Already hard hit by a global pandemic and the rise of large ecommerce companies like Amazon, small businesses will have yet another problem on their hands: Apple’s new iOS update.
Following through on its commitment to protect user privacy (at the expense of advertiser revenue), Apple’s recent iOS 14 update requires developers to ask users for permission to track them for advertising purposes instead of automatically allowing apps to have tracking permissions. This will make digital advertising for small businesses much less effective, while also limiting the reach of ads.
Facebook has been an extremely vocal critic of Apple’s new policy. In a recent post titled Speaking Up for Small Businesses, Facebook’s VP of Ads and Business Products Dan Levy, states that “Apple’s new iOS 14 policy will have a harmful impact on many small businesses that are struggling to stay afloat and on the free internet that we all rely on more than ever.”
In response to the criticism, Apple said on Wednesday, December 16, “We believe that this is a simple matter of standing up for our users. Users should know when their data is being collected and shared across other apps and websites—and they should have the choice to allow that or not. App Tracking Transparency in iOS 14 does not require Facebook to change its approach to tracking users and creating targeted advertising, it simply requires they give users a choice.”
How Will Apple’s iOS Update Harm Small Businesses?
Some people may think that Facebook’s “Speaking Up For Small Businesses” stance is just posturing and that coming out against Apple is more of a PR stunt rather than sticking up for small businesses. After all, ad sales are the primary source of revenue for Facebook. And while it may be the case that all Facebook advertisers will be hurt by the update, most likely small brands with small budgets and small teams will have the hardest time coping. Let’s look at the update from the perspective of a local florist.
Your local flower shop is a small mom-and-pop business and most likely a staple in your community. Since they discovered Facebook ads, they’ve been able to increase their sales considerably. Most small companies like that don’t have the budget for powerful websites, TV commercials, and other large marketing initiatives —they rely heavily on Google and Facebook ads to attract customers. Right now, Facebook ads lets companies find the exact people who would most likely be interested in their product, and show them ads relevant to their interests. But that’s only possible because the users have previously given permission for their interests to be tracked.
And while privacy is a big button issue in advertising right now, if you’re interested in finding a local flower shop near you, wouldn’t you want to support your local businesses by buying from them instead of big box stores? Without those tracking capabilities, ads simply become billboards to the masses that people glaze over instead of being shown to the people who are actually interested in the product.
So without those targeting capabilities, small businesses like your local flower shop—businesses that can’t afford powerful social, SEO, and marketing automation campaigns necessary for real conversions—will flounder.
Publishers Will Also Struggle
Around March of 2020, the media industry saw massive layoffs both locally and in national publications as advertisers started pulling their budgets to stave off layoffs in their own companies. The media industry relies heavily on these advertising dollars to survive—and this update will dramatically reduce the effectiveness of ads. Consequently, advertisers will not be able to pay publishers as much as they previously did. As this traditional payment declines, publishers and media companies will be forced to either find other streams of revenue or lay off writers and content producers.
This problem won’t only be seen in large media companies like the New York Times or Washington Post, but on the local scale as well. Local publishers and blogs—which are already struggling to stay afloat—will definitely feel the negative effects of Apple’s iOS update since they rely on ads to keep from going under.
Ecommerce Sites Will Especially Suffer
Many small businesses have found a special and lucrative space in ecommerce. While brick and mortar stores have struggled during 2020 from the pandemic, ecommerce-focused businesses thrived. And it’s not just Amazon and Ebay that are thriving. Clever entrepreneurs, young and old, have figured out how to source their own products and create their own employment.
Shoes stores, illustration services, and book authors are just a couple niches among the thousands that have used Facebook’s highly targeted ads to build a living for themselves and deliver fantastic products to their customers that weren’t previously available. Apple’s iOS update will dramatically cut the reach of these businesses, since many of them rely heavily on Facebook ads to exist.
And while Facebook has put out recommendations for how small businesses can weather Apple’s updates, it won’t be a while until we see the full ramifications of how these ads impact companies.