So, the endgame is in play. I heard a prominent ecosystem CEO say he was afraid of what Google and Apple would do to his company. He wasn’t speaking colloquially. It was real fear from a normally fearless guy. Data winter is coming.
Both Apple and Google, each in their own way, are sucking critical data out of the online advertising ecosystem. The stated intention of these moves is to improve privacy. Likely, these moves will not improve privacy, but will seriously impair basic advertising capabilities like sequencing, frequency control, targeting and attribution.
Both Google and Apple are offering solutions that mitigate some of the issues they are creating. The solutions are claimed to be effective … by Google and Apple. Any questions?
Understanding what happened requires a narrative. Here’s one.
Google, the big dog in digital advertising, which built a business on knowing what a unique person cares about, is trying to shut down a practice that allows other companies to buy and sell knowledge about what a unique person cares about.
What motivates Google? There are two factors. One is being proactive about privacy -- which might keep governments from fining Google on the basis that its browser (Chrome) is complicit in privacy violation. The second motivation is hurting its competitors.
So Google has used moral high ground to maim its competitors -- and have governments support it. That’s a bit like getting Mexico to pay for The Wall, only real.
Is privacy actually improved by Google’s move? No. In fact, the web is likely to feel more invasive than ever. You will be asked for your email, (a toxic identifier that ties you to your bank accounts, etc.) constantly, and every site you visit will still try to set cookies (first-party).
Apple has a similar story.
Back in more-innocent times, to encourage investment in app development, Apple provided an ID field that would allow a phone to be recognized by an app. The so-called “IDFA” field can help app developers create relevant ads.
Apple is taking away that data on the basis that “tracking” is bad -- except, we guess, when Apple does it.
To quell the betrayed, Tim Cook, in a long speech, told us how horrible it is that users are tracked for advertising purposes. If there is justice, Tim will get nothing but demographically targeted ED ads from now on. It’s a bad idea to stab a million young developers in the back.
Anyway, there’s a much more credible explanation for Apple's move than moral high ground. To grow at its current rate (15% on $260 billion), Apple has to grow by an Oracle, every year. That’s tough. Apple says it has over 1.5 billion devices in-market. Do you think having detailed data on that many people would be instrumental for entering new categories -- like, maybe, automotive? What if Tesla didn’t have that data?
Advertisers are silent, which is odd. Odd because the capabilities that are being compromised are there to protect them from waste. Perhaps they don’t want to sully themselves by appearing to support practices that appear to invade privacy.
Buyers will continue to complain about sellers' monopoly power, but they won’t take risk to prevent it.
Agencies are quiet too, but on the other hand, they don’t hate waste as much as advertisers. Generally, they get paid whether advertising sold a product or not. However, those paid for performance are going to have a nerve-racking year because attribution systems will change.
Governments, apparently, have better things to do. Not because they don’t care, but because advertising and data are too esoteric. Together, they comprise black magic that can get you elected, or arrested. Legislators don’t have a clue how it all works, so there’s really no win. Look stupid on C-Span? Anger the witch doctors? No thanks.
Publishers are center stage, yet also quiet. Publicly at least, publishers are taking solace in the simple idea that before data, there was context, and, by god, they still have context. Contextual targeting will indeed have a second coming, but keep in mind Facebook grew from nothing to 60 billion without any context-based targeting. Why?
Options for Shelter
Regime theory suggests that when a superpower decides to flex its muscles, the best way for small players to survive is to gang up. Trading data creates scale from thin air because data markets enable clout similar to massive publishers. Likewise, industry associations can organize multilateral actions. However, this seems unlikely because the superpowers themselves are high-paying members of such associations. As such, they might not support such actions -- and money talks.
There are other ways to aggregate for scale: data co-ops, mergers, second-party data partnerships, and so on. Considering the amazing progress over 20 years collaborating with technical protocols (for example, RTB), you would think the industry could come up with a solid plan.
Fang kind of hopes we don’t.