How Apple's iOS 14 privacy update could hurt New Zealand businesses

How Apple's iOS 14 privacy update could hurt New Zealand businesses, according to Aro Digital's Tim Dorrian.
Photo credit: Getty

The privacy changes Apple is introducing with iOS 14 aren't just a concern to other tech giants like Facebook and Google - small businesses in New Zealand are worried their bottom line will be affected.

The much talked about App Tracking Transparency (ATT) feature will make it easy for iPhone users to opt out of having their online activity tracked in order for companies to more effectively advertise to them.

Tim Dorrian is the managing director at Aro Digital, a Wellington-based company that works with New Zealand companies on social media advertising, Google ads, analytics and digital marketing strategies.

He tells Newshub the change will indeed empower Apple's customers, but that empowerment will come with a cost.

"It gives the user more control, from a tracking perspective, on what data they choose to share. But that has implications for them in terms of the ads they're being targeted with," says Dorrian.

"At the moment you can be targeted with ads from a website that you have visited recently. That will happen less if you opt out of being tracked."

There's one type of specific online activity that companies track to very effectively advertise that they're worried the ATT feature will weaken.

"If you've added an item to your cart on a website, proceeded to the checkout process and then dropped out, due to tracking you might later get a reminder about that item, or an ad from that website. Some might find that helpful, others might find it annoying and spammy," says Dorrian.

Certain businesses in Aotearoa are said to rely on that type of targeted advertising as a major part of their operation.

"New Zealand's skincare industry in particular does really well online and a large part of that is being able to re engage with people who have visited their websites," says Dorrian.

"With all the e-commerce clients we've worked with over the years, they get the best return on investment from a targeted campaign - especially with people who have added something to their cart and not yet purchased. Businesses typically see a much lower return on investment out of awareness ads, which are trying to just initially drive people to the site."

Apple CEO Tim Cook recently gave a speech at the Computers, Privacy and Data Protection conference in Brussels, where he insisted advertising will do fine without online tracking.

"Technology does not need vast troves of personal data, stitched together across dozens of websites and apps, in order to succeed," said Cook.

"Advertising existed and thrived for decades without it. And we're here today because the path of least resistance is rarely the path of wisdom."

People placing something in their cart on a website but not completing the purchase are a particularly attractive customer for that website to  target ads to.
Photo credit: Getty

Facebook and Apple have each fired off fiery accusations at each other in a public scrap over the privacy changes, including effectively labelling each other liars.

Dorrian won't say which of the two companies he thinks is lying, but says while Facebook's messages have been "self-serving" he agrees with the social media company that Apple is implementing the changes to increase its own advertising power.

"I think it's not the consumer pushing for this, I think it's Apple, who have their own agenda with Apple Ads. I think they want to take some of the power away from Facebook to strengthen their own position with a future ad product they're likely rolling out."

An Apple representative recently told Newshub it was absolutely incorrect that the company's privacy features are being introduced as an anticompetitive measure. They referred to what they called Apple's long history of prioritising privacy, saying it's always been done for the customer. 

While Aotearoa's beauty industry and others made up of small and medium-sized Kiwi businesses are worried about the impacts of iOS 14, bigger corporations are unlikely to be seriously hurt by it.

"All of the big businesses out there, from the likes of Microsoft to Kmart, they'll be able to work out ways around these changes to tracking laws. Larger organisations can implement server-side tracking, create workarounds or invest in expensive tools that achieve effectively the same thing. They'll be more or less unaffected," says Dorrian.

"If you're a small business, you won't be able to work your way around this tracking update. So you'll feel negative impacts like not being able to do as many targeted ads, which ultimately mean you get your content in front of an ideal, highly qualified audience."

Apple's new privacy initiative is expected to be rolled out in the next round of updates for its iOS 14, iPadOS 14 and TVOS 14 systems.