Last year, Apple introduced a new privacy feature, a pop-up window for its iPhones that allows users to prevent apps from tracking their web activities (1).
Meanwhile, Google is considering disabling tracking technology in its Chrome web browser.
Facebook engineers are working on a new method to show its users ads without relying on their personal data.
Developments in this area indicate an intense battle for the internet’s future. This struggle has embroiled tech giants, advertising companies, and small businesses.
More importantly, it has indicated a profound shift in how businesses use personal data on the internet to make money, aka targeted advertising.
Massive Digital Ad Industry
More than two decades ago, the internet went through an upheaval in the ad industry. It disemboweled magazines and newspapers that long relied on selling print ads and classifieds. It also threatened to dethrone TV ads as the main way for brands to reach large audiences.
However, marketers started to splash their advertisements and promotions across different web portals based on people’s specific preferences and interests. And it powered the growth of tech companies like Google, Facebook, and Twitter, which offered their services at no additional cost in exchange for their data.
Today, most brands track users using technologies like “cookies” and use their data to target them with relevant ads.
This system has ballooned into a 350 billion+ USD digital advertising industry (2).
The Rise of Privacy-Conscious Web
Citing the privacy mantra, Apple has launched tools to block marketers from tracking people (Suggested Reading: Apple’s App Tracking Transparency and Feud with Facebook).
Google, which highly relies on digital ads, is also reinventing its system and is trying to have it both ways. Google seems to aim to send people ads without exploiting their personal data.
There has been a famous quote circulating on the internet for as long as we remember, “if you are not paying for the product, you are the product.”
However, what would happen if we stopped using personal information as the currency to access online content and services?
Most ecommerce platforms, app developers, and media publishers have already started to explore different paths to survive the rise of the privacy-conscious internet. In some cases, businesses are overturning their entire business models.
Many companies have also started to make people pay for their offerings by levying subscriptions and other fees instead of using their personal information.
According to Jeff Green, the CEO of Trade Desk, an ad-tech company based in California (5), “the recent developments have finally started answering questions that the internet has been struggling with for decades: how would the internet pay for itself?”
We believe it hurt brands that highly relied on targeted ads to purchase their products. It is especially true for tech titans like Facebook. However, only for the short term.
After all, businesses that can’t track people will still need to advertise their offerings. Meaning they will spend more on tech platforms since they still have the largest customer database.
“The changes will keep on driving more money and attention to Facebook, Google, and Twitter,” said David Cohen, CEO of the Interactive Ad Bureau (6).
Two Sides of the Internet?
We believe the shift towards a privacy-conscious web is complicated by opposing opinions of Apple and Google regarding ad-tracking.
On one side, Apple wants its customers, who pay premium prices for its products, to have the right to block ad tracking completely.
On the other side, Google executives suggest that Apple has turned privacy into a privilege for those who can afford its products.
It means that the internet may start to look different for people depending on which products they use.
For instance, you may see ads somewhat relevant to your interests on your iPhone. However, you may still get highly targeted ads on your android device.
“It will become a tale of two internets,” said Brendan Eich, Founder of Brave, a new-age private web browser (7). “Eventually, we may see creators choosing sites. Thereby, we may see some sites that work well in Google Chrome may not even load in Apple Safari,” he added.
Businesses that don’t keep up with these new changes are at risk of being left behind (8).
As we mentioned, more and more media publishers and mobile apps have started to charge fees via subscriptions and others. Several ecommerce websites and other businesses are also considering price hikes to keep their revenues.
Apple believed that advertisers would start adapting to the new privacy-conscious web. Whereas Google said, it would work on an approach that will allow marketers to continue targeting users with ads while protecting people’s data.
What Led Us Here?
Since the rise of the internet in the early 90s, it has been dependent on digital ads.
During that same decade, 1994, “Cookies” started to track users’ browsing activities across the internet, which allowed marketers to aim ads at individuals (9). For instance, if you search for a new smartphone, you will soon see ads about those products and topics.
After launching app stores in 2008, marketers also started planting invisible trackers to collect data about what people do inside apps (10). Then, they linked that information with cookie data and shared it with third-party data brokers for even more specific ad targeting.
It led to a vast digital advertising ecosystem we see today, which underpinned free online services and websites. Platforms like TikTok and Buzzfeed flourished through this same model.
Anyhow, over the last many years, there has been a massive distrust of these practices.
In 2018, Facebook was under the spotlight for the infamous Cambridge Analytica scandal (Suggested Reading: Facebook: The King of Social Media or Unchecked Hedonism?). During the same year, regulators in the European Union enacted the General Data Protection Regulations to safeguard people’s data.
In 2019, Facebook and Google agreed to pay massive fines to the Federal Trade Commission to settle alleged violations of users’ privacy.
Thereupon, Apple started reconsidering its advertising approach. Apple announced in 2017 that its web browser would block cookies from following its users (11).
“It feels like we are being tracked because we are. No longer,” said Craig Federighi, head of software engineering at Apple (12).
Last year, the tech giant also launched a pop-up window in iPhone apps, allowing people to choose whether they wish to be followed for marketing purposes. If the user opts for no, the app must stop monitoring and sharing their data with any third party.
It promoted an outcry from Facebook. In December, the social media platform also went for full-page newspapers ads to announce that it was “standing up to Apple” on behalf of small businesses that would get hurt since their ads could no longer find specific potential customers (Suggested Reading: Facebook’s Ill-Fated Fight Against Privacy as Apple Remains Firm).
“The situation is challenging for them to navigate,” said Mark Zuckerberg, CEO of Meta platforms.
The company has now started to look for new ways to use insights gathered on their devices to target people without allowing third-party data sharing.
For instance, if you click on ads to purchase shoes while clicking on ads for a beauty product, it would share that pattern with marketers.
While you will still start seeing ads for shoes, it would be less intrusive than sharing personal data like email addresses with marketers.
“We support offering people more control over their personal data. However, Apple made these far-reaching changes without any input from the industry and businesses who are most impacted,” said a spokesperson from Facebook (13).
In 2019 Google started discussing ways to offer more user privacy without killing its 135 billion+ USD online business.
While conducting studies, its research team found that cookies disintegrated people’s trust. Hence, the team concluded that Google should stop supporting cookies on its Chrome web browser.
However, the tech giant decided to continue allowing cookies until it created a new way for marketers to serve people via targeted ads. Last year, it attempted a new way to use its data troves to group people based on their interests so marketers can target those cohorts instead of individuals.
The method is called FLoC, Federated Learning of Cohorts. However, the plans were plugged out by Google last month (16) (Suggested Reading: Using Chrome is About to Get Complicated with FLoC). It seems that Google is still “indecisive” in its stance against privacy, unlike its counterparts like Apple and Meta, and won’t stop supporting cookies any time soon.
Yet, we believe that marketers need to start looking for new ways to generate revenue increasingly. If your business solely relies on advertising for revenue, it would be at risk with the shift towards privacy.
In short, it is time for businesses to take a hard look at the changing scenario and move towards acceptance. The focus of the marketers should not be on grief or anger but instead on finding ways to thrive in this new landscape.
Marketers should stay on top of things and start adapting by using new ways like subscription fees, using AI to serve ads, or other charges.
There are several ways to rebuild targeting in a scalable way. You can still generate considerable revenue if you start to adapt now!
We aim to come back with new ways for businesses to thrive in this new landscape. Until then, stay tuned with us for more startup-related news and updates.