We’ve Got Questions on Facebook’s New Strategy

Did the social media behemoth really just cry uncle in their battle against Apple?

This past week saw the conflict between Apple and Facebook take an unexpected turn, while tectonic plates in ID-driven advertising continued to shift amid signs that the earthquakes may soon be felt. On that happy note, let’s get started.

A Place for Cohorts

Did Facebook just electively throw away perhaps the world’s greatest marketing asset ever created (knowing exactly who you are and what you like — because you told them)? Did they just throw in the towel in their very public battle with Apple? Is the social network behemoth just tap dancing for regulators? And is this really going to hurt Facebook business?

These are just some of the many questions we had upon reading The Verge’s report on Facebook’s five-year plan to scale back its incredibly lucrative ad business historically based on mining personal user data. Graham Mudd, Facebook’s VP of product marketing for ads, says that the company is working on technology that will “scramble” the data used to identify individuals, so it won’t know who people are when it sends them ads.

Between what Unified ID is planning to do with encrypting emails and Google with FLoC, this is definitely the year of digital ad companies deliberately taking once-golden personal data and making sure they can’t actually read it.

In addition, Facebook is basically saying, this is the end of us (or anybody) being able to build profiles or siphon user data off of somebody else’s device or ecosystem. “I think what we see in terms of the trends and frankly our own work, both from a regulatory perspective and the platforms — Google and Apple — is that access to that kind of data will become more limited over the course of the next couple of years,” Mudd told The Verge. “That’s just a reflection, I think, of peoples’ changing expectations around privacy. And I think we’re embracing and trying to build for that future.”

Yet here’s how the story’s author framed this: Facebook’s new rhetoric about making advertising more privacy-conscious is also, in a sense, admitting defeat. Last year, it mounted a loud PR campaign in objection to Apple’s ad tracking prompt, arguing that Apple was acting anti-competitively and harming small businesses that relied on ads to reach customers. But the campaign ultimately fell flat, and now Facebook is working on some of the same privacy-conscious approaches to data collection that Apple uses.

Needless to say, this is a BFD. Whether Facebook and Google are actually voluntarily implementing changes that will make their ad products less effective, and thus making the duopoly less duopoly-ish, remains to be seen.

On Topic

Speaking of the duopoly, is Google shifting gears on FLoC? According to Digiday, the search titan has had some discussions about moving away from grouping web users into cohorts based on their interests and habits — and instead placing both websites and people into topic categories. This would appear to be something of an admission that Google’s ongoing Privacy Sandbox effort was still dancing on the wrong side of consumer privacy protection (or at least appearing to in the eyes of regulators). Going from “one-to-one” targeting via cookies to reaching groups of people based on what common topic they are into sure sounds very 1990s media and will likely not excite many brands. Here’s betting that Google is still able to work some data science magic here. Regardless, this development shows just how quickly the ID ground is shifting beneath the entire industry.

Apple-tite for Destruction

Mobile analyst extraordinaire Eric Seufert had a must-read Twitter thread this past week on just how Apple’s new targeting rules are blunting not only Facebook but also companies that are born (or used to be born) in the Facebook ecosystem. Per Seufert, until recently, startups (like, say, mobile games companies or DTC brands) could launch products on FB/IG and, thanks to the powerful targeting tools, build sizable customer bases at a very early stage (like before hiring a ton of ad people).

“FB accommodated the creation of whole consumer categories,” he tweeted. “One consequence of FB’s diminished targeting effectiveness that I’m seeing manifest in real time is that smaller companies need to operate across more channels to deploy the same budget. More channels = more overhead, more analytical complexity.”

That could be good for the rest of the digital ad ecosystem — spreading the budgets around. Or that could mean fewer venture-backed brands get funded as investors see the potential for overhead-less hockey-stick growth evaporating.

That’s all for this week. See you next time!