Snap End Around
App-centric tech companies like Snapchat, which rely to some degree on mobile ad analytics to help drive app installs and, more importantly, track attribution, would seem to be right in Appleâ€™s crosshairs as the tech giant forces apps to request permission from consumers to participate in ad tracking. And Snapchat may indeed take a big hit later in the year. For now, though, Snapchat may have figured out a clever workaround, per Adweek.
For starters, Snapchat made the decision to segment its users by operating system, knowing that only people who had downloaded iOS 15 would have encountered any new opt-out messaging.
Next, it took a minimalist approach with its messaging to newer users, using Appleâ€™s generic prompt over something more custom and complicated. So far, results have been solid.
Does this mean that everyoneâ€™s got IDFA figured out? Thatâ€™s likely too big an assumption at this point. For instance, mobile game company Zynga said that in Q2, it saw â€œchoppinessâ€ in its business due to IDFA acceptance rates and people going back out into the world, although its user-acquisition activity began picking up as the quarter closed.
But all this tap dancing that app makers have endured raises a fundamental question about Appleâ€™s data moves: Are they really trying to prevent people from being tracked across apps without their knowledge, which would seem to put Apple against ad networks and attribution providers â€” or do they just want more control over revenue flow? Because otherwise, why hurt Snapchat and Zynga, seemingly great partners?
Apple of Its Eye
Speaking of Appleâ€™s motives, is this all (or partially) about bringing in more ad revenue? Barronâ€™s notes that Appleâ€™s ad business is big and getting bigger. In fact, Bernstein analyst Toni Sacconaghi estimates that Apple will bring in $3 billion in ads in Q3, up from about $300 million in 2017. By 2023, he thinks Apple could have a $10 billion business on its hands thanks to search ads in its App Store and by better monetizing Apple News and Apple Maps.
If this sounds a lot like Amazon â€” which first dipped a toe in ads and then suddenly dove into the lake and started doing laps â€” well, thatâ€™s where Toni sees this heading. One big question going forward is if and when Apple will do something with Apple TV.
Criteo Revenue Base Theory
When we talk about ad firms thought to be highly vulnerable to all the big changes hitting digital identity, the list often starts with companies like Criteo, whose pundits presume its fortunes have lived and died by cookie-driven retargeting.
So Criteoâ€™s earnings should offer a solid barometer to understand whether the changing conditions surrounding ad targeting are truly â€œrockingâ€ retargeting as expected. And the answer thus far seems to be that things are not as bad as expected â€” yet?
The French companyâ€™s revenue actually jumped 26 percent year over year, but of course, as AdExchanger noted, that number is compared to last yearâ€™s Lockdown Quarter of Doom. On the downside, Criteo forecast $56 million in losses in the first quarter of 2021 due to privacy policies and regulations â€” so thereâ€™s that.
However, Criteo has been focused on refashioning its business as one that is much less dependent on retargeting, including launching a new self-serve platform for marketers wanting to lean into the retailer ad craze (there are lots of eyes on Instacartâ€™s sudden billion-dollar ad business). Revenue for that platform grew by 13 percent as Criteo added clients such as Best Buy.
Weâ€™ll see how the company is able to handle ID-driven losses while pivoting into tangential but very different businesses â€” as Criteoâ€™s journey is one that many others in this space will be considering over the next few years.
If thereâ€™s any worry about the ID/targeting headwinds in the ad business at large, the holding companies arenâ€™t seeing it. In fact, per The Wall Street Journal, WPP raised its forecast to pre-pandemic rates a year earlier than expected, to 9â€“10 percent for the year.
The CEO of WPP, Mark Read, said in an interview, â€œIf you take the three sectors that were most resilient last year â€” consumer packaged goods, consumer technology and healthcare â€” they also continue to grow this year. Itâ€™s more than just a cyclical bounceback. Thereâ€™s structural growth in their spending as they desire to grow and hold on to market share.â€
â€œIf you look at where clients start, now they increasingly start with digital and not with analog and thatâ€™s true for WPP clients and also true for our companies in the way in which weâ€™ve positioned our offer,â€ Mr. Read said during an earnings call with analysts. â€œI think things have changed fundamentally, and we expect that to continue to shift.
Letâ€™s hope that optimism holds, and isnâ€™t suddenly thwarted by rising fears of the Delta variant. On that happy note, weâ€™ll see you next time. Stay safe.