If an advertiser could link its own ID to a particular device, it could keep targeting ads. Apple has a policy against fingerprinting, but no real way of enforcing it, according to marketing tech experts. Private Relay could act as that enforcement, cutting data off at the source, because it hides IP addresses—like a virtual private network—which is the string of code that identifies a person’s device and network.
Marketers are worried that Private Relay could apply to almost all traffic coming from iPhones; not just traffic to websites, but traffic to apps, as well, according to Ari Paparo, CEO of Marketecture Media, a new ad tech vendor review site. “Turning it on for everything by default,” Paparo said, “makes IP addresses useless for advertising purposes, and they are widely used right now.”
Private Relay launched last year, but it was reserved for iCloud subscribers, making those users’ IP addresses private when they visited websites on Safari. Publishers say more and more traffic comes from people using Private Relay. The anonymity lowers the demand from advertisers because they can’t accurately target ads to those visitors.
“I wouldn’t say it’s a significant amount of traffic, but we’re seeing an increase in users running that Private Relay,” said Eric Hochberger, CEO of Mediavine, an ad management platform that works with publishers.“That’s the end of a lot of fingerprinting, a lot of household matching, and it’s going to end a lot of things that advertisers have come to rely on.”
What’s in store
Apple is set to unveil iOS 16 at WWDC, which is when it would introduce changes to Private Relay. Apple has been using software updates to thwart tracking for years, starting in 2017 with Intelligent Tracking Prevention in iOS 11. Tracking prevention took away third-party cookies in Safari, which were the easiest method of dropping a tag on a web visitor’s browser to target and measure ads.
Then, with iOS 14.5, Apple finally instituted App Tracking Transparency, which expanded anti-tracking to apps, cutting developers off from the Apple Identifier for Advertisers, unless an app received direct permission from consumers to track them. Apple is partly credited with starting the crusade against tracking. That effort has spread, and Google is working on similar policies that could obfuscate signals on the Chrome web browser, when Google shuts off cookies next year, and hide data from Android devices.
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These changes are upending the mobile marketing ecosystem, making it more difficult for even the largest internet ad companies, such as Meta, Snap, Twitter and TikTok, to make money from their apps. Meta, which made $115 billion from advertising in 2021, has been vocal about how Apple’s policy changes have created an adverse environment for its business, and it has characterized Apple’s control over its ecosystem as anti-competitive. Apple’s privacy changes have led to major changes in how internet ad companies target and measure ads.
Without sharp data signals the apps have to use more aggregated forms of data, instead of information that could be tied to an individual, to measure outcomes like “conversions,” which is when a consumer takes an action on an ad, like downloading an app or buying a product. Meta, Google, Snap and others have had to come up with new ways of measuring “conversions” by calculating the results using anonymized data sets. Still, the system is not perfect, and it is leading many marketers toward confusion about what works and what doesn’t in their ad strategies.
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Meanwhile, Apple has stepped into advertising in a bigger way, filling the data void it created. Apple has a measurement platform called the SKAdNetwork, which apps use to pull some data from iPhones to track ad performance. Apple also is developing its own ad products, particularly in search advertising. Apple helps app developers place ads when consumers browse the App Store, showing ads in results similar to how Google and Amazon return ads in their search properties. Apple's critics have even accused the company of leveraging privacy concerns to benefit its own advertising ambitions.
Apple does not reveal how big its ad business is, but a recent report from Toni Sacconaghi, a Bernstein analyst, estimated Apple’ ad revenue grew from $300 million in 2017 to $4 billion in 2021. That’s only 2% of Apple’s total yearly revenue, which mostly comes from device sales and services.