1. Navigating Apple’s iOS 14 Update
W H A T A D V E R T I S E R S N E E D T O K N O W A N D H O W T O P R E P A R E

2. I N T R O D U C T I O N S
Meet the Authors
Tanner Heslop
Associate Manager,
Media Services
Michael Goodwin
Business Manager
Christine Cerniglia
Senior Manager, Media
Services
Anna Otieno
Head of Strategy &
Insights
DJ Sutton
Associate Director, Media
Services
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3. New Engen is a modern, integrated marketing agency that helps brands at all
maturity levels – from heritage to disruptor – to learn, evolve, and thrive. Above
all, in an uncertain and ever-changing marketplace, we remain agile and
strategic partners for our clients. We leverage creativity, media expertise, and
technology to accelerate the adaptation of ideas and executions to achieve
breakthrough results in advertising.
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About New Engen
MEDIA
SERVICES
INSIGHTS &
ANALYTICS
CREATIVE
SERVICES

4. To date, one exhaustive federal law that governs data
privacy in the United States does not exist. Rather, there
is a combination of topic based, industry based (i.e.
health info, financial info, telecommunications,
marketing, etc.) and state (territory, locality) specific
policies and laws. For example:
• Federal Trade Commission Act (FTC) - federal
legislation to promote fair competition between
businesses and protect consumers against fraudulent
business practices - for example, misleading
advertising practices or privacy policies
• Fair Credit Reporting Act (FCRA) - federal law that
regulates collection of consumers’ credit information
and access to their credit reports
• Health Insurance Account Portability and
Accountability Act (HIPAA) - federal statute that
protects sensitive health information from being
released without consent and knowledge of patient
• State Specific Policies and Laws
California Consumer Privacy Act (CCPA)
Enhances privacy rights and consumer protections for
California residents (Jan 2020).
General Data Protection Regulation (GDPR)
European Union law on data protection and privacy.
Places control in the hands of consumers with the “Right
to Erasure” or “Right to be Forgotten” (May 2018).
New York SHIELD (Stop Hacks and Improve
Electronic Data Security) Act
Update to existing data breach notification requirements
(Oct 2019) and expansion of data security of privacy
information for New York Residents (March 2020).
Background on privacy
R E C E N T D A T A P R I V A C Y P O L I C Y &
L A W S
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5. Background on iOS 14
During their annual Worldwide Developers
Conference in June 2020, Apple announced the
fourteenth major release of the iOS mobile
operating system: iOS 14.
As a part of this release, Apple announced several
new features and changes intended to give
consumers more control over their personal data.
Of particular importance are the changes related to
Apple’s Identifier for Advertisers, or IDFA.
For Apple, iOS 14 represents the latest
development in a years-long shift in emphasis on
user privacy. After they were sued for mobile
privacy breaches in 2010, Apple has regularly taken
steps to limit the data passed back to advertisers
and increasingly put control in the hands of iOS
users.
The trend towards consumer privacy is not limited
to Apple properties. As with the California
Consumer Privacy Act (CCPA), state governments
are also beginning to push for greater data privacy
protections and oversight.
As data privacy and ownership continues to build
momentum, we should expect to see more
changes.
In addition to the shift towards consumer protection
and privacy, many, including Facebook, argue that
the reason behind this update is to incentivize app
developers to charge their users for their app,
instead of relying on ad revenue.
Apple has a 30% tax on all purchases made in-app
or in the App Store for businesses with revenue over
$1M. For businesses making less than $1M in
revenue, it’s 15% of all purchases. While Facebook
may not put up a paywall, some believe that iOS 14
will be a net positive to App Store revenues.
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6. W H A T I S I D F A T R A C K I N G ?
Apple’s Identifier for Advertisers (IDFA) is a
privacy framework created by Apple that uses
unique identifiers to allow apps and marketers to
track user activity at the device level. IDFA-tracked
data provides advertisers like Facebook with deep
visibility into user behavior, allowing them to tailor
ad delivery to users on Apple mobile devices using
a wide range of targeting parameters.
While IDFA has been in use for some time and app
developers have been able to access it by default,
new changes in the iOS14 update mean Apple
mobile device users will now receive an in-app
prompt called AppTrackingTransparency (ATT),
asking them whether they would like to allow that
app’s developers to access IDFA-tracked data.
W H Y I S T H E A T T P R O M P T
S I G N I F I C A N T ?
The ATT prompt marks the first time users will be
opted out of IDFA tracking by default at the app
level. Even if they opt in via the prompt, an
estimated 20% of Apple device users will still not be
able to grant advertisers access to their IDFA due to
other privacy settings, notably the Limit Ad
Tracking (LAT) feature.
LAT is a separate setting in Apple mobile devices
that effectively opts users out of sharing their IDFA
with any app on that device, and supersedes
individual ATT prompts if users attempt to opt in.
The inevitable drop-off in users opting into IDFA
tracking will leave Facebook with severely reduced
access to a bevy of user data that feeds its algorithm
and helps it determine how to serve ads to billions
of users daily.
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7. The bottom line of Apple’s
iOS14 update
These changes represent a significant risk to not
only mobile app advertisers, but web advertisers as
well.
While Facebook has found a way to navigate
through privacy policy changes in the past, their
public statements on iOS 14 signal they are
anticipating a meaningful impact to their ads
business, raising alarm bells for advertisers and
investors.
This subject is complicated, and both Apple and
Facebook have been opaque regarding timelines,
as well as specific user and advertiser level impacts.
But, there are actions advertisers can take to
mitigate impact.
No formal announcement has been made as to
when this prompt will begin to appear in iOS 14,
but chances are high that it will come some time in
Q1 2021.
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8. Notably, opting out of tracking is the
prompt default.
Facebook (along with many other apps)
uses device IDs called IDFA to track
behavior (page views, cart adds,
purchases) on other companies’ apps &
websites.
App developers have just a few lines of
text to convince users to allow IDFA
tracking.
iOS 14 will give users the option to block device level (IDFA) tracking on Facebook and other mobile apps
using a prompt like the example below.
What is changing?
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9. H O W D O E S F A C E B O O K C U R R E N T L Y U S E I F D A ?
In current state, Facebook uses IDFA to tie actions on third-party sites (e.g. browsing, add-to-carts,
purchases) back to a user. This allows Facebook to track mobile users in order to attribute conversions and
better understand their interests and purchase habits.
David views ad on iOS device
with IDFA tracking enabled.
The next day, David visits
company website on mobile
browser and purchases product.
Facebook knows from 1P data
that David has been served an
ad.
Facebook tracks purchase via
their site pixel.
Facebook uses IDFA to close
loop and tie purchase to David’s
device and ad interaction.
David is automatically funneled
into Facebook retargeting
audiences.
Facebook leverages data from
purchase to inform targeting
algorithms, LAL audiences, etc.
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10. H O W D O I F D A R E S T R I C T I O N S A F F E C T T R A C K I N G ?
With IDFA restrictions, Facebook will have a more difficult time tying actions (e.g. purchases, add-to-carts)
on third-party sites back to a user. As a result, they will lose visibility into user behavior, and in some
instances, the ability to attribute conversions back to mobile ad interactions.
David views ad on iOS device
with IDFA tracking BLOCKED.
The next day, David visits company
website on mobile browser and
purchases product.
Facebook is blocked from using
IDFA & may not be able to
attribute the purchase back to
the ad interaction.
David is not included in pixel-based
retargeting lists.
Facebook does not know for certain
whether the ad interaction
contributed to a conversion &
cannot leverage data to improve
targeting.
Facebook knows from 1P data
that David has been served an
ad.
Facebook tracks purchase via
their site pixel.
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11. H O W M I G H T F A C E B O O K A D A P T T O I D F A R E S T R I C T I O N S ?
With a reduction in IDFA reliability, we anticipate Facebook will attempt to lean on alternate signals from
their mobile web pixel to close the loop. Advanced Match and the Conversions API will be increasingly
important to Facebook as a growing number of users block IDFA tracking.
David views ad on iOS device
with IDFA tracking BLOCKED.
The next day, David visits company
website on mobile browser and
purchases product.
With IDFA blocked, Facebook
looks for alternate identifiers to
tie purchase back to a user.
David is added to retargeting lists
despite having IDFA blocked.
Thanks to Conversions API and
Advanced Match adoption,
Facebook has enough signals to
close the loop & attribute conversion
back to David.
Facebook knows from 1P data
that David has been served an
ad.
Facebook tracks purchase via
their site pixel.
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12. T R A C K I N G S C E N A R I O S
User views ad on
mobile
User purchases on
desktop that day
Not impacted by IDFA. Facebook first-party data informs ad interaction on
mobile devices, and attribution of desktop conversions works if a user has
logged in on a desktop browser within the last 7 days.
User clicks ad on
mobile
User purchases in
same session
Based on our current understanding, this would not be impacted by IDFA. In-
app browser allows for accurate attribution of mobile web purchases, while
Facebook first-party data captures ad interaction.
User views ad on
desktop
User purchases on
desktop that week
Not impacted directly by IDFA, however the deprecation of 7-day view
tracking as an indirect result of IDFA would mean that this conversion no
longer gets tracked.
User clicks ad on
mobile
User purchases in
later session on
mobile browser
Impacted by IDFA. Facebook has utilized IDFA in the past to close the loop on
this interaction, but without access, must rely on alternative pixel signals to
attempt to accurately attribute.
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13. How will Facebook Ads programs be impacted?
A T T R I B U T I O N
Facebook, as well as other ad platforms, will see
diminished accuracy of attribution for iOS users in
certain situations. Expect to see a decline in
conversion volume.
C U S T O M A U D I E N C E S
Many iOS users may no longer be included in custom
audiences. Expect retargeting performance to
deteriorate, and plan for less comprehensive
audience segmentation.
P E R F O R M A N C E
With reduced access to third-party data for iOS
devices, we expect Facebook’s ability to target
these users to decline over time. Lookalike audiences
could see a substantial hit to performance and
mobile-heavy placements, like Instagram Stories, will
see a marked decline in efficiency.
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14. Total Facebook Revenue
Revenue from iOS Devices
IDFA Blocking Users
80% of above iOS revenue**
85% of above iOS 14 revenue***
We can’t say for certain how many users will adopt iOS 14 and opt out of IDFA tracking. However, based on
existing data, we can make some assumptions to arrive at a rough estimate of impacted revenue.
iOS 14 Users
100%
70% of total Facebook revenue*
48% of
Revenue at
Risk
* Revenue by device type will vary by advertiser. 70% estimate is based on an aggregate view of New Engen portfolio data.
**We expect 80-90% of iOS users to migrate to iOS14 or newer platforms by the end of 2021. As of Dec. 15, 2020, 72% of all
iOS devices were using iOS14.
***Most experts project that 85-90% of users will opt out of IDFA tracking.
What is the expected size of impact?
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15. What can you do about it?

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What can you
do about it?
Explore attribution alternatives.
With the loss of IDFA signals, Facebook is going to undoubtedly look for alternative signals to help
them close the loop. Two ways to bolster the signal are with Advanced Matching, allowing Facebook
to pull hashed data from input forms on site (name, email, phone, etc.), and Facebook Conversions
API, and setting up a shop with checkout on Facebook and/or Instagram.
Bolster 1st party data collection.
Drive iOS traffic to unique landing page.
Focus on customer relationship management.
Explore new channels.
As IDFA and other web-browser privacy changes make pixel tracking more difficult and less
reliable, capturing email addresses and other personally identifiable information from customers
will allow businesses to fill in the gaps left by increasingly fragmented pixel coverage.
This will allow internal CRM platforms to still understand and track value added
as long as mobile iOS users are shopping via web browser.
Greater emphasis on CRM, including data upkeep and remarketing strategies, can drive higher
LTV and help offset potential increases to acquisition costs.
While all app-based social platforms will be impacted by IDFA, we believe that Facebook is the most
exposed because of their current wealth of third-party data. Early adopters of new platforms like
Pinterest, Snapchat, Tik-Tok, and Twitter could have a first-mover advantage as more advertisers
begin to diversify spend.
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Segment campaigns by device type.
Diversify creative asset aspect ratio.
Evaluate efficacy of Automatic Placements.
Consider mobile placements as upper funnel driver.
Optimize creative for click-based conversions.
ACTION TO TAKE
WITHIN FACEBOOK
Maintaining parity between devices will allow you to control mobile investment and
performance.
Clients that rely exclusively on square assets may find value in developing portrait
assets for mobile-only campaigns.
As mobile-first placements see a marked decline in efficacy, maintaining placement
parity by device type may lead to more reliable performance depending on client’s
reliance on iOS mobile devices.
If mobile-first placements see a marked decline in efficacy, advertisers will likely reduce
their spend to these placements, which may lead to reduced CPM’s. Mobile-first
placements like IG stories which have high engagement and a low CPM may present
strong upper funnel opportunity.
Including overlaid CTA’s may improve click-based performance for mobile users.
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18. Let’s talk about specific
impacts to your business.
Reach out to your New Engen account team or send us a message at
www.newengen.com/contact.