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| DATE | 2021-01-29 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout - NYLXS] You cat the Prodcut
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https://www.wsj.com/articles/apples-privacy-change-will-hit-facebooks-core-ad-business-heres-how-11611938750?mod=hp_lead_pos6
Apple’s Privacy Change Will Hit Facebook’s Core Ad Business. Here’s How.
Patience Haggin, Keach Hagey and Sam Schechner
8-10 minutes
Facebook Inc. FB -3.34% will suffer damage to its core business when
Apple Inc. AAPL -4.46% implements new privacy changes, advertising
industry experts say, as it becomes harder for the social-media company
to gather user data and prove that ads on its platform work.
Facebook warned this week that Apple’s new feature, which is expected to
roll out this quarter, will pose risks for its business, but the company
hasn’t detailed how it is exposed. Facebook in August pointed to a small
corner of its business that facilitates ad placements on third-party
sites and apps. It has also played up how the change would hit small
developers.
The core of Facebook’s business, its flagship app and Instagram, would
be under pressure, too. The Apple change will require mobile apps to
seek users’ permission before tracking their activity, restricting the
flow of data Facebook gets from apps to help build profiles of its
users. Those profiles allow Facebook’s advertisers to target their ads
efficiently.
The change will also make it harder for advertisers to measure the
return they get for the ads they run on Facebook—how many people see
those ads on mobile phones and take actions such as installing an app,
for example.
“The market dynamics here are going to shift heavily,” said Simon
Poulton, vice president of digital intelligence at WPromote, a
digital-marketing agency. “If you are marketing on Facebook and the
results are going down because the efficiency is going down, you are
going to turn that down.”
The chief executives of Facebook and Apple traded public barbs this week
over the change. Facebook has aggressively pushed back against Apple’s
plan. On an earnings call Wednesday, Facebook Chief Executive Mark
Zuckerberg said, “Apple has every incentive to use their dominant
platform position to interfere with how our apps and other apps work.”
Apple has defended its policy, saying it is giving priority to user
privacy. An Apple spokesman declined to comment further. Without naming
Facebook directly, Apple CEO Tim Cook condemned “conspiracy theories
juiced by algorithms” and tied recent social unrest to an argument that
app-tracking tools are turning consumers into advertising products.
“ “The market dynamics here are going to shift heavily.” ”
— Simon Poulton, WPromote
The extent of the potential financial impact on Facebook, which
generated $86 billion in revenue last year, isn’t clear. The company
said it expects revenue to be stable in the next two quarters. In the
past year, Facebook’s business has thrived despite the coronavirus
pandemic and a boycott by several advertisers over hate speech on its
platform.
Eric Seufert, an analyst and marketing strategy consultant who has
studied Facebook’s business, said he expects the company to take a 7%
revenue hit in the second quarter as marketers spend less and ad prices
decline as a result of Apple’s change.
The fight is happening as Facebook and other tech giants are under
antitrust scrutiny over their dominance. Companies looking to forestall
action by regulators in such situations often argue they face
substantial competitive threats in the marketplace.
“As we have said repeatedly, we believe Apple is behaving
anticompetitively by using their control of the App Store to benefit
their bottom line at the expense of app developers and small
businesses,” said a Facebook spokesman.
Part of the power of Facebook’s business is how it gathers data from
mobile apps—what people do on the apps, what they search for, what they
buy and more. More than 85,000 iOS apps had installed Facebook code that
relays data back to the company as of December, according to analytics
firm MightySignal.
The data is often coupled with a unique Apple identifier for the app
user—a string of numbers and letters that helps Facebook identify
individuals, allowing it to add that data to their profiles, or
“identity graph.” App data makes up about 15% of user profiles,
WPromote’s Mr. Poulton estimates.
Apple’s planned privacy change will mean that apps can’t pass along that
identifier without users’ permission, thereby limiting what Facebook can
glean.
Ad buyers say Facebook’s insight into app usage is part of its value
proposition. That data lets Facebook better optimize ads to the people
most likely to become lucrative customers, saving advertisers money in
the long run. For instance, a mobile game dependent on in-app purchases
can target ads at users with a history of heavy in-game spending.
Many apps are dependent on highly targeted ads to drive downloads.
Dating app Bumble Inc. cited the coming Apple change as a risk factor in
its filings for an initial public offering and predicted that 20% or
fewer of its users would opt to be tracked.
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Apple’s restrictions will also strike at Facebook’s ability to show how
well its advertising works. Facebook gives advertisers metrics such as
how many people who viewed an ad in the past week went on to buy the
advertised product. The company relies on Apple’s identifier to get this
information on iOS mobile devices—which account for a significant
portion of Facebook activity: Among U.S. smartphone users, 45.3% used
iPhones in 2020, according to Statista.
Madan Bharadwaj, chief technology officer and co-founder of Measured, a
marketing measurement company, estimates that Facebook will only be able
to claim credit for about 50% of the sales it currently does, as a
result of the change.
“It’s going to have a huge impact on the total amount of revenue, or
conversions, that Facebook can attribute to itself, which is basically
the signal that all advertisers use for making investment decisions,” he
said. “It’s going to drop their performance metrics hugely.”
In August, when Facebook first warned of the coming Apple change, it
pointed to Facebook Audience Network, a small part of its business that
facilitates ad placements on websites and apps.
Apple’s move is part of a broader tightening of privacy rules in the
digital advertising ecosystem, from government regulations in Europe and
California to Google’s announced plans to get rid of third-party
“cookies,” bits of code used to track users on desktop browsers.
In the fall, Facebook warned its partners that “upcoming digital privacy
initiatives affecting multiple browsers will limit businesses’ ability
to measure people’s interactions across domains and devices,” according
to correspondence viewed by The Wall Street Journal.
The silver lining for Facebook, Mr. Poulton said, is that its
competitors will also be hurt by the Apple change, particularly those in
the business of serving automated, or “programmatic,” ads in real-time
across the web. Marketers who want to shift spending away from Facebook
may scan the landscape of options and say, “‘Facebook—it’s not as good
as it once was, but it’s better than this,’” Mr. Poulton said.
How Apple and Google Formed One of Tech’s Most Powerful Partnerships
0:00 / 8:03
5:31
How Apple and Google Formed One of Tech’s Most Powerful Partnerships
How Apple and Google Formed One of Tech’s Most Powerful Partnerships
Apple and Google have one of Silicon Valley’s most famous rivalries, but
behind the scenes they maintain a deal worth $8 billion to $12 billion a
year according to a U.S. Department of Justice lawsuit. Here’s how they
came to depend on each other. Photo illustration: Jaden Urbi
Write to Patience Haggin at patience.haggin-at-wsj.com, Keach Hagey at
keach.hagey-at-wsj.com and Sam Schechner at sam.schechner-at-wsj.com
--
So many immigrant groups have swept through our town
that Brooklyn, like Atlantis, reaches mythological
proportions in the mind of the world - RI Safir 1998
http://www.mrbrklyn.com
DRM is THEFT - We are the STAKEHOLDERS - RI Safir 2002
http://www.nylxs.com - Leadership Development in Free Software
http://www.brooklyn-living.com
Being so tracked is for FARM ANIMALS and extermination camps,
but incompatible with living as a free human being. -RI Safir 2013
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