- Apple’s recent privacy update caused widespread disruption in the mobile advertising market.
- Several companies mentioned the iOS 14.5 update to their companies in their recent earnings calls.
- Analysis of call transcripts using Sentieo research tool reveals how advertisers are coping.
Apple’s privacy update in April sent shockwaves through the mobile advertising market, making it more expensive for advertisers to acquire new customers on platforms like Facebook, Snap, and YouTube.
The so-called app tracking transparency change requires app developers to ask users for their permission in order to track them on other apps and sites. As most users unsubscribe, advertisers have less data on the audiences they are targeting and the effectiveness of their campaigns. Businesses such as gaming apps and e-commerce companies that rely heavily on placing ads in other apps or using advertising methods such as retargeting to attract new customers have been particularly successful. affected.
Insider reviewed recent results call transcripts using the Sentieo Inc. research tool to analyze which companies felt the impact the most and how they are adjusting their marketing accordingly.
Apple’s privacy update pushed up the price of mobile ads
Business leaders, including the online dating giant Match group, game companies Electronic arts and Roviowatchmaker Movado Group, fitness equipment company platoon, trader Mark of Posh, art market Redbubble, teledentistry brand SmileDirectClub, and e-commerce company Zalando noted on their earnings calls how the mobile advertising environment had become more difficult, disruptive and competitive – more expensive, in other words – in the third quarter.
Stephanie Phair, Online Luxury Fashion Market Client Manager Farfetch, said business demand generation – or marketing costs – as a percentage of revenue was higher than it originally expected in the quarter due to cost-per-click inflation. ” larger than expected “. Somewhere else, WayfairIts advertising accounted for 10.1% of its net sales, up from 9% in the quarter of last year, which, according to its CFO, was “in part” due to changes in iOS.
Some advertisers, like Poshmark and Zynga reduced their ad spend as they sorted out the Apple update – although both have indicated that they are either ready to increase their spending again or have already started doing so. Naked Wines said it had reduced spending “at a rate supported by current performance”. Mobile game company DoubleDown Interactive reduced its sales and marketing expenses in the quarter by 18% year-on-year.
“The cost per install, or CPI, for mobile users has tended to increase over the summer, causing us to be more cautious about ad spend during the period,” the CFO said. from DoubleDown, Joseph Sigrist, during the company’s earnings call in November.
Some advertisers have changed their media mix
With Apple’s privacy changes making it more difficult to acquire new users through channels such as Facebook and mobile app ads, some advertisers have sought to diversify their media mix.
“We have at least three to five new channels that… we’ve started to see significant traction in the last quarter,” said Justin Schreiber, CEO of
business LifeMD. “And we actually think these channels and others are more scalable.”
Apple’s Search Ads product was a place for business advertising budgets, including buzz, Farfetch, according to their income call transcripts. Analysts at Bernstein Research estimated earlier this month that Apple’s privacy update could benefit its own advertising business to the tune of $ 1 billion in additional revenue per year. Apple’s Search Ads prices had already risen 67%, as measured by cost per click, in the second quarter, analysts at Bernstein said.
Elsewhere, some advertisers have turned their attention to the Android mobile operating system, which has yet to roll out a similar tracking update.
“There has been a bit of a rush to advertise on Android and acquire people on Android,” said Bumble chairman Tariq Shaukat. “So this has led to a slight price inflation on the Android side.”
Other companies are reallocating their spending to other channels. Farfetch called his work with YouTube and his investments in
, and SmileDirectClub shifted more of their advertising dollars to television.
“By carrying more weight on television, we will foster greater awareness, assisted and spontaneous,” said David Katzman, CEO of SmileDirectClub. “This is also a longer term strategy focused on building our base with consumers, including the highest income customers, rather than paying for every sale we get. “
Other Advertisers Ready to Seize Opportunities Aroused by Apple’s Change Tracker
Some executives were eager to alert investors that Apple’s privacy changes could represent an opportunity for their companies over their competitors.
Activision Blizzard, Reserve assets, and buzz all highlighted the different strengths of their large data-driven marketing teams.
“When we see changes in the dynamism of the industry due to IDFA, they created market opportunities that we were able to capitalize on,” said Humam Sakhnini, president of the King Digital Entertainment unit at of the game company. Activision Blizzard.
Like other consumer packaged goods companies, Clorox did not directly address Apple’s privacy update in her call for results, but CEO Linda Rendle told Bernstein’s operational decisions conference earlier this month that she was fully prepared for changes well in advance.
“And in fact, our ROI and our advertising increased even though we spent more money,” said Rendle, referring to the company’s return on advertising investment.