Political unrest, a global pandemic, and the ensuing economic fallout apparently weren’t enough – small businesses have yet another impossible obstacle to grapple with: Apple’s new iOS update.
Continuing its campaign to protect and promote user privacy, Apple’s recent iOS 14 update will automatically strip advertisers of tracking permissions when it comes to targeting highly-specific demographics. While users can still opt in to allow advertisers to show them targeted ads, it is unlikely that many users will do so. The result will be that the 1 billion iPhone users worldwide will no longer belong to highly particular groups of demographics available to relevant advertisers.
Facebook has been extremely vocal about their opposition to the Apple update, stating that “Apple’s new iOS 14 policy will have a harmful impact on many small businesses that are struggling to stay afloat and on the free internet that we all rely on more than ever.” They also published multiple full-page ads in the Wall Street Journal and other publications, attacking Apple’s plans.
Apple said on Wednesday, December 16, “We believe that this is a simple matter of standing up for our users. Users should know when their data is being collected and shared across other apps and websites—and they should have the choice to allow that or not. App Tracking Transparency in iOS 14 does not require Facebook to change its approach to tracking users and creating targeted advertising, it simply requires they give users a choice.”
How Exactly Will Apple’s iOS Update Harm Small Businesses?
Seeing how ad revenue is Facebook’s primary source of revenue (they made almost seventy billion on ads last year), it’s not surprising that many people are skeptical about Facebook’s motives behind the “Speaking Up For Small Businesses” campaign. Unfortunately, there may be some truth in the campaign. While the iOS update will adversely affect all advertisers, big and small, most likely small businesses will have the hardest time coping with the changes. Let’s look at the update from the perspective of a local camping-gear retailer.
Your local camping-gear store is run by someone in your city and is likely a community staple. Since they discovered Facebook ads, they’ve been able to target people in the community interested in all things outdoors and entice them to come to the store with irresistible deals, and they’ve even been able to launch an ecommerce branch of their store, shipping their gear out to buyers across the country. Their sales have increased considerably and they’re finally breaking even. Most small companies like this don’t have a budget for popular, powerful websites, TV commercials, and other expensive marketing initiatives —they rely heavily on their targeted Google and Facebook ads to get in contact with customers. But this hyper-targeted advertising is only possible because users in their hometown and across the country have given their permission to be tracked. And this permission is what Apple is taking away.
I’ve worked for a small company called Smartcare that manages child care billing, and although they’re doing very well, I’ve seen first-hand how reliant they are on Facebook advertising to reach daycare owners. This update is going to make it nearly impossible for them to talk to their target audience. I could say the same for at least a dozen other young and small companies I work with. Without good tracking ability, small businesses like your camping gear store—businesses that can’t afford powerful social media campaigns, search engine optimization, and marketing automation campaigns necessary for real conversions—will have some difficult choices to make.
How Much Online Privacy Is Enough?
Although dramatically increasing internet privacy is a hot topic right now, there might be a decent case against it. If you’re interested in finding a local camping gear retailer near you, wouldn’t you want to support your local businesses by buying from them instead of big box stores? Maybe I’m alone in this, but so long as I have to see ads, I don’t see any harm in being served ads that are catered to my personal interests. Provided that they’re not reading private messages or listening in on me, I don’t find it particularly invasive if platforms track what online things I click on or show interest in.
It’s a tradeoff. We can either pursue complete online anonymity, but it might come at a cost that’s higher than we realized. Without individual tracking capabilities, Facebook’s digital ads will become expensive billboards that broadcast to the uninterested masses, instead of being shown to the people who actually care. Consequently, only big brands will have the budget and the wherewithal to make good use of them, and the rich will get richer.
Publishers Will Struggle
As the pandemic began, the media industry was forced to execute significant layoffs both locally and nationally as advertisers started pulling their budgets to stave off layoffs in their own companies. The media industry seriously depends on these advertising dollars and this update will dramatically reduce the effectiveness of their ads. As a result, advertisers will not be able to pay publishers like they once did. As traditional advertisements devalue, publishers and media companies will be forced to either lay off staff or look for other revenue channels.
This problem won’t only take a tax on large media organizations like the New York Times and Inc. Magazine, it will affect publishers on local scales even worse. Small blogs and publishers—which already have quite the fight to survive—will have to bear the brunt of the Apple’s iOs update since their ads are often the only thing keeping them from going under.
Ecommerce Will Especially Suffer
Many small companies have found a special niche in the ecommerce space. Especially while brick and mortar stores have had to close during the pandemic, ecommerce campaigns have been the only thing keeping many businesses afloat. And it’s not just Amazon and Ebay that are thriving—millions of independent sellers and entrepreneurs from all ages and economical backgrounds have figured out how to use Facebook ads to build successful online businesses.
Dress stores, photography services, and fandom merchandise are just a few niches among the thousands that feature hard-working individuals who have invested themselves and their businesses into Facebook’s advertising. Unfortunately, many of these stores rely almost solely on Facebook ads in order to survive. Apple’s iOS update is going to sever the connection between these ecommerce sites and their clients.
While Facebook has released recommendations for how small businesses can withstand the Apple update, few advertisers are optimistic about the outlook of it.