Publishers face a variety of challenges as consumers demand more control over the ways their personal data are collected and used to target them with advertising, a key source of revenue for many publications.
Technology companies are responding to those demands by offering more privacy controls — often because of stricter regulations — that threaten to undercut how much publishers can charge for advertising. Because advertisers are willing to pay publishers more for reaching the right audiences, any measures that make consumers more anonymous are harmful to publishers.
The most recent threat to digital ad revenue comes from Apple Inc., which revolutionized media consumption habits with the introduction of the iPhone in 2007. The company in September rolled out iOS 14, the newest version of the software that runs hundreds of millions of iPhones worldwide and soon will have stricter privacy controls.
The change is worrisome to publishers because so many people use smartphones as the primary way to read content such as news articles. Fifty-seven percent of U.S. adults said they often get their news on a mobile device, compared with only 30% of people who frequently read news on a desktop or laptop computer, according to a study by the nonprofit Pew Research Center.
Starting early next year, Apple will ask iPhone users for consent to share the Identifier for Advertisers (IDFA), a random number that the company assigns to devices to help track user activity in apps and websites. The company had announced the change at its yearly conference for software developers.
While it’s already possible for people to change their iPhone settings to stop sharing the IDFA, the procedure takes several steps that include digging through the privacy controls. Only about 30% of iOS users in the United States switch on the “limit ad tracking” feature on their iPhones, a study by marketing analytics firm Singular found this year.
Many more people are likely to opt out of tracking after Apple simplifies the procedure in the upcoming version of iOS 14. When an iPhone user first opens an app that seeks the IDFA, a pop-up will appear that says an app “would like permission to track you across apps and websites owned by other companies. Your data will be used to deliver personalized ads to you.” iPhone users can either tap on “allow tracking” or “ask app not to track.”
The wording is dissuasive to iPhone users because it doesn’t explain that Apple’s IDFA has no personal identifying information. The promise of personalized advertising isn’t a very strong incentive to consent to tracking, and most people don’t like the idea of being monitored online.
The loss of IDFA tracking may mean that publishers experience a 40% decline in ad rates in iPhone apps, Sheri Bachstein, global head of consumer business at Weather.com’s parent company, said in an interview with The Wall Street Journal. The negative effect on websites may be similar, though publishers have other audience tracking measures like browser cookies.
Apple’s Changes to Browser Settings
Apple’s plan to alert iPhone users about app tracking follows other changes to privacy settings that came with iOS 14 in September. The new operating system turned off tracking of third-party cookies in all web browsers by default. Cookies are small data files that websites put on web browsers to track repeat visits and other online activity.
The change to cookie settings means Apple’s “intelligent tracking prevention” will block cookies as a privacy measure in other web browsers like Google’s Chrome. However, Chrome isn’t as popular as Apple’s own Safari browser that comes preinstalled on iPhones, which means the change to cookie settings likely will have a muted effect on publishers.
The bigger effect was felt after Apple added cookie blocking to Safari in early 2017. The change triggered a 60% drop in the price of ads that targeted Safari users in the following two years, according to data from the Rubicon Project, a programmatic sell-side platform, cited by The Information.
Apple’s changes to its privacy settings precede Google’s plan to end support for third-party cookies in its Chrome browser in early 2022, a move that may upend the digital advertising market unless other audience tracking measures are developed.
For publishers, these limitations on audience tracking mean that they must continue to adapt their strategies to sell advertising. Those strategies can include requiring readers to register to gain access to a site, with the pledge that any identifying information like name or email addresses won’t be shared with anyone else. Such “zero party” information is valuable to publishers that protect user privacy.
Publishers also can emphasize contextual-based advertising, offering ad placements near related content that’s most likely to appeal to a target audience. For example, placing real estate ads amid stories about home hunting or grocery ads next to stories about cooking. Exclusive content in a brand-safe environment is appealing to readers and advertisers.
Alternatively, paid subscriptions can be a significant source of revenue for publishers facing difficulties monetizing their content with advertising. Amid stricter privacy controls like the ones that Apple is implementing on iPhones, publishers will continue to develop revenue strategies to build on their key strengths.