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Apple and Google's privacy decisions help ad firms recover amid the pandemic

Adtech firms that develop alternative tools to target consumers have seen a rise in demand, in particular contextual advertising companies that target ads based on the content of web pages, not who is viewing them.

Some in the industry say the privacy changes will force companies to shift the way they engage with customers. Some in the industry say the privacy changes will force companies to shift the way they engage with customers.
Some in the industry say the privacy changes will force companies to shift the way they engage with customers. (Unsplash)

Moves by Apple and Google that make it harder for brands to track billions of consumers are creating a money-making opportunity for advertising companies that were hit hard by the pandemic.

Google is phasing out third-party online tracking cookies and Apple is requiring app owners to ask for explicit permission to track users across other companies’ apps. The changes make it harder for companies to follow our every move online, so marketers are devising new ways for brands to find out what consumers are doing and pitch products to them.

It won’t threaten the tech giants’ status as gatekeepers to billions of consumers, a role that’s only growing as more economic activity shifts online. Yet it’s an opportunity for ad agency groups such as WPP Plc, Omnicom Group and Publicis Groupe SA to reassert their relevance.

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Caraway Home, an online seller of kitchenware, expects the privacy changes will increase the cost of finding new customers on Facebook, and decrease the effectiveness of its targeting.

Also read: Apple has big plans of growing its advertising business

A month ago, Caraway signed a deal with marketing tech firm Impact Tech to connect with bloggers and Instagram influencers. Impact’s platform will show Caraway how many sales it achieves when its products get a mention, and the kind of content that’s most effective – for example, whether an interior design blog drives more revenue than a blog focused on motherhood.

“As customer acquisition on Facebook gets more expensive as these changes roll out, this is set up to be one of the most powerful channels going forward,” said Josh Knopman, Caraway’s director of growth.

WPP is creating a new unit geared to helping clients better use first-party data. An early customer is Walgreens Boots Alliance, with WPP taking data from the retailer’s customer loyalty platforms to craft its media strategy.

Publicis is also seizing on Google’s cookie announcement by partnering with ad technology company The Trade Desk to offer digital identifiers that give consumers anonymity and the ability to manage privacy preferences, while still letting advertisers see some of their online activity.

“Already in beta the adoption is really strong,” said Dave Pickles, The Trade Desk’s chief technology officer and co-founder. “That press release that Google made is the best thing that ever happened to us.”

Adtech firms that develop alternative tools to target consumers have seen a rise in demand, in particular contextual advertising companies that target ads based on the content of web pages, not who is viewing them.

One such company, GumGum, just raised $75 million from Goldman Sachs Group. That came with a $700 million valuation, according to a person familiar with the matter.

Read more: Apple explains why its App Store rejected over 1 million new apps in 2020

Companies like BMW AG and Vodafone Group Plc have turned to GumGum for help with recent campaigns. Headphone-maker Bose Corp. worked with GumGum to market its earbuds for sleep on technology websites and target keywords like “night”.

“The industry over-used the cookie, clearly,” said GumGum Chief Executive Officer Phil Schraeder. “Contextual is a good alternative to cookies because it will be here to the end of time.”

Some in the industry say the changes will force companies to shift the way they engage with customers. For Cory Munchbach, chief operating officer at first-party data firm BlueConic. it’s going to require a “fundamental rethink” by brands and publishers.

“This should be good for ad agencies,” said Matthew Bloxham, an analyst at Bloomberg Intelligence. “The heightened business complexity means their services are in greater demand from clients, and I think most of the agencies are seeing that.”

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