How Apple's new privacy policy affects small businesses

Small businesses should rethink and reconsider how they approach customer acquisition. They can no longer be heavily dependent on social media advertising.

How Apple's new privacy policy affects small businesses

Apple has rolled out the long touted privacy feature update that has advertising platforms up in arms. The feature that has them miffed, notably Facebook, is the opt-out ability of a user from ‘Identifier for Advertisers (IDFA)’ sharing.

Apple has always been outspoken about its focus on privacy first features and how iOS is the most secure mobile operating system. With this feature release, it seems like it’s taken it a bit further.

According to Apple, they are now giving users a choice of whether they would want their devices to be tracked for advertisers to deliver targeted ads to them. For advertisers, they must have their ads be extremely targeted for them to get the most out of their ad spends.

Facebook has been openly calling this move by Apple a hit for small businesses that depend on using Facebook ads for reaching their potential customers. With this feature disabling third-party data sharing, advertisers will not be able to target ads based on user behavior.

But will small businesses take that big of a hit? Is mobile advertising as we know it changing now? How does Apple’s new privacy policy affect small businesses? Let’s take a look.

The immediate impact on small businesses

The privacy feature is called ‘App Tracking Transparency’. A user receives a prompt asking them whether they would want an app to track their online activity. Users can choose to allow the said tracking or opt-out of being tracked for advertising purposes.

The prompt for an app only once, and once a user opts out, the app developer cannot access the data about the user anymore.

User prompt for App tracking transparency 

Now if a user disallows tracking for the Facebook app on their phone, Facebook can no longer use app tracking data to build data profiles of users based on their online activity. The company builds these user profiles to compile information about a user that can be used to show them ads relevant to their interests. The insights into what these interests are come from analyzing their online activity and behaviors.

No tracking means no refined user profiles. This in turn means ad targeting and retargeting are less specific. This is where it is expected that small businesses will face a hurdle when it comes to their advertising efforts on Facebook.

Almost every business runs ads on Facebook. Small businesses, even more so. The reason small businesses use specific ad targeting is so that they can optimize their campaigns. They work with limited budgets and want to get the most out of their ad spends. Ad targeting helps them do that. Because it allows them to target specific users with specific interests and behavior.

If a small business is completely reliant on Facebook ads for acquitting new customers or users, then this is going to be a problem for them. And there a good number of small businesses which rely on purely Facebook for customer acquisition.

These businesses will immediately see a drop in relevance of the ad to the people who are seeing it. It only seems logical. Will that be the case though?

What are experts saying

But it also depends on how many users actually choose to opt-out of this feature. And that is not an easy prediction to make. One report says 48% of users reported that they will tap on ‘Allow’ and stay opted-in to the app tracking functionality.

This number is not a given, and can always change – for better or for worse. Maybe most users won’t care about this feature. Maybe they will. The real fear that Facebook and other advertising platforms have, and by extension small businesses too, is that the power is no longer in their hands.

Earlier, users couldn’t decide if they wanted to be tracked by the apps they are using. Now they do. And that is the difference that sparks this controversy.

Privacy experts are lauding this move by Apple. Advertising and marketing experts are expressing concerns about how this will have a negative impact on small businesses.

The true impact will depend, at the end of the day, on the users themselves. And how many of them actually make do end up using this feature to opt-out of being tracked by apps.

What can small businesses do?

This might be a good time for small businesses to rethink and reconsider how they approach customer acquisition. One way or the other, things have for sure changed in terms of how they can reach their ideal audience.

Facebook is a great platform for a lot of small businesses to advertise and gain new customers. After all, Facebook is the most popular social networking site with almost 3 billion users. It is the perfect platform for small businesses to advertise.

But all is not lost. Sure, advertising may take a hit. But there are other ways to attract users on Facebook to your business.

Small businesses should now start to think about how they are spending their ad dollars. The growing consensus among experts is those small businesses that are heavily or exclusively dependent on social media and Facebook advertising should revamp their marketing strategy.

It stands to hold true that other operating systems and platforms may also start to follow suit. They may build features for more user privacy. And this would end up becoming a deterrent for advertising platforms, and also have an impact on their effectiveness.

Small businesses should invest and grow other channels of lead gathering. Organic traffic and leads usually end up being of higher quality more often than not. They also result in better conversion rates, as well as higher retention rates. This is the perfect time to figure out a strategy to grow and drive organic traffic, now that they cannot be fully dependent on Facebook ads to help them bring new customers.

It serves well to refocus on building and growing email lists and campaigns. Email marketing might seem like an old-school tool but the truth is, it still works. Retention of existing customers costs way lesser than acquiring new ones. And email campaigns are a great way to do that.

In the near future, we will more likely see an added focus on privacy and user data protection. It only makes sense for businesses to keep an eye out for these. And even anticipate them so that they are not caught off-guard.

The best way to counter the effects of such changes is to have a marketing plan and strategy that is diversified, and not extremely dependent on a single channel or platform.