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37 min 26 sec ago
By Andy Woo – 1 hour 9 min ago
By Garett Sloane – 2 hours 34 min ago
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Apple has used iOS updates to thwart tracking in apps and across the web.
Apple’s developer conferences are famous for product debuts, like new watches, Macs and perhaps, even, augmented reality goggles this year. They have increasingly become must-watch events for mobile marketers, too, given how Apple’s iPhone software changed the rules in advertising.
At Apple’s Worldwide Developer Conference, which begins today, the marketing community expects even tougher policy enforcement in programs like Private Relay, which is Apple’s way of hiding IP addresses—internet signals that marketers use to follow consumers across the web. Meanwhile, Apple could create even more opportunities for its own ad business, as developers increasingly have to go through the iPhone maker to run effective campaigns on its devices.
One of the biggest changes that publishers and marketing technology vendors anticipate is that Apple will expand Private Relay. “The likelihood is pretty high that Apple is going to announce something around Private Relay being always on,” said Charles Manning, CEO of mobile ad measurement firm Kochava.
Apple was not available for comment for this story, but the marketing world expects Apple to change Private Relay from just applying to a sliver of traffic on iPhones, to represent an even greater proportion of traffic. The expansion would go a long way toward Apple reaching one of its biggest goals, which is to limit a practice known as “fingerprinting.” Fingerprinting is when a third-party ad technology firm can detect activity coming from a device—like an IP address, location and a consumer’s scrolling patterns on a website—and use that data to basically determine a direct identity.
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.”
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.

Read more: Apple’s privacy changes may be to blame for Snap’s weakened ad outlook 
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.
Marketing tech companies expect Apple will continue growing its search advertising offering, and the company could look to create a bigger ad network that competes even more closely with Google, Meta and Amazon. “They’ve been doing a lot to catch up to their more mature partners in the space,” said Justin Trieu, VP of marketing and business at Skai, a third-party platform that helps advertisers scale on Apple search ads. 
In fact, just last month, Apple introduced a new method of buying search ads in the App Store’s “explore” section. Advertisers can buy a display ad in the explore tab based on “cost per tap” goals, so the brand only pays if a consumer clicks on the ad. The ad unit had been sold on a CPM, or cost per thousand views. It’s a minor tweak, but it suggests that Apple is getting more confident in its own targeting capacity, because it only collects payment for the ad if the consumer is enticed to take an action. Most of the ad industry uses the term “cost per click,” but, in typical Apple fashion, the company is writing its own advertising playbook.
The move to “cost per tap” on those new ad formats could expand the number of advertisers willing to bid on the ad space, Trieu said. Larger brands were the ones that could afford CPMs, but smaller advertisers would bid on space if they only pay when the marketing goal is reached; that’s the essence of performance marketing.
“That move by Apple to have a cost-per-tap model is a welcome entry point for advertisers that want to spend more money in a lingo that they’re used to,” Kochava’s Manning said. “You tend to find a greenfield of opportunities to sell more media.”
As Apple’s search ads become more sophisticated, the company may also introduce a new search engine, according to a report last week. Tech evangelist Robert Scoble tweeted that Apple could launch a Google rival that would be an option for iPhone users to set as their search engine. Google has paid Apple billions of dollars a year to be the main option for search within Safari web browsers. If Apple made a greater push into search, more ads would likely follow, according to marketers.
Oh, and a new search engine is coming too. Will Siri finally get "smart?" Hmmm.
Marketecture Media’s Paparo said Apple could “expand its advertising footprint internally,” and the company recently elevated its longtime ad executive Todd Teresi to the head of the Apple ads business. But taking market share from Google and others won’t be easy, Paparo said. There are still many technical hurdles, and search marketers are already used to working with more developed platforms with tactics like search engine optimization and campaign management, which Apple has not fully built out yet. “It’s a big hill to climb for Apple to enter the search business,” Paparo said.
 
In this article:
Garett Sloane is Ad Age’s technology, digital and media reporter. He has worked in newspapers from Albany to New York City, and small towns in between. He has also worked at every advertising industry trade publication that matters, and he once visited Guatemala and once rode the Budapest Metro.
 

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