Apple's at it again. In 2021, the tech giant formally began its campaign to protect user privacy (a.k.a nuke digital advertising) with the iOS 14 update, which allowed Apple users to turn third-party tracking off, and then killed email open rates with the iOS 15 update.
Now, Apple's iCloud Private Relay is in beta, and eCommerce brands will now have to contend with masked IP addresses, which will pose major challenges to attribution.
At the time of writing, the iCloud Private Relay only affects Safari users who have enabled the relay. But given Apple's track record, we can expect more extensive privacy features to follow.
So what will the iCloud Private Relay mean for marketers? We'll get to that. But first, if you're not familiar with it already...
What is iCloud Private Relay?
iCloud Private Relay is a privacy feature for iCloud+ subscribers that hides part of your user data from network providers and websites.
The relay prevents the creation of complete individual browsing profiles because you will only have partial access to who someone is and what they are doing.
How iCloud Private Relay works
Although iCloud Private Relay is a privacy feature, it's not the same as the internet privacy features we're familiar with. The relay isn't a VPN, corporate tunnel, or geo-hopping. So how is it different?
The relay encrypts all your communications and uses transport mechanisms to introduce an intermediary–Apple and its partner infrastructure–before network traffic data reaches a website. So, the data from your device is sent to Apple's infrastructure, and it is encrypted before it reaches a website.
The websites you're visiting are hidden from network operators (i.e., your ISP). Apple's iCloud Private Relay means you're also protected from legacy connections and sites that aren't using HTTPS (although most modern websites do).
Here's the step-by-step process:
- User connects to their browser and their Apple device encrypts the connection to the website
- The device relays the connection to Apple. Apple knows the user's IP but not the website they're visiting.
- Apple masks the user's IP address with a temporary one.
- Apple relays the user's connection to a different server–one that is not managed by Apple itself (e.g., by Cloudflare).
- The third-party does not know the user's IP address (they only have Apple's temporary IP, which gives an approximate location), but it does know the destination websites that the customer visits.
So, this relay prevents any single party from having enough data access to profile a user.
How Private Relay Differs from VPNs
VPNs and Private Relay both protect privacy, but the two function differently.
Private Relay doesn’t have device-wide encryption
Standalone VPNs encrypt all the information from your device and assign new IP addresses before connecting you to the intended website. In contrast, Apple’s Private Relay only encrypts information sent from your Safari browser, in addition to a small part of app traffic and DNS-related traffic from your device (secured with DNS monitoring).
Private Relay doesn't support geo-hopping
VPNs are famous for letting you overcome geo-blocking–i.e., geographic restrictions that limit your access to certain content. Private Relay, however, does not include geo-hopping features–your temporary IP will be local or at the country level. So, it can’t be used to access Netflix France from the USA.
Multi vs. dual-hop architecture
Apple's Private Relay follows the 'dual-hop' architecture with separate internet relays that we described earlier: the first hop gives you a temporary IP, and the second uses a third-party service to decrypt the website name.
VPNs, however, connect you through a series of servers before sending you to the intended website–this is called multi hopping.
The Effect of iCloud Private Relay on Attribution Models: The Scary News
While Private Relay is currently only used in some Safari users, it can have dire effects on attribution models.
For iPhone iOS and Mac users who have the functionality enabled, there is no way to track anything except last click attribution.
This means that marketers can't use reliable attribution models to understand user behavior for iOS and Mac users. Unfortunately, there's no direct workaround for this problem yet. Business leaders will instead need to reduce third-party data reliance, and make better use of zero and first-party data in order to retain customers.
How to Prepare for Private Relay’s Impact
Private Relay is going to impact your brand. While it won’t have an immediate impact like iOS 14, you should prepare now because we expect Private Relay to eventually get rolled out for all iOS users over the next 12 months. As a result, preparing sooner rather than later (i.e., as soon as possible) is crucial to stay ahead of the competition.
Leverage Your Zero-Party Data
Zero-party data is the information you collect directly from customers with their deliberate consent. This includes the data you collect from surveys, questionnaires, customer profiles, and subscription information.
Zero-party data is an invaluable asset that helps you personalize your campaigns and improve your customer's experience. In fact, at Daasity, we don't consider zero-party data to be an optional asset; brands that don't collect ZPD are temporary at best. This is because of two core reasons:
- Successful brands must be customer-first. You can't truly know what your customers want without collecting zero-party data.
- Privacy initiatives have come for third-party data, and they're only going to become more stringent. If you don't start leveraging zero-party data, you won't have enough insights to improve the customer experience.
Collecting zero-party data isn't difficult, either. But it's important to be intentional about ZPD collection. You can consider collecting it from:
- Social media: You can reach out to large groups of people and get their thoughts and suggestions. Social media also makes it easy to access demographic information, customer profiles, and information about the latest trends.
- Your website: You can use conversational web pop-ups to collect customer information in a natural way.
- Your marketing: By sending polls and quizzes to individual customers, you can create zero-party data-backed profiles and show them products more relevant to their preferences.
Leverage Your First-Party Data
First-party data (1PD) is the data such as purchase history, personal (contact) information, subscription data, discounts used, onsite browsing data, and loyalty program data.
Like zero-party data, 1P data comes directly from your customers, so it helps you better personalize their experiences and segment your audiences.
For example, purchase history is a type of first-party data that can help you provide customers with relevant upsell and cross-sell offers. It also helps eCommerce brands identify which customers have a higher LTV and are willing to spend more.
You can get the most out of your first-party data by combining it with RFM analysis. RFM sorts customer behavior into three segments:
- Recency - the customer's last purchase
- Frequency - how often customers buy from you
- Monetary - how much your customers spend
There are multiple ways to run a RFM analysis and bucket customers within the framework, but at Daasity, we score customers on a scale of 1-10, with 1 being the best.
This helps you refine your marketing strategy by focusing on high-value customers (those who scored 1 or 2) and nurturing mid-value customers, bringing them over to HVC territory.
Focus on Building a Community and Culture
There are serious ROI benefits to building your own engaged customer community–it can result in a sky-high ROI of 4000x. But there's an important caveat to benefiting from community marketing: your customers must be active and engaged.
Successful communities include an active subsection of your customer base, or users who frequently engage with your brand and are highly valuable. However, only 18% of the average customer base falls under this category (the insider category).
Fortunately, on average, 51% of a brand’s customers aren't too far off, as they fall under the 'supporter' category. These customers engage with your social media accounts and even engage with your community and other members. However, they aren't as loyal or dedicated to your brand as insiders.
So, you can get the most out of your community marketing efforts by:
- Nurturing your supporters: Engage with them and focus on strengthening your relationships, so you can convert them into insiders.
- Helping your insiders help you: Provide them with opportunities and incentives to promote your brand, e.g., customer rewards and loyalty programs
Blog content is the digital embodiment of a marketing strategy that has existed since print; information marketing. With information marketing, brands can lead with value and strengthen brand awareness by educating customers about their pain points (and how those pain points can be solved).
Instead of focusing on hard sells, you can guide customers and help them choose products that are right for their needs.
Informative, valuable blog content helps you create a more loyal customer base, too. You can earn your customers' trust by helping them arrive at the right solutions.
And in the age of growing privacy restrictions, search engine optimization (SEO) remains one of the most effective, sustainable strategies for engaging with your ideal customers.
After all, unlike social media advertising, SEO brings customers to you through search intent.
How Daasity Helps Brands Navigate Privacy Restrictions
If you're hearing about us for the first time, hi! We're Daasity, the eCommerce data and analytics platform for the fastest-growing consumer product brands. Our customers leverage Daasity to centralize all data, which gives them a headstart in planning for privacy trends.
Daasity is at the forefront of data analytics, and we provide a single, unified view of your most important data. We collect data from your whole tech stack, empowering you to make data-driven decisions and push important data into relevant marketing channels.
Having a centralized, accurate data picture will separate the brands who survive the privacy wars from those who don’t. And Daasity helps you not only survive, but thrive.
Want to learn more? We’d love to show you a demo.