Report: Apple's Pro-Consumer Privacy Changes Cause 15% Drop in Revenue for Advertisers

A recent report on the impact of Apple’s privacy changes for iPhones and iPads appears to show that advertisers are experiencing a 15 to 20 percent drop in revenue. The changes allow consumers to block advertisers from tracking them, a business model criticized as “surveillance-based” advertising.

VenureBeat reports that Consumer Acquisition’s Brian Bowman has sounded the alarm on Apple’s decision to favor user privacy over targeted ads by changes access to its Identifier for Advertisers (IDFA). An analysis of $300 million in paid social ad spending by Consumer Acquisition found that IDFA has had a negative effect on iOS advertisers with many experiencing a 15 to 20 percent revenue drop.

Apple released iOS 14.5 in April which included a new feature where the OS prompted users to answer whether they would allow their data to be tracked for advertising purposes. Apple believes this puts user privacy at the forefront of its business model, but many advertisers are upset that they suddenly have less access to user information in order to target ads more efficiently.

Around 20 percent of consumers are selecting yes on Apple’s App Tracking Transparency prompt allowing advertisers to track their personal data. As a result, advertiser performance has dropped massively. In May, an astounding 96 percent of iPhone users disabled ad tracking.

Many privacy-focused tech executives and investors have been highly critical of targeted advertising. Thiel Foundation President Blake Masters, who recently announced that he is contesting the Republican primary for U.S. Senate in Arizona in a bid to replace Democrat Mark Kelly, recently appeared on Breitbart News Daily where he discussed tech censorship and targeted advertising.

Discussing targeted advertising specifically, Masters said: “And the last thing I’ll say about this — it’s sort of the nuclear option — but I’m becoming increasingly convinced it’s necessary to ban targeted advertising. It is unclear to me that these companies, business models, the unique innovation that allows them to extract such monopoly profits is the specific ability to target their user because they have with advertising because they have so much data on these users.”

Last week a group of privacy-focused tech firms including DuckDuckGo, Vivaldi, and the company that makes Protonmail are calling for a broad ban on targeted “surveillance-based” advertising. The open letter published by the group states: “Although we recognize that advertising is an important source of revenue for content creators and publishers online, this does not justify the massive commercial surveillance systems set up in attempts to ‘show the right ad to the right people.’”

The letter urges lawmakers in the United States and the European Union to enact data protection laws that could protect consumers from what they call “privacy-hostile” practices that many companies use in their advertising practices. The companies allege that exploiting users’ privacy for targeted advertising is not necessary for companies to be profitable.