Apple’s crackdown on in-app tracking so far has come into force more gradually than expected thanks to a protracted rollout. This has tended to obscure the impact of the new restrictions. But after a first full quarter, it has become clearer that it will rattle, squeeze and throttle the flow of ad dollars online. The long shadow Apple cast over the current earnings season for the largest online advertising businesses puts this impact into sharp focus.
It was Apple, not supply chain woes, those businesses seemed most concerned by going into the home stretch of 2021. Not because they’re seeing swathes of media dollars move out of their businesses thanks to Apple — that is happening but only up to a point. Rather, the concern was simple: things are going to get worse before they get better; the apprehension there is the cautious forecasts from CEOs and the dramatic drops in share price on the back of underwhelming sales. It’s as if the first full quarter of grappling with Apple’s crackdown on tracking was a real eye-opener for CEOs of the biggest online ads businesses.
Think about it: Since ATT launched in April more and more Apple users have been required to give their permission to be tracked across apps and sites on Apple devices. It’s done via a mobile identifier called the Identifier for Advertisers (IDFA). This is crucial to advertisers’ efforts to know whether someone bought an item or downloaded an app after they saw an ad that promoted it. Without the mobile identifier, this becomes harder. In fact, it’s nigh on impossible to track, target or measure ads in any great detail without the IDFA.
This has all sorts of ramifications for the companies that built businesses on the back of those identifiers. Some of those businesses, however, are feeling it more acutely than others.
Take Peloton. The fitness business told analysts during its earnings call earlier this month that ATT would hamper its ability to add subscribers to its service as a result of not being able to precisely target as many people based on their interests. The Trade Desk, however, has barely felt the impact of it to date. Granted, variations like this are to be expected. After all, these are online businesses that are reliant on different data signals that are influenced by a myriad of other factors. So it’s understandable why The Trade Desk can say ATT has had a minimal impact on its business. Indeed, much of the traffic it helps marketers bid on doesn’t cover in-app ads, which is where ATT hits hardest.
Even so, it would be irresponsible for CEOs to believe they’re out of the woods yet. Doing so, risks being caught flat-footed as some bosses discovered over the summer.
Mobile gaming developer Playtika’s stock slumped down 25% earlier this month (Nov. 3) on the day it posted earnings that missed analysts’ forecasts. Unsurprisingly, it cut its own forecast for the quarter. It came after the company’s management team had previously dismissed concerns about ATT. Advertisers like Playtika are the workhorses behind many online platforms that make money from ads so it stands to reason that those businesses are also starting to feel the pinch — albeit to varying degrees.
Pinterest, for example, said in its SEC filing for the third quarter that Apple’s privacy safeguard has dented the platform’s “ability to track user actions off our platform and connect their interactions with on-platform advertising.” On …….