The way ads are chosen for you is changing

The field of digital marketing is undergoing a generational sea change that is likely to forever alter the way we see, place, and experience online advertising.

The shift, influenced by privacy concerns and tech giants’ attempts to ring-fence their ecosystems, is already being felt by those working in digital marketing.

App Tracking Transparency, introduced in 2021, allows users to opt in or out of sharing their activity on any particular app with other companies’ apps and websites.

Data suggests only 25 per cent of iOS users opt into tracking, with public relations entrepreneur and tech blogger Ed Zitron writing that this means “the world’s billion-plus iOS users are no longer effective targets for social media’s only real revenue driver”.

Meta’s Facebook tried to get around Apple’s App Tracking Transparency by embedding permission into their terms of service,but this led to a huge fine from the EU – GDPR requires companies to be transparent when obtaining consent to share their data with third parties.

In a recent Substack post, Mr Zitron highlights the discrepancy between pre-Musk Twitter’s advertising revenues (some $4.5 billion, 90 per cent of the total) and the income generated from the company’s controversial move to put the coveted blue tick mark – displayed next to one’s username and previously deemed an airtight signifier of authenticated identity – up for sale ($28 million).

His headline (‘Social Media Is Dying’) may sound over the top, but it is hard to argue with the facts: advertising makes up 97.5 per cent of Meta’s income (and are decreasing), and 90 per cent for Snap (owner of popular messaging app Snapchat).

The walls seem to be closing in for digital advertisers wedded to the old model, with even Google promising to retire the third-party cookie, which can track a user’s activity across different websites.

To see how these changes will impact the local advertising landscape, BusinessNow.mt reached out to three leading marketers, all of whom acknowledged that businesses need to change tack in their approach to customers.

“The digital marketing landscape has been undergoing a significant shift in recent years, making it much harder for us advertisers to track user behaviour and target ads based on their interests,” says Jonathan Gianino, marketing manager at Harvest Technology plc.

“App-based brands rely heavily on user data to generate revenue from advertising, but with fewer users opting into tracking, they are finding it more challenging to deliver personalized ads to their target audiences.”

He continues: “The decline in tracking is also leading to a shift in the way that advertisers measure the success of their campaigns. In the past, advertisers could track user behaviour across multiple apps and websites to determine which ads were most effective in driving conversions.

“However, with fewer users opting into tracking, this type of cross-app tracking is no longer possible. Advertisers are now having to rely on other metrics, such as click-through rates and website visits, which are less precise indicators of campaign success.”

Benji Borg, CEO of 9H Capital, says that these “very interesting developments” are showing “how the big players are trying to ring-fence and protect their space”.

His takeaway from these changes is that “as a business you need to have a very strong customer database – something you own and can leverage”.

“This has always been the fundamentals in digital marketing, and it hasn’t changed. We need to attract people to our business and give them enough value for free or at cost for us to get their data.

“The more value you give, the more data you can ask for.

“If businesses are not going to centralise their data, understand their customers and utilise that data, they will continue to be ‘bullied’ by the big tech players who are doing just the same and excluding everyone else.”

Managing director of marketing agency Keen, John Falzon, expresses a similar sentiment, describing the new limits to behavioural advertising as “an opportunity for innovation and the development of new, more privacy-friendly advertising technologies”.

He singles out first-party cookies and Google Topics, saying that these technologies offer “a promising path forward for advertisers and website owners alike”.

First-party cookies, he explains, are cookies that are set by the website that the user is visiting. These cookies are used by website owners to track user behaviour and personalise the user experience, such as remembering user preferences and login information.

Importantly, unlike third-party cookies, first-party cookies do not track users across multiple websites.

“With the end of third-party cookies, many advertisers are shifting their focus to first-party data. This means that they are relying on the data they collect directly from their own websites, rather than third-party data collected across multiple websites.”

Mr Falzon continues: “Google is one of the companies that is leading the charge in developing privacy-preserving advertising technologies that rely on first-party data. For example, it is developing a technology called Topics, a new proposal for privacy-preserving advertising that uses browser history to determine user interests.”

The browser categorises sites visited based on 300 topics, with a lightweight machine learning algorithm providing estimated topics for uncategorised sites.

“When visiting a site with the Topics API, the browser shares three topics of interest from the past three weeks, chosen randomly from the top five topics of each week.”

Google is currently testing Topics with a small group of advertisers, and plans to roll it out more widely in the coming months.

Mr Falzon also points out that Google has introduced several tools to help website owners.

“For example, Google Analytics allows website owners to track user behaviour on their own site, and Google Tag Manager allows them to manage their tracking tags and scripts in one place.”

There is no doubt that the digital advertising sector is facing significant disruption.

Mr Gianino concludes: “As the digital marketing industry continues to evolve, it will be interesting to see how these trends develop and what new innovations emerge in response to the changing landscape.”