Ad firms hurting due to Apple’s Intelligent Tracking Prevention feature

Internet advertising firms are losing hundreds of millions of dollars following the introduction of a new privacy feature from Apple that prevents users from being tracked around the web.

Advertising technology firm Criteo, one of the largest in the industry, says that the Intelligent Tracking Prevention (ITP) feature for Safari, which holds 15% of the global browser market, is likely to cut its 2018 revenue by more than a fifth compared to projections made before ITP was announced.

With annual revenue in 2016 topping $730m, the overall cost of the privacy feature on just one company is likely to be in the hundreds of millions of dollars.

Dennis Buchheim, general manager of the Interactive Advertising Bureau’s Tech Lab, said that the feature would impact the industry widely.

“We expect a range of companies are facing similar negative impacts from Apple’s Safari tracking changes. Moreover, we anticipate that Apple will retain ITP and evolve it over time as they see fit,” Buchheim told the Guardian.

“There will surely be some continued efforts to ‘outwit’ ITP, but we recommend more sustainable, responsible approaches in the short-term,” Buchheim added. “We also want to work across the industry (ideally including Apple) longer-term to address more robust, cross-device advertising targeting and measurement capabilities that are also consumer friendly.”

‘Sabotage’

ITP was announced in June 2017 and released for iPhones, iPads and Macs in September. The feature prevents Apple users from being tracked around the internet through careful management of “cookies”, small pieces of code that allow an advertising technology company to continually identify users as they browse.

Its launch sparked complaints from the advertising industry, which called ITP “sabotage”. An open letter signed by six advertising trade bodies called on Apple “to rethink its plan … [that risks] disrupting the valuable digital advertising ecosystem that funds much of today’s digital content and services.”

It also accused the company of ignoring internet standards, which say that a cookie should remain on a computer until it expires naturally or is manually removed by a user. Instead, the industry said, Apple is replacing those standards “with an amorphous set of shifting rules that will hurt the user experience and sabotage the economic model for the internet”.

In response, Apple noted that: “Ad tracking technology has become so pervasive that it is possible for ad tracking companies to recreate the majority of a person’s web browsing history. This information is collected without permission and is used for ad re-targeting, which is how ads follow people around the internet.”

Initially, many advertisers believed they had found a technological way around some of the restrictions put in place by ITP. Criteo, which took advantage of that loophole, had initially expected revenue to drop by only 9-13%, the company said. But in December, Apple closed that work-around on its mobile devices as part of the iOS 11.2 update, causing the ad-tech firm to update its projected impact to its current estimate of 22% “relative to our pre-ITP base case projections”.

The company has not given up hope, however. “We are focused on developing an alternative sustainable solution for the long term, built on our best-in-class user privacy standards, aligning the interests of Apple users, publishers and advertisers,” Criteo said in a press release. “This solution is still under development and its effectiveness cannot be assessed at this early stage.”

There is more pain to come for the advertising industry. Google has announced a built-in adblocker for its Chrome, which holds over 55% of the global browser market according to data from Statcounter. Google has been testing the feature since June 2017 and will roll it out to all users in February.

Unlike Safari’s ITP, however, Chrome’s adblocker has been created in partnership with the ad industry. The feature only blocks what the company calls “intrusive ads”, such as autoplaying video and audio, popovers which block content, or interstitial ads that take up the entire screen.

Source: The Guardian