Why advertisers are freaking out about Apple’s new privacy settings – and why they shouldn’t

Among the updates in Apple’s long-awaited iOS 14.5 update is change to device privacy settings. Similar to what GDPR did for email – a requirement for the user to opt-in to data collection for the purposes of advertising – the new iPhone operating system requires users to consent to their data being shared with apps. Of course, from a user freedom perspective, this is great; it allows anyone to control what app publishers see and don’t with greater transparency into how and what data is being leveraged.

Many advertisers are worried. Facebook has been particularly worried. Why?

Well, their fears are rational. Facebook thinks that people will opt out of getting ads from them. And, to be honest, in some way they’re right: some people just don’t like ads.

This has a lot of people on their side freaked out that they’ll lose ad revenue, since they predict their advertising partners will see audiences shrink and decrease investments accordingly.

Here’s why that thought process is short-sighted.

Let’s say you have an audience pool of 100,000 for your small online store. Your cost per thousand impressions (CPM) is like $6 (example number, totally arbitrary). Your click rate hovers around the 4% mark. Your ad is decently relevant, and your product looks useful. Some people enjoy it. Now Apple implements this rule, and your audience pool falls down to 85,000. Bad? Not necessarily.

How qualified was that audience to begin with?

If you have a bunch of people who quit getting ads because they hate seeing ads, is that such a bad thing? Let’s examine that question conversely: if an audience proactively opts into getting ads, doesn’t that make them fundamentally more receptive to your message?

So instead of having 100K decently qualified people in your audience, now you have 85,000 more qualified people. And from there, maybe you get an email signup ad unit going and you narrow that down to 25,000 supremely qualified people. Now you have a better idea of who you’re trying to sell to. This helps solves the marketer’s dilemma: identifying the ideal customer.

Here are my predictions for the next few years of Facebook advertising over iOS devices:

• Cost per 1,000 impressions will go up. That’s pretty much a given. Smaller audience, pricier to target. Ad units continue to approach their true market value.

• Click rates go up, cost per click (CPC) could go either way. My sense is average CPC goes slightly up after an initial dip. Marketers are pessimistic now but they won’t be forever.

• Ads continue to increase in relevancy. (And that’s a good thing.)

• Digital marketing budgets will increase as more actionable data convinces higher-ups that the investment is less nebulous than ever before.

Final thoughts: now is the time to hone your message and invest in genuine persuasion strategy. Stop thinking about touch points; start thinking about sticking points. Your audience is going to be more receptive than ever before, and this time it’ll be by design!