iPhone 5 Already A “Sell Out,” Will Allow Users To Block Ad Tracking

Last night at the equivalent of a midnight movie opening, Apple

iPhone 5 pre-orders went on sale. Unlike some of my colleagues here at SEL/ML I was not up ordering one. But lots of people were and it appears the initial run of pre-orders has “sold out.” Shipping and availability dates have now been pushed to “two weeks” rather than September 21.

It took the previous iPhone (4S) roughly 24 hours to “sell out” initially. Last night Apple was apparently cleaned out of its first tranche of iPhones in roughly an hour, with a heavy load on servers. Would-be iPhone buyers can still potentially get the devices directly from carriers and from stores on September 21.

Whenever they get them iPhone 5 buyers will discover a setting (under About) that allows them to “limit ad [network] tracking.” At the same time Apple is introducing a new “advertising identifier” that it will compel all ad networks to use. That identifier will allow targeted ads to be delivered to the device. It will also enable the “limit ad tracking” button.

Credit: Apple Insider

Interestingly the “limit ad tracking” setting is off by default to enable targeted ads to appear on devices unless users flip the switch. Apple owns the iAd “network.”

Earlier this year Apple started barring developer and ad-network access to iPhone UDIDs to prevent device-specific tracking. In a parallel episode, Google was fined $22.5 million by the FTC in the “Cookiegate” incident, in which it bypassed default Safari privacy settings on the iPhone. Privacy is and will continue to be a hot topic with consumers and regulators (see also, last year’s Carrier IQ controversy).

It almost goes without saying that the entire online ad industry has done a poor job of educating people about the benefits of targeted advertising (outside the search context). A regular drumbeat of privacy controversies has spawned the “do not track” movement and other anti-tracking initiatives.

Source: Pew Internet & American Life Project (March, 2012)

In addition, consumer surveys have indicated general ambivalence if not hostility toward online tracking and targeting. As one example a March 2012 Pew survey (n=2,000 US adults) found that two-third of respondents did not want to be tracked and targeted by online advertising (see chart above).

Yet people also tend to respond to targeted ads when they see them. This is the difference between abstract attitudes and behavior.

People are even more responsive to targeted ads in a mobile context. Smartphone owners — and especially iPhone owners — tend to be more receptive to targeted ads. Almost the exact opposite of the Pew survey above, a 2012 IAB study found that a majority of mobile users welcomed ads on their devices.

Source: IAB “mobile dairies” study (April, 2012)

Postscript: There are reports that Apple has stopped taking pre-orders for the iPhone 5. However that’s not correct. Pre-orders are still up and available, with the same “two week” delivery estimate. This screenshot was taken seconds ago (noon Eastern time).