How Apple’s privacy settings helped TikTok fight Facebook

The TikTok, Facebook and Instagram apps on a phone screen

Photo: Ascannio (Shutterstock)

In April 2021, Apple dropped a nuclear bomb on the world of online advertising. The company has implemented a new iPhone privacy setting called App Tracking Transparency, or ATT, which shows you, an iPhone user, a popup asking if you would like to “Allow this app to track your activity across apps and sites.” Web of other companies? ” You have two options: “Ask app not to track” and “Allow”. The vast majority of people choose the former, which prevents apps from collecting certain data. Behind the scenes, the change has caused a radical change in the tech landscape. Meta, formerly known as Facebook, said a single setup cost the company about $ 10 billion. Its stock value has plummeted 70% this year. But ATT had another side effect, which attracted far less attention than Meta’s problems. Apple’s iPhone privacy setting gave TikTok a significant edge in its struggle for social media dominance.

“As Meta struggled to maintain performance, TikTok presented a buying market for advertisers where demand was low and supply was high,” said John Donahue, co-founder of programmatic advertising consultancy Up & to the Right, which has worked with major advertisers such as Coca-Cola, Hershey and Linksys. “Timing is everything in life and TikTok couldn’t have timed it better.”

ATT has brought Facebook’s ad targeting systems to their knees, motivating advertisers to look for new places to spend their money. Despite ATT damaged TikTok likewise, the video in abbreviated form the app was in the perfect position to offer an alternative to Meta – its popularity was exploding, its novelty meant ad prices were low, and it had designed new advertising models built for the new world order of privacy.

The privacy setting “showed the risk of having most of the eggs in one basket,” Donahue said.

Tic knock just lowered its ad revenue is expected for the year, but it still is is expected to grow 155%, an increase of $ 6.01 billion over 2021, according to Insider Intelligence. Meanwhile, Insider predicts Meta’s worldwide ad revenue will drop for the first time ever, down 2% from 2021, a drop of $ 2.25 billion. It would be absurd to give ATT all or even most of the credit for those numbers; the recession played a major role in Meta’s losses, as did the company’s remote bet on virtual reality and “the metaverse”. Likewise, Tiktok’s earnings have a lot to do with cultural changes. But there’s no question that TikTok stole ad money that would otherwise have gone to Facebook and Instagram, and Apple’s privacy setting had a lot to do with that.

“ATT has accelerated the move to start funneling more money into TikTok,” said Jasmine Eenberg, a social media analyst at Insider Intelligence. “While Facebook, Instagram and others have suffered under ATT, somehow TikTok has benefited from it.”

App Tracking Transparency is designed to prevent businesses from tracking what you do across different apps, websites, and services. Specifically, the setting revokes access to an ID number called Identifier For Advertisers, or IDFA, which Apple actually created to help ad technology companies track you and target you with advertisements. Let’s say you have a gaming app that you want to monetize. You can connect to the Facebook advertising network, collect the IDFA and send it to Facebook so that they know which targeted ads to show you.

More importantly, IDFA is used to measure how ads are working. Companies like Meta monitor your web activity and observe how your IDFA appears across different apps, noting if your behavior has changed after seeing a particular ad. This process provides an essential metric for advertisers to decide where and how to spend their money. But ATT disrupted that data flow, making it much more difficult to do all the monitoring and analysis. Facebook’s advertising network was built around easy access to that information, and the change caused an earthquake in its systems.

ATT leveled the playing field. TikTok does a lot of targeted advertising, and the privacy setting has hindered the company app in the same way that Meta did. But part of TikTok’s advantage, aside from timing, came from the fact that the app developed ad formats that promised to engage users in new and compelling ways. TikTok “Spark Ads“For example, they offer commercials that allow advertisers to sneak into marketing that resembles the platform’s organic content, which has helped TikTok attract advertisers with a path to the” authenticity “users crave. TikTok also has presented opportunities to work with new and trendy influencers, leveraging the trust content creators have with their audience. At the same time, Meta and other older players in social media were fighting to catch up with TikTok and scrambling to adapt their systems for ATT.

“Advertisers lost faith in Facebook because the platform was experiencing weekly and even daily volatility as they updated their algorithms,” said Alexa Kilroy, head of brand at Triple Whale, an analytics platform that manages data and advertising campaigns for over 6,000 companies. “Meanwhile, TikTok was building the plane as they flew it.”

When reached for comment, TikTok didn’t address whether or not ATT gave him an edge, instead focusing on how the company is addressing the challenges ATT presents. “We want to meet the marketers where they are currently located and also develop new solutions, with marketers, who resist the changes in the data landscape,” said Kate Amery, spokesperson for TikTok.

Suddenly, Meta advertising wasn’t a safe bet and the new opportunities on TikTok were even more tempting. And while the timing was great for TikTok, it couldn’t have been worse for Meta. Facebook and Instagram have been on tilt for years. Young people ditched Facebook, earning a reputation place for baby boomers. Instagram failed to innovate and steal features from other apps it no longer works. Where Instagram has successfully ripped Stories from Snapchat, its effort to copy TikTok with Reels is a big flop. Meta has cluttered its apps more ads And algorithmically adapted content and tuned its services on drive engagement at the expense of a healthy and pleasant user experience. These problems, combined with years of controversy, have left Meta with a commercial problem that TikTok doesn’t have: Facebook and Instagram alone. I’m not cool anymore.

ATT is part of a bitter public struggle between Meta and Apple. ATT was obviously poised to have a huge effect on Meta, whether or not that was Apple’s main intention. After ATT’s announcement, Meta ran away full page ads in major newspapers, berating Apple for harming small businesses by limiting their ability to advertise. The next day, Tim Cook replied on Twitter:

Despite Cook’s tacit acknowledgment that ATT was aimed at Meta, Apple insists the move was about consumer protection. “A user’s data belongs to them and they should decide whether to share their data and with whom,” said Shane Bauer, a spokesperson for Apple. “We gave users the choice of whether or not to allow apps to track them.”

Apple did not address the effect of ATT on TikTok. Meta declined to comment.

“Even before ATT arrived, advertisers were starting to diversify their revenue streams and many were already experimenting with TikTok,” says Eenberg. Meta’s customers were ready to jump, and Apple kicked Meta when it was idle. We still don’t know how well Meta will eventually recover from the blow if he does.

But despite all of Apple’s claims that “privacy is a human right,” the company is exploiting your data and Meta’s decline, albeit perhaps not as much as TikTok. The iPhone maker is building a new ad network after sidelining competitors and freeing up space with ATT. So far, Apple has slipped new ads on the iPhone, it’s working advertising for Apple TVand seems focused on poaching Meta advertisers. In recent months, the company has also updated its tools to help advertisers track user behavior and measure ad performance. Apple is, on the whole, more reserved for exploiting user data than its competitors, but it does track you down when he has explicitly promised not to, according to research published this week. Again, the company denies that ATT is part of a long-standing digital advertising scam. Apple sent Gizmodo a academic study– which the company has funded – arguing that ATT won’t help Apple’s advertising business.

Potential hypocrisy aside, it’s ironic that a privacy-protecting approach helped usher in the era of TikTok, a business that raises troubling new privacy concerns due to potential ties to the Chinese government. The questions about geopolitical privacy are so intense that the Donald Trump administration has threatened to ban TikTok altogether, a threat that lingers in the remarks by FCC hardliners. Ultimately, the privacy issues facing the entire tech industry are so serious that they aren’t it doesn’t matter who owns TikTok, as there are many other ways the Chinese government can obtain American data. But worries over TikTok’s data practices they are not entirely exaggerated.

What is clear is that Apple’s limits on targeted advertising have given TikTok an extra hand in its struggle to control the social media landscape, but that advantage probably ran its course. “I think for the most part TikTok has experienced their accelerator and, from there, it’s a natural trajectory,” said Donahue of Up & to the Right.

ATT gave TikTok a boost by knocking Meta off its perch, but it won’t give the company much more of an advantage in the future. During Facebook’s rapid rise in the early 2010s, the total lack of privacy rules meant the company could print money with targeted ads. TikTok is in a very different situation. The field is crowded with competitors, and ATT makes the social media advertising business less profitable.

“As long as TikTok’s user growth continues, they will continue to be a hot platform and will be able to spend many other social media platforms,” ​​said Donahue. “But TikTok will have a battle to reach the level of dominance in the new world of privacy that Meta didn’t have.”

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