Digital advertising: companies reliant on behavioural technology need new workarounds

Online advertising and digital privacy do not coexist in harmony. New privacy regulations, particularly in the EU, mean the days of being stalked around the internet by personalised adverts may be coming to an end. Not every tech giant is ready for the shift.

Meta, the company formerly known as Facebook, expects to lose $10bn of revenue this year as a result of Apple’s privacy changes that automatically opt users out of advertising tracking. It is also spending less on advertising as it battles inflation and supply chain problems. Shares are down 43 per cent from their high point last year.

Yet other companies that rely on digital ads tell a different story. Snap, Pinterest and Google beat revenue expectations in the past quarter. That dovetails with data showing global digital advertising spending continues to grow. GroupM expects growth to exceed 22 per cent to more than $766bn in 2022 — excluding political adverts.

What is changing is where those dollars are spent. The US has debated banning targeted adverts altogether. In the EU, there are plans to curb the use of certain data for personalised advertising. Google plans to ban third-party cookies — software trackers — on Chrome in 2023. These privacy regulations focus on ads that track browsing behaviour. Click on a pair of trainers, for example, and watch as they follow you from site to site by adverts.

That is a vulnerability for the likes of Meta, which relies on this third-party data to sell adverts. Companies with sufficient first-party data to find workarounds or who use contextual advertising, focusing on website content, are less affected.

Google can serve adverts to users based on searches. Amazon has its own data gleaned from customers’ purchase history. Apple knows what users are searching for in its App Store. Meta continues to defend targeting advertising as good for consumers and businesses. But momentum against surveillance advertising is gathering. Meta is in need of a better response.

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Source: Financial Times