How Apple’s New Privacy Effort Will Impact Travel Marketing

Apple plans to tighten its privacy practices in a way that will undermine the ability of travel companies and other businesses to run semi-personalized advertising campaigns.

Apple is set in the coming weeks to release a new operating system, iOS 14, that will require app developers to get users’ clear consent to track their online behavior. The change affects players that place ads in apps on behalf of brands, such as placing ads for an online agency in a dating app.

“Now that users must opt-in before tracking them, technically all tracking methods go out the window,” said Quentin Lederer, chief operating officer of WIHP Hotels, a marketing specialist.

Digital marketing agencies and platforms like Google via its AdMob business will no longer collect a person’s advertising identifier on Apple devices without the person’s permission. Apple’s ad identifier is a set of numbers that many companies use to reveal how shoppers research and buy online.

A screenshot of Apple’s new controls for privacy settings in its iOS 14 operating system debuting in September. Source: Apple.

Apple has touted the move as a plus for consumers, giving them greater transparency about privacy and data sharing. Apple will also demand that app developers, such as travel brands, disclose what data they collect and who their data-sharing partners are.

We reached out to Apple for comment but didn’t hear back by publication time.

The question for travel brands is how many consumers will opt out of ad targeting and tracking on iOS devices.

“If consumers clock out in large numbers, travel marketers should think more about capturing and leveraging first-party data, rather than the traditional reliance on third-party as we know it,” said Carlisle Connally, vice president of marketing at Koddi, which offers advertising technology for travel companies.

First-party data refers to email addresses, phone numbers, and other information consumers agree to share directly with companies in exchange for things like loyalty program benefits. With Apple changing the game, this data will be more valuable, but some travel marketers will have to up their game in using it.

“By and large, travel brands activate their first-party data and additional data opportunities not as well as they think that they do,” Sooho Choi, executive vice president and global head of travel and hospitality at Publicis Sapient, a digital transformation consultancy.

“Whether that be via technology, or channel interactions, or overlaying data aggregator’s information against loyalty data and bringing that to life in a much more personalized way, the travel sector’s efforts could be much more differentiated and much more targeted than they are today,” Choi said.

Apple’s ad market is significant but not huge. Yet it’s the latest in a series of privacy clampdowns, such as Google’s plan to sunset tracking cookies, U.S. lawmaker worries in recent months about so-called bitstream data from ad auctions, and Europe’s ongoing clampdown on privacy issues.

Here’s a breakdown of how Apple’s seismic move will shake different parts of the travel industry, followed by some potential workarounds.

Hoteliers Face a Challenge

Many hotel companies have recently pushed for consumers to book directly on their sites rather than through third-parties, which charge commissions. Apple’s new rules will make it more challenging to measure these “book direct” campaigns.

“The impact [of Apple’s move] will be not allowing travel advertisers, like WIHP on behalf of hotels, to see the full picture of what is happening with their campaigns,” Lederer said.

Hoteliers track two types of reservations on their sites, broadly speaking. One kind is immediate direct reservations, meaning that the user clicked on a digital ad campaign in a mobile app and made their reservation on a hotel’s site straightaway. The ability to track these direct reservations won’t be too much of an issue because hoteliers have alternative methods for attributing which ad campaigns led to sales.

The problems arrive with other types of reservations, specifically ones where the user clicked on the campaign but only came back, say, weeks later to reserve a room on the hotel’s site.

“Those reservations, which account for roughly 30 percent of all reservations being tracked, depending on the campaign type, will be impossible to track moving forward if the user doesn’t opt-in,” Lederer said.

Destination Marketers Face Changes

Many destination marketing organizations (DMOs) may need to mix up their digital marketing techniques after these iOS changes.

Tourism promoters usually lack email addresses and other “first-party” data from consumers. Some analysts argue that these organizations need to respond to Apple’s privacy changes by creating data hubs with regional travel companies, like hotel groups that have lots of customer data.

“The DMO regains the data advantage away from the walled gardens while at the same time providing a deterministic and cohesive view across channels,” said Charles Mi, CTO of data consortium Adara.

Another option is so-called “connected TV,” where people use the internet via logged-in services.

“When people are watching video on an internet device, such as watching a streaming Netflix series on an Apple TV, a destination marketer could offer relevant pitches to travelers based on their logged-in, online behavior,” said Dave Goulden, vice president of product at Sojern, an ad-tech firm focused on travel marketers.

Airlines May Need to Adjust Course

Airlines often used mobile in-app advertising to prompt consumers to “re-engage” with their apps if they haven’t used them in a while, as a way to encourage people to book their travel directly.

“We’re going all-in on email being a key identifier, working with all our partners to collect that information,” said Goulden of Sojern.

So-called hashed emails let vendors match customer records across databases without explicitly sharing customer email lists between companies. Vendors semi-anonymize, or “hash,” an email address by converting it into a string of numbers.

For example, when a consumer logs into a site like Amazon with their email address, an ad-tech firm could use a hashed version of that email address to see if the same email address was used to sign up for, say, an airline’s frequent flier program.

Email isn’t the only identifier that can help. Phone numbers, addresses, and membership information can also serve a purpose.

“Travel brands are in a better position than most to cope with Apple’s privacy changes due to already robust loyalty programs,” Connally said.

Online Agencies Also Affected

Online travel companies have often used ads in non-travel apps to encourage people to install their apps. Those ad campaigns will need to shift to elsewhere, such as Facebook and Instagram, where they can better target potential app users.

Travel ad networks that run campaigns across apps on behalf of brands, such as ads for, say, Airbnb-backed HotelTonight on the dating app Tinder, stand to lose the most in the short-term. They may be less able to track ads, which will likely cost them business from the travel conglomerates.

Travel Brands Will Lean More on Loyalty

Some analysts believe the need for identifying customers for better digital marketing will help speed up the development of loyalty programs.

“Loyalty programs give people an incentive to register their emails, which provides the authentication you need to continue to market to them,” said Goulden of Sojern.

“This opens up opportunities for loyalty programs that cut across smaller brands, such as hotels and attractions operators coming together around loyalty,” Goulden said.

Travel Brand Ad Networks and Data Cooperatives

Apple’s move will prompt the travel sector to reach for some other ideas in their marketing playbooks.

“What was once a tech-driven strategy will evolve into a ‘back-to-the-basics’ approach based around content and creativity,” Connally said. “The sector will be leveraging traditional key performance indicators like click-through rates, etc.”

Apple’s new move may speed up a rising use of identity linking solutions and authenticated traffic solutions from various companies to enable “people-based” identification.

The scale of these new identifiers won’t be as big as the old model.

“You’re not going to log in to every app you download or site you visit, and that’s okay,” said Travis Clinger, senior vice president and head of addressability and ecosystem at LiveRamp, which focuses on advertising tech and data connectivity. “We don’t need to have that across the board because a small amount of people-based identification gives you enough information.”

The change in ad tracking in apps may also benefit smaller publishers.

“Travel brands have an opportunity to start joint media network propositions where they’re working together with third-party data partners to create a consent-based way to run long-term ad campaigns and communications,” said Ray Velez, chief technology officer at Publicis Sapient. “It could be travel blogs or other types of publishers, where you can deliver relevant ads to users, though getting alignment on how to interpret regulations would take some work.”

One source of inspiration for the cruise lines, hotel operators, online travel agencies, and other travel companies might be CVS Pharmacy, which last week launched a media network to sell advertising directly to marketers, including in-store signs, banners on the CVS.com website, programmatic display ads, online video, social media, and search.

Expedia Group Media Solutions, the advertising arm of the travel conglomerate, is another example.

“Third-party data from the offline world can be valuable,” Clinger said. “I’m a Travel and Leisure subscriber. I also traveled a lot for work before the pandemic. I’m in a lot of third-party databases. That can still help reach mobile in-app inventory when it’s made addressable through ATS [authenticated traffic solutions].”

Smaller travel blog empires, such as Boarding Area, Cranky Flier, The Points Guy, and Matador Network, might gain from the broader shift to identity-based tracking. While blogs and niche media networks may seem small compared in size compared to, say, Fox News, they often have many readers who visit daily and have signed up for emails.

“These smaller publishers often have huge log-in rates, but there are sites in the long-tail with dedicated audiences,” Clinger said. “They used to be hard for major advertisers to advertise on due to their small size, but because they have lots of first-party data and so they may have a tailwind here.”

Lessons from Europe?

Given that Europe recently adopted General Data Protection Regulation (GDPR), how has ad tech has responded to that shift? Can advertisers outside of Europe draw lessons for the similar privacy issues arising elsewhere?

“Currently, GDPR is not fully in place for most independent hotels or chains,” said Lederer of Paris-based WIHP. “On top of this, each party seems to have a different opinion on what ‘personal data’ means. Some hotels believe that they need to get approval from the user for Google Analytics tracking, and some don’t, as you can anonymize IP [internet protocol] tracking in Google Analytics.”

“We see there is a rough 30 percent of users who opt-in to tracking when requested,” Lederer said. “GDPR needs to be clarified with a deeper understanding of what can and can’t be tracked without consent. If this was clarified with a better understanding, ROAS tracking could eventually be simplified to only pick up ‘non-personal data’ to avoid needing consent.”

In response, ad tech players have aimed to create more standardized best practices for collecting data with the Interactive Advertising Bureau’s Transparency Consent Framework, which Google signed onto this year.

Expect New Tools

A realignment in travel marketing and ad tech is in the cards. For one thing, more holistic measurement tools will be needed.

“Apple’s changes also have opt-in requirements for marketers that want to evaluate user acquisition efforts against revenue, retention, or user behaviors versus just app installs,” said Mike Herrick, senior vice president of technology at Airship, a customer engagement platform.

For marketers, Apple’s recent announcement creates yet another wall for attributing how effective campaigns are.

“This impacts not only the amount of data available for measurement, but also introduces bias to the data used for attribution, since the only user level data tracked would be from consumers that choose to opt-in,” said Maggie Merklin, executive vice president at Analytic Partners, a marketing measurement and consulting firm.

Many travel companies have yet to adjust to a world where first-party data is central and “person-based” identification is common.

“If you’re a travel brand, it’s much easier if you can make one API call and get back the identity from four identity providers in a single response versus key off all four,” Clinger said. “The ad tech ecosystem has to get there.”

For app developers, other tools may pop up. Kochava, an analytics provider, is encouraging brands to use so-called actor-specific identifiers, which uses tokens and its data marketplace as a workaround.

Expect new ways of gathering information from the booking engine on a hotel’s site, for instance.

“Server-to-server tracking might work to avoid having any scripts installed on the booking engine, and that could enable tracking without any consent needed,” Lederer said.

A few industry observers said the unintended effect of these privacy moves by the tech giants may be to concentrate their power.

“One unintended consequence of GDPR-like regulations is that walled gardens like Facebook, Google and Amazon have gained a greater share of advertising dollars as data at their disposal — across massive networks — is considered first-party data with authentication unifying it all within their walls,” Herrick said. “While obviously attractive to advertisers it puts more power in the hands of a few…and we’ve seen how that plays out for brands over time.”