That Apple graph.
And the increase in digital advertising inequality.
Last week the FT reported that since Apple implemented their privacy approaches (namely ATT) that their ad network has thrived.
If you go on to read further into the article it has quotes such as;
EasyPark is one app that has doubled its spending with Apple since April. Caroline Letsjö, head of brand, said the strategy resulted in an “all-time high in ad conversion rate,” while the efficiency of reaching iPhone customers via Google “has suffered and thus we have decreased our budget”.
Is this interesting?
Eric Seufert does a great job in explaining how this data can be misinterpreted so I won’t re-hash his excellent analysis but the direction of travel for Apple has ramifications for the wider ad-funded internet.
My industry work, conversations and reading skews towards big advertisers with vast sums of money. These brands can create significant opportunities for digital advertising to drive business by investing in a raft of data-driven functions (you, dear reader, likely know this!). But when I think of the 7 million other advertisers on Facebook and similar ad platforms, how many of those can afford to do the same?
Given they likely cannot invest in things such as brand studies, attention surveys, marketing mix modelling, clean rooms, robust incrementality studies etc, they are HEAVILY reliant on what bundled platforms tell them is and isn’t working.
Inequality is the difference in social status, wealth, or opportunity between people or groups.
The increase in digital advertising inequality (i.e those that can afford to undertake custom measurement analysis and be more predictive in approach vs those who can’t) seems more obvious than ever and that’s a little terrifying as it’s being created by the same companies who benefit from it (i.e own the measurement in a fairly restricted/blackbox way and make money on the ad spend).
It sometimes feels like we live in multiple parallel universes in advertising, one minute you need to know the latest small update on Instagram and the next you’re supposed to be signing multi-million dollar deals with open-source tech vendors - all supposedly THE MOST IMPORTANT THING TO KNOW THIS WEEK. It’s stressful but it’s because of how companies are supporting different parts of the industry.
Essentially, I think what we’re seeing are suppliers and intermediaries in advertising polarising to supporting one side of the equality threshold and that means large buyers need to balance a bit of everything across the supplier/intermediary spectrum (i.e using walled garden ‘free’ tools as well as leveraging expensive brand studies) whilst the smaller-medium buyers simply cannot afford to do much of the custom/expensive stuff.
Where there’s inequality there’s exploitation - history has shown us this, but specifically in digital advertising many buyers and sellers have been thrown to the mercy of decisions made by a handful of companies. Disagree? You just need to look at the distribution of wealth on the NASDAQ for proof. Their incentives? Largely stakeholder driven. It is how the system is setup to work and really buyers can’t bemoan their luck, they need to operate around that (they do all present great opportunities just at a cost of doing business on their terms), at least for the foreseeable future whilst hopefully putting some pressure on some of these moves - the industry can’t just rollover and accept everything!
Finally, Snap released their quarterly earnings yesterday (Thursday 21st of Oct) citing the impact that Apple Privacy changes were having on their ads business and are down 30% at time of writing. Facebook, Twitter and others also felt some impact from this (Facebook earnings next week, will be interesting to see what they say).
These short-term market swings support my points about the buyer inequality, as investors see that these ads businesses are made up of buyers who primarily rely on what the platforms tell them.
When you extrapolate this out into economic impact around jobs, shareholder value loss (or potentially just moving it into a different company, one which aggressively avoids tax) it’s fascinating. And hey, all because of some ads!
Interesting times, just need to be careful when we see people talk about the ‘industry’ as it’s an all encompassing term and one which should consider all stakeholders.
Some good articles
Why regulators can’t save you from the Apple ad powerplay by Ciaran O’Kane (really agreed with this)
IPA Bellweather report came out this week (always good to follow)
Quo Vadis Portfolio update by Tom Triscari (one of my favorite people to read)
Finally, something for charity
The Programmatic Advisory team + friends (I would love for you to join our ‘Keep Moving’ Strava challenge!) are aiming to each walk or run 100km throughout November to raise money for Cruse, a bereavement charity based in the UK.
You can see why we’re supporting this important cause and why we’re doing 100km here - https://firstname.lastname@example.org/why-were-doing-keep-moving-100km-november-challenge-for-bereavement-charity-cruse-b423b6ba58a5
Stay safe, stay positive and hopefully see you soon.