[ad_1]
Apple CEO Tim Cook delivers remarks during the European Union privacy conference at the European Parliament in Brussels, Belgium, October 24, 2018.
Yves Herman | Reuters
As the industry braces for Apple’s change to settings on users’ iPhones in the name of privacy, analysts at MKM Partners said on Tuesday that some online advertising companies like Facebook and Snap would be more vulnerable to advertising impacts. mobile than their peers.
Apple’s change will take a privacy option for users to share their Advertising ID, or “IDFA,” which was previously buried deep in users’ phones and put it front and center when they open an app. Before using an app like Facebook that tracks your data for targeted advertising purposes, you will be asked to turn on tracking. Companies like Facebook are concerned that Apple’s notice will discourage people from turning on tracking, limiting their ability to target ads, the core of their business.
Industry players currently use this identifier, when available, to target advertisements and measure their effectiveness. But the change is expected to have a huge impact on the ability of advertisers to target ads the way they’ve been, because people are unlikely to participate.
MKM analysts said they created a framework based on seven factors to determine the risk of online advertising companies on change. Factors include scale, access to first party data, exposure to iOS devices, relative revenue contribution from app install ads, off-platform ads, ads purchased by small businesses, and Ads purchased by industries that rely heavily on paid mobile user acquisitions. Basically, these businesses include gaming, dating, ridesharing, and video streaming.
Based on these metrics, analysts say Facebook and Snap have the highest potential headwinds due to the IDFA changes, followed by Twitter and Pinterest. They said Google and Amazon had the lowest relative exposure.
“However, when it comes to gravitational pull, the relative effectiveness of ads, and access to top-notch data compared to other subscale platforms, programmatic ad networks, and publishers, we would expect that the Big Six online ad companies do better than the rest of the industry, ”they wrote.“ We await more attention on this issue as we approach the 4Q / 2021 earnings outlook, and we would be longing for weakness, particularly FB and SNAP stocks, due to upcoming changes to iOS 14. ”
In a December note, analysts at Bank of America also said Facebook and Snap were the most exposed to the changes, which could create a 3% headwind for Facebook and 5% for Snap. They claim that Twitter has modest exposure to mobile app downloads, but the exposure is relatively low compared to Facebook and Snap. Pinterest and Google are the least exposed to IDFA, they said.
Facebook has been outspoken about the change, recently running newspaper ads, releasing a new website, and posting a blog post outlining its arguments against Apple over the change it claims “threatens personalized ads on which millions small businesses count to find and reach customers. ”Facebook, in its blog post, argued that Apple’s new tracking rules are about“ profit, not privacy, ”and said it believed ‘Apple was behaving anticompetitively by using control of the App Store in a way that benefits its bottom line at the expense of developers. and small businesses.
Apple told CNBC that the privacy feature gives iPhone users more control and transparency over how their data is tracked and used for advertising purposes, and that apps will be able to explain the benefits of the. followed to users in the prompt.
A mockup of the pop-up that iPhone users will see before using an app that tracks their data. This image was provided by Apple.
Apple
Describing the bull’s-eye for the ad ecosystem when it comes to IDFA changes, MKM said companies with scale and access to first-party data will benefit as ad dollars gravitate towards these types of platforms. -forms. They also said the advertising ecosystem is already focusing more and more on privacy and secular trends have become stronger despite headwinds caused by privacy regulations.
But they said the effectiveness of mobile ads could also decrease as the measurement becomes more “fuzzy,” and said companies with limited first-party data will face headwinds, MKM said, outlining its arguments. bearish. They also wrote that off-platform advertising might become less effective as cross-device advertising might not be able to rely on the same device signals as before.
CNBC Michael bloom contribution to reports.
[ad_2]
Source link