Apple's latest update cripples location-based marketing

After taking on companies that track consumers all over the web, Apple has now set its sights on app publishers that track consumers all over the real world. In mid-September Apple released iOS 13, which is a software update offering new features and improvements. Among those changes: It asks users if they want to opt-in to share their location with app makers.

The iOS 13 update, for instance, will ask users if they want to allow an app publisher Bluetooth access. Although most people associate Bluetooth with sound, it can also determine a person’s location through various means, such as planting beacons at car dealerships, malls or stores. Open the Best Buy app, for example, and a prompt from Apple will display: “Best Buy would like to use Bluetooth. This will allow Best Buy to find and connect to Bluetooth accessories. This app may also use Bluetooth to know when you’re nearby.”

In the example above, the user might question why Best Buy needs Bluetooth access and deny the retailer permission to access that data altogether. Apple’s software update also prevents other methods app publishers use to track consumers. For instance, companies could previously learn a user’s location if they walked by a public WiFi hotspot. With Apple’s update, they no longer can.Apple’s iOS operating system has a 48 percent market share in the U.S., according to Amazon-owned Statista. Thus, the company’s latest update makes it significantly harder to track nearly half of all smartphone users. Apple did not return requests for comment by press time.

What it means for marketers

Apple’s update isn’t necessarily aimed at legitimate retailers such as Best Buy, but it does target app publishers that capture user location data through questionable means.

“Wallpaper apps, mobile games, a flashlight app, ringtones—these are apps where users might not have known that their locations were being collected in the first place,” says Joshua Anton, founder and CEO of data location services company X-Mode. “Apple’s latest update is going to have a bigger effect on those folks.”

Apple’s update is designed to weed out sketchy publishers that don’t have a legitimate use case for collecting someone’s location data. A weather- or fitness-related app, for example, likely won’t have a problem obtaining someone’s permission simply because it makes sense to allow it, says Anton.

But Apple’s update will affect retailers because of their frequent use of location-based data for marketing purposes. It will also cause headaches for so-called attribution vendors, which use location data to determine whether someone went into a store to make a purchase. But if Apple’s update causes fewer people to share their data, then the pool of available location data will shrink, leading to higher prices for marketers that want to obtain it.

While the amount of location-based data will decrease, the quality of what’s available will increase, Anton says. “Retailers are going to get less data and there’s going to be some shell shock at first,” Anton says, “But the quality of location data will be higher so, in theory, they’ll see a greater return on their ad spend.”

Who wins?
The move might also strengthen the position of companies such as X-Mode, which get users’ permission to collect location data by plugging into various apps that have legitimate use cases for capturing location. The company, for example, has an earthquake alert app, making it more likely that a user would be willing to share their location. Others, such as Foursquare, gather location data through owned-and-operated consumer apps such as City Guide, Swarm and Placed.

Apple’s latest update also doesn’t give app makers an opportunity to explain the benefits, or so-called “value exchange,” in sharing location data, says Keith Soljacich, VP of experiential technology at Digitas North America.

“Any time you ask a consumer or shopper for a piece of data, they have to understand the value exchange, but the way it is going out with iOS 13, these notifications are popping up and asking for permission without any context or value exchange,” Soljacich says. “I would love if Apple’s new update would at least give me a chance to explain what sort of experiences giving this data will provide.”

Beware of work-arounds
When Apple killed the cookie through its Safari “Intelligent Tracking Prevention” feature, many companies such as Google, Facebook and Criteo created workarounds to negate the feature and continue to track consumer browser behavior. Apple pushed back, and each iteration of ITP has thwarted previous workarounds.

Given Apple’s history, making a workaround for Apple’s attempt to block location-based data collection isn’t advised, says Josh Cohen, VP of product at Foursquare. “Our recommendation is to not use this as an opportunity to find a workaround,” he says. “Apple is enforcing app and location providers to be more transparent.”

Working with reputable location-based vendors and asking how their data is gathered is one option marketers have to navigate the Apple’s iOS 13 update. Creating an app with a legitimate use case for capturing location-based data is another solution.

GDPR-like?
The move to weed out less reputable app publishers might strengthen the position of larger companies. X-Mode’s Anton draws a parallel to how the European Union’s strict new data privacy rules (known as GDPR) put companies such as Google and Facebook in a position of advantage.

I’m already seeing it in Europe,” he says. “Sketchier publishers are collecting things they shouldn’t, and we saw them die out through GDPR." Apple’s latest update “will strengthen the position of companies like X-Mode and Foursquare, who own a direct relationship with the publisher,” Anton says.