Apple’s latest iPhone update gives users the ability to restrict the tracking of online data, which is used by companies such as Facebook to sell targeted advertising. Image by Austin Distel via unsplash.com

Facebook claims an update to iPhone software will undercut small businesses’ ability to effectively advertise online, but local experts say the change may just necessitate that companies go back to Marketing 101.

Apple announced the new feature at its Worldwide Developers Conference in 2020, requiring apps to ask for permission before using in-app data and data from other apps, websites or properties to create targeted advertising. The policy was enacted in April with iOS 14.5.

While the update requires individual apps to disclose how they use data and ask permission to track users, iPhone owners can also opt out of tracking across all apps. Apple said the changes address their belief that “privacy is a fundamental human right.”

For social media platforms, it could mean a significant decrease in revenue from targeted ads on their platforms. For example, a company using this kind of target ad could see that a user on Instagram (owned by Facebook), had clicked on an ad, viewed a product on a website and decided not to buy it. They could then advertise that same product or similar ones to that specific user, Sarofim said.

While tracking of online behivor would be curtailed, Sarofim added that demographic and geographical data will still be available for advertising purposes.

“The new iOS update will limit the amount of data Facebook and other apps can collect in the background,” said Samer Sarofim, assistant professor of marketing at Fresno State. “IOS will act as a filter for what kind of data is collected by advertising platforms, like Facebook.”

Befor the update went live, Facebook estimated its clients could see up to a 60% decrease in online sales generated by targeted ads.

A representative from Facebook said the company has been receiving guidance and updates to mitigate effects on business.

Mike Stricker, director of digital advertising at Jeffrey Scott Agency in Fresno, said while most companies do or should use Facebook advertising, he doesn’t see the change greatly impacting their overall ability to market to customers on the social media platform.

Some early research has said only 6% of iOS 14.5 users in the United States have opted into allowing tracking across all apps, but for small businesses that just means the pool of users who can be specifically targeted is smaller, Stricker said.

“For small businesses, if you’re running an awareness campaign, you aren’t going to be affected too much,” Stricker said. “If you’re trying to put a message out there, it will show up more like a newspaper ad.”

Stricker said the companies that will be most affected will be e-commerce businesses. Sarofim added that the changes only account for activity on an iPhone, and not activity by the same user on their desktop, laptop or other devices.

Both said they feel the changes will just force businesses and advertisers to be more deliberate about their online marketing. Sarofim said businesses will have to verify their social media accounts and create more meaningful and beneficial interactions with customers.

Consumers have shown they are willing to share data when they feel a company will use it respectfully, Sarofim said. If small businesses don’t bombard social media users with ads and create ads that will be useful to their consumers, they’ll be more likely to share data.

Stricker said fewer targetable customers means companies will have to “go back to fundamentals” by creating better projects and campaigns to resonate with their audience.

He said targeted marketing should just be a tool in a company’s marketing toolbox, and if these changes are creating a huge impact they should rethink how they approach advertising.

Sarofim said Facebook was incentivized to make the policy change seem like a bigger deal for small businesses because targeted ads are one of their large paid-advertising revenue streams. In reality, Stricker said they’ve seen this change coming for years and should be ready.

“If pushed ads are limited, you need to develop more organic interaction with your own social media accounts and pages,” Sarofim said. “Those interactions are often more effective than paid pushed ads, which is something else businesses need to consider and adapt to.”