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You are still being tracked on the internet, but in a different way


“They consolidated their own power.”

An undated photo provided by Stoggles shows company co-founders Max Greenberg, left, and Rahul Khatri. “We need to experiment with other platforms,” Greenberg says of online advertising. (Stoggles via The New York Times)

The internet industry shook last year when Apple introduced iPhone privacy measures that threatened to disrupt online tracking and cripple digital advertising. Google is committed to taking similar privacy measures.

But in less than a year, a different type of internet tracing began to take over. And it has the unintended effect of bolstering the power of some of tech’s biggest titans.

This change suggests that the collection of online user data for targeted advertising is not going away. This has implications for how businesses make money online and how the internet works. It also highlights the advantages accumulated by some of the largest digital platforms.

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“They’ve established their own power,” said Eric Seufert, media strategist and author of Mobile Dev Memo, a mobile advertising blog, about Apple and Google.

For years, digital businesses have relied on what is known as “third-party” tracking. Companies such as Facebook and Google deployed technologies to track people wherever they went online. If someone was scrolling through Instagram and then browsing an online shoe store, marketers could use that information to target shoe ads to that person and reap a sale.

But this kind of invasive tracking is reduced or blocked by Apple and Google to protect people’s privacy. Last April, Apple introduced a feature allowing iPhone users to choose not to be tracked by different apps. Google also announced a plan to disable tracking technology in its Chrome web browser by 2023 and said it was working to limit data sharing on Android phones.

Now tracking has moved to what is known as “first party” tracking. With this method, users are not tracked from app to app or site to site. But companies still collect information about what people do on their specific site or app, with users’ consent. This type of tracking, which companies have been doing for years, is growing.

In other words, Google accumulates data about search queries, location data, and contact information from its own users. Pinterest does the same with its users on its site and app, while TikTok collects information about people who are on its app. The New York Times also does the first-party follow-up.

The rise of this tracking has implications for digital advertising, which relied on user data to know where to target promotions. This tilts the playing field towards large digital ecosystems such as Google, Snap, TikTok, Amazon and Pinterest, which have millions of users and have amassed information about them. Smaller brands need to turn to these platforms if they want to advertise to find new customers.

Many small businesses already appear to be spending less on digital ads that rely on third-party data, such as Facebook and Instagram ads, and reallocate marketing budgets to platforms with lots of first-party information, such as Google and Amazon. .

“Anyone who is sane and wants to reach a large audience should always go,” Douglas C. Schmidt, a Vanderbilt University computer science professor who studies digital privacy, said of major tech sites.

Consider Stoggles, a Pasadena, Calif. company that sells fashionable goggles online. The company, which spends about $250,000 a month on online advertising, has long spent about 80% of its marketing budget buying Facebook and Instagram ads to identify new customers, said Max Greenberg, one of the founders of Stoggles.

But after Apple made its privacy changes, Stoggles cut spending on Facebook and Instagram ads to 60% of its budget, Greenberg said. Instead, the company bought more Google search ads, Amazon ads to reach shoppers, and TikTok ads to appeal to young people.

“The days of super cheap, highly targeted online marketing are over,” Greenberg said. “We need to experiment with other platforms.”

Some tech companies have said they don’t consider monitoring, collecting, and storing data about their own users as tracking. Collecting such first-party information, they said, is the digital equivalent of a supermarket monitoring customers in its store and using that data to persuade businesses to advertise or offer coupons. .

Google and Apple said the change was not a way to bolster their own rankings. Apple said it had to follow the same rules as everyone else. Google said it made a commitment to regulators not to adopt privacy measures that would give it an advantage. He also said he was working on software to help advertisers and website publishers who didn’t have access to first-party data.

Theoretically, Facebook and Instagram would also benefit because they have lots of first-party data. But their parent company, Meta, has struggled to manage the transition. In February, the company said it expected to lose $10 billion in sales this year due to Apple’s privacy measures.

To adapt, Meta has hired hundreds of engineers to work on new ad targeting systems that don’t rely on tracking people across the Internet. He also asked small businesses to share information about their customers with him to improve his ad performance.

Landon Ray, CEO of Ontraport, a software company that works with small businesses, said Meta has been broadcasting a presentation to Ontraport customers for the past few months, encouraging them to share their customer information with Meta.

“The idea is that if everyone does that, then Facebook would have all the data it needed again,” Ray said.

In a statement, Meta said the effort was no way to evade Apple’s privacy policies and that advertisers must obtain permission from their users to share data with it. He added that he created the program before Apple’s changes and that Google and Snap were doing similar things. Mark Zuckerberg, CEO of Meta, said his company expects to benefit from the long-term tracking changes.

As Meta adapts, some small businesses have started looking for other avenues for ads. Shawn Baker, owner of Baker SoftWash, an outdoor cleaning business in Mooresville, North Carolina, said it used to take about $6 worth of Facebook ads to identify a new customer. Now it costs $27 because the ads aren’t finding the right people, he said.

Baker began spending $200 a month to advertise through Google’s Marketing for Local Businesses program, which pops up her website when locals search for cleaners. To compensate for these higher marketing costs, he increased his prices by 7%.

“You spend more money now than you had to spend before to do the same things,” he said.

Other tech giants with first-party information are capitalizing on the change. Amazon, for example, has tons of data about its customers, including what they buy, where they live, and what movies or TV shows they stream.

In February, Amazon first disclosed the size of its advertising business — $31.2 billion in revenue in 2021. That makes advertising its third-largest source of sales after e-commerce and cloud computing. Amazon declined to comment.

Amber Murray, owner of See Your Strength in St. George, Utah, which sells stickers online for people with anxiety, began experimenting with ads on Amazon after Facebook ad performance deteriorated. The results have been remarkable, she says.

In February, she paid around $200 to have Amazon feature her products at the top of search results when customers searched for textured stickers. Sales totaled $250 a day and continued to grow, she said. When she spent $85 on a Facebook ad campaign in January, it only brought in $37.50 in sales, she said.

“I think the golden age of Facebook advertising is over,” Murray said. “On Amazon, people are looking for you, instead of telling people what they should want.”

This article originally appeared in The New York Times.


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