Silicon Valley has recently cracked down on online tracking, causing a furor in the advertising industry. Apple will soon require users to opt in to tracking for each of their apps and Google has shelved a replacement to the third-party cookies on which advertisers have become dependent. This may actually be the first time that tracking – even granularity – has reduced for marketers.
While advertisers accuse big tech of acting to entrench their dominance, how do these interlinked moves reflect significant trends beyond the industry? And what is the future for smart marketers who look beyond trying to recreate consumers’ fading footsteps and seek to seize the privacy shift as a marketing opportunity?
The Silicon shake up
For advertisers, 2021 has started with then left reeling from a one-two punch from big tech. In January, Apple announced that it was introducing the AppTrackingTransparency Framework within iOS 14.5, which means that users will have to opt-in to being tracked outside of an app upon first usage. A month later, Google followed with news that they would not be developing an alternative identifier to third-party cookies, which they had last year targeted for removal from Google Chrome by 2022.
While we can and will question the companies’ claim to act in the name of privacy, the considerable impact of their actions on the advertising industry is certain. Apple currently holds 27% of the global mobile market and Google Chrome is the world’s leading browser, handling 64% of global traffic. Any change that affects these user groups is therefore of great importance to advertisers.
In defense of privacy or revenue, these are big changes
Apple’s shift will mean that a quarter of mobile users will have to consciously decide, via an on-screen prompt, whether to allow each of their apps to track them across their device and to access their device ID. This is predicted to reduce consent rates to just 10-15% of Apple devices. For the large majority who may not consent, ads will no longer be served based on device, but instead based on contextual information. This means less personalisation and, most likely, lower effectiveness. Measurement will also be limited as tracking outside of the app is no longer feasible; only a limited number of conversion events will be trackable within a 24 hour window.
While the move represents a significant blow for all in-app advertisers, Facebook reacted by publishing full page newspaper ads against the change, which threatens its mobile advertising revenue. A huge 98.3% of Facebook users access the platform via mobile; if Apple users opt out, this risks making Facebook less attractive to advertisers.
Just a 10-minute drive away in San Francisco, Google announced that they would not develop an alternative user identifier to third-party cookies, which will be removed from Chrome next year. The browser joins Safari, Firefox and Edge, with the result that over 90% of browser traffic will no longer be tracked by third-party cookies. The effect for marketers and advertisers is that key activities, from attribution and measurement to optimisation and segmentation, will likely become increasingly challenging.
Google has offered a solution to this problem through Federated Learning of Cohorts (FloCs), which uses the platform’s extensive first-party data to target groups based on shared interests. Testing has suggested that it achieves 95% effectiveness versus cookie-based targeting while avoiding tracking at the user level. An industry push to FloCs would undoubtedly strengthen the tech giant’s dominant position as advertisers become evermore dependent on Google’s first-party data. The move could therefore be labelled ‘Google-first’ as much as it can be called ‘privacy-first’.
How will this impact marketers? What are the key next steps?
1) The privacy shift is bigger than the tracking crackdown – don’t be stuck in the past.
While the advertising industry has raced to replace the cookie, marketers should be wary of alternatives and workarounds. Past experience has shown a strong willingness from tech companies to update against technical workarounds to third-party cookies such as browser-based fingerprinting. Equally, Apple has been clear that non-compliant apps will be removed from the App Store.
Marketers should be cognizant of shifts beyond big tech in the name of privacy, from the European Union’s GDPR to more localised regulation such as California’s Internet Privacy Law. These regulatory changes reflect very real consumer concerns. One study found that nearly 97% of respondents were concerned about their data privacy and 87% saw it as a human right. Such negative figures in engagement metrics would drive immediate action from marketers: they should do so regarding privacy as well.
2) Context is key – focus on first-party data.
The direction of travel set by Apple and Google is towards more contextual advertising. For brands, this requires a serious rethink of data strategy. Marketers will need to revisit and expand their first-party data and develop data partnerships to gather explicitly consented second-party data. Combining these data points into one data platform to create contextual customer profiles will be fundamental in ‘privacy-first’ targeting.
3) The opportunity – market your privacy advocacy.
The most forward-thinking of brands will see the privacy shift as a marketing opportunity. Successful marketers will not see first-party data gathering as an exchange of value alone, but as an opportunity to build trust with consumers and to strengthen their credentials in data responsibility. The push for privacy also aligns with recent growth in sustainable and ethical brands and marketing. While the spotlight may have been on environmental and supply chain initiatives, brands should look to human and social sustainability – also key pillars of sustainability – and understand that privacy protections support these goals. For sustainable and ethical brands, being ‘privacy-first’ is not a marketing obstacle but a marketable demonstration of their brand promise and integrity, just like using sustainable materials or production practices.
The impact of the online tracking crackdown cannot be denied. Brands however have a real opportunity to differentiate themselves. Marketers must urgently review their data strategy to drive successful contextual targeting in the ‘privacy-first’ era, while touting their privacy credentials to stand out as responsible consumer champions.