Apple has made a big change to its privacy rules and Facebook isn't happy.
April 30, 2021
Facebook (NASDAQ: FB) has been a vocal opponent of the change arguing that it will make it harder for small businesses to target their ads. That might be true, but it’s likely that these changes will be very popular with consumers and that will force other companies to adopt the same rules.
Steve Symington and Dan Kline broke down exactly what Apple has done and how Facebook may use artificial intelligence to keep its ad business humming on the April 28 edition of 7investing Now.
A full transcript follows the video.
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iOS users will now have to, and this is when you download the next version of iOS, which has not been available for me yet. So you must give explicit permission for apps to track their behavior and sell their personal data such as age, location, spending habits and health information to advertisers. I don’t think it’s as big a deal for Pinterest, because most of what you’re posting on Pinterest is self-selecting you for advertising, and they’re still allowed to do that. But Steve, do you think this will be a little bit of a drag at least on Pinterest?
Steve Symington: Yes, and no, I think people are assuming that almost nobody’s going to opt in, you know, it’s like, “well, of course, you can sell my personal data.” People don’t always want that. I don’t think it’s as big a deal as people are making it out to be, you know, for Pinterest and other kind of social media companies that rely on advertising to fund their otherwise free products.
You’ll see fewer personalized ads, but I think digital advertising will still kind of find a way to use artificial intelligence and machine learning, in particular, to present relevant ads to you and get these products, I think digital advertising is still the sort of wave of the future.
Dan Kline: I really like what Apple’s doing. But I will probably opt-in. What I would prefer, though, and Google does a little bit of this, but Facebook doesn’t do much of this. I would like the ability to say, I know I looked for couches, but now I bought a couch, stop selling me couch ads. That should be implicit and easy. I’d like to be able to say I don’t want political ads or, you know what, I prioritize local restaurant ads, please give me local restaurant ads, or concerts or, or whatever it is, I think there can be a lot more opt-in. That being said, and this is a lesson for us at 7Investing as we build out our website as well.
The history of people being willing to make those choices is actually really low. My friends at Microsoft, who all no longer work at Microsoft, went through three or four iterations of an MSN homepage, where you could really set and pick your content and no one did it. So the reality is, we actually do need algorithms to do this for us. I want the best, most focused social media experience possible.
Now on Facebook, I do think that means opting in to letting it serve me ads based on my choices. The problem with that being is Facebook has been explicitly evil with what it does with some of its data. But um, do you think this is going to be a big deal? I think it will be a noticeable deal for Facebook, but I don’t think it’s going to be a giant deal. Do you do disagree?
Steve Symington: Yeah, noticeable but not giants a good descriptor for the current situation. They are large enough and innovative enough and have enough smart software engineers where they’ll find ways around the way they’re handling this. And I think this is part of a broader shift in less intrusive, digital advertising in general. And that’s something that Google, your Magnite’s and even your Criteos of the world, your digital advertising retargeting all these companies have expected is on the way, right. And they’ve been sort of hedging their businesses as a result and the way that they actually target ads. So I don’t think that this is a huge deal. In the long term for the viability of mobile advertising and online advertising.
Dan Kline: I would agree, I think we’re in kind of the second inning of the digital advertising game, and I pointed this out on on Monday’s show. Companies have to think about experience. So I’m a Hulu customer. And Hulu shows you three-four 30-second commercials when you’re watching a show, if it’s an hour show, maybe three times, the problem is it might show you the same commercial three times in a row, it might show you only two different commercials, the entire thing, it is way more effective to show me a 30-second commercial once, or if it’s the same brand show me three different commercials for that brand, than it is to get me tired and angry at the brand. Because I’ve literally seen the same commercial eight or nine times in an hour.
I think we see that repetition everywhere, I’ve seen the same problem, you know, on services like Pluto and the and the the TiVo channel, and the Roku channel. So I do think we have to get better, we have to get smarter, we need to have that little ‘Hey, I don’t want to see this ad’ box. And maybe I’m not changing my insurance company, I don’t need to see insurance ads. It doesn’t. It doesn’t help if I if I ever do change my insurance company, I’ll try Lemonade. I want my ads to be content. I’ve bought things on Facebook, which almost always never works out.
But I’ve bought things on Facebook, because Facebook realized that I’m a sucker for coffee makers. So they kept sending me different coffee makers. And I purchased at least two: my cold brew maker I bought through Facebook, and my like pod machine that makes espresso which is excellent, Son of a barista. It’s a really, really good product comes with like 100 pods, it was like 90 bucks. Like it was a really good deal. Facebook showed me those often enough that I kept looking at it going “maybe, maybe” and I finally did. If they could do more of that where it feels like content. That would be great.
I’ve got just one more question on this here. Really, maybe two. So Facebook did something evil genius on this, their objection to Apple doing this. And it’s hard to find an objection to more privacy or opt ins. But Facebook basically said, this is going to hurt our ability to target ads for small business. I actually think there’s some truth to that, like, do you think that’s a viable objection? It’s a tough one to make, but it’s probably the only one you can make.
Steve Symington: Yeah, I think it is, it’s sort of like Facebook is is like, ‘think of the children,’ kind of scenario is what they’re what they’re doing. And I think it’s true, you know, as much as Facebook ends up being the enormous beneficiary, similar to how Google does the same thing with Google ads. This is something that can hurt the ability for small businesses in particular, to target people in their area, and to be able to actually drive business, especially if they’re local.
My wife runs a preschool and she’s run Facebook ads that you can really, really narrow down to people in certain areas with certain interests. And she’s gotten several students that way. And this could make it a lot harder for Facebook to to actually provide the best bang for small businesses buck in the process. So yeah, I think that the evil genius move is a valid one.
Dan Kline: Steve, is Apple making this the standard? is Google gonna have to follow in the Android store. Are we going to see more companies making this level of control over your information?
Steve Symington: Yeah, Google, actually, I think just a couple of months ago, I’d need to dig up the the blog post that they posted in their Google ads. It’s part of the the Google Ads blog site. But yeah, Google talked about how they’re doing something in this sense.
Yeah, it’s going to be kind of the way the world functions going forward, because people want a more private internet. But there are ways where you’re still going to get those sort of like, you know, they generalize. So you’re going to have big groups of people, that they can say, well, this group tends to be interested in this stuff, and they can be pretty darn smart. And you may not notice a significant difference in the effectiveness of some of these ads as a result. So it may not be that big of a deal, kind of a moot point.
When all said and done. You end up getting a more private internet where they’re not targeting you as an individual. They’re targeting you as a maybe demographic. So I That’s just yeah, that’s the way forward. And yeah, like you said, we’re still in the early innings. Yeah.
Dan Kline: So as a 47-year-old male who grew up in the 80s, I’m going to be seeing a lot more aggregate ads for Stranger Things. I don’t want to watch it like, please, just stop. Our own Sam Bailey points out that this might be difficult for companies like ours that use targeted ads on social media and in search. And I don’t think it will be for the reasons Steve just said, I think there is a identifiable profile through AI. For people who would be interested in investing, I actually think it’s possible that it might do a better job, because I’m sure sometimes our ads are being seen by people that are very much day traders, and are not necessarily long term investors, the AI might do a better job, Steve, to close this out.
Do you think this opens the door for any regulation? Like I actually think this should be the standard from a legal point of view?
Steve Symington: Right. Yeah, I think, if anything, it kind of softens some of the arguments that more strict regulation is required. It’s not an entirely selfless move on Apple’s part, right, sort of takes part of the target off of their back. And same thing with with Google, and Facebook, you know, they’ve all said they’re open to regulation, as long as it’s the right kind of regulation that sort of understands how the internet works, right. And I think on the surface, the optics of moving in this direction are good from a regulation standpoint. But I think it needs to happen anyway. I guess the bigger challenge is having a congress that understands how the internet works. That’s the problem where you have someone talking to the CEO of Google, asking him why Apple showed him an ad, you know, on his iPhone, or whatever. Or asking Facebook, how they can remain free? There’s so many of those where you’re like, come on guys.
Dan Kline: So I actually talk about this a lot. I think we need an OSHA for the tech industry. I think we did the tech industry to get together and self-regulate, because I don’t think we’ve seen this with the FCC. The FCC doesn’t understand how TV works. So they’ve passed all sorts of hard and fast regulation, that have made it difficult to talk about, you know, not now but when these laws first came out, it might be difficult for say, like a 10am talk show to talk about women getting a mammogram like or men getting a colonoscopy, because you might have to use words or terms that are not necessarily available in that time slot.
So it’s one of those cases where I don’t think old man government is capable of doing this. I’m sure there’s some young Congress people that fully get this, but I think the regulation is going to have to come from elsewhere. Sam Bailey if you want to pop on with audio, our very own Simon Erickson did a podcast that goes much more into the future of digital advertising. Sam if you want to jump on in and promote that you are welcome to do so.
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