In early February of 2022, Facebook said they’d lose around $10 Billion due to Apple’s App Tracking Transparency feature.
If you think that the size of the entire digital-out-of-home (DOOH) advertising industry is somewhere between $10-20 Billion, that’s a significant amount of money.
Why would Facebook lose this potential revenue just because of a transparency feature on Apple phones?
The reason is that the majority of the people who use Apple phones prefer not to be tracked by 3rd party companies. That means companies like Facebook can’t track users across apps. And that creates challenges for the advertising industry in general.
I’ve always been curious about why people don’t like sharing data with advertisers. Why do they feel so protective about it?
The problem is so big, that targeted ads are actually one of the reasons why some people find ads annoying. Thus, it affects the industry in general.
There is some research around this topic, but my favorite sentence is this one from Leslie K. John, Tami Kim, and Kate Baraszin in an HBR article titled “Ads That Don’t Overstep”: “People don’t always behave logically when it comes to privacy”.
As a little experiment, ask people around you how much they like sharing data with advertisers (while you are at it, go ahead and ask yourself too). You’ll hear various reasons, but you won’t be satisfied.
I think people just act irrationally. And there is not much we can do about it.
Now, humans are humans, and we can’t change that. We have been and will be irrational at times.
Politicians know that. That’s why they introduce all those regulations to protect their citizens. It’s a little funny when you think that the governments have the biggest potential to be the “big brothers.” Think about it; even China, a country famous for watching every step of its citizens, has a law for personal data protection.
Big tech companies also know that. They keep adding new constraints for the collection or use of personal data.
To me, the trend is clear. Collecting and using personal data by anyone (except governments & big tech companies) will be more and more difficult. So the challenge the advertising industry is facing will only get stronger, and personalized advertising will probably be dead soon.
Where will $10 Billion Go?
Now, imagine the $10 Billion Facebook potentially will lose this year, and all the other budgets similar companies will lose this year and in the future? Where will those ad budgets go?
Will advertisers spend less? I don’t think so. They will likely use other channels to connect to their customers.
Being in the DOOH advertising industry, I hope we can benefit from this shift. I actually think we have an amazing opportunity here.
Opportunity for DOOH
I bet you haven’t seen anyone visiting NYTimes.com to see any banner ads, but you’ve seen a lot of people at Times Square watching those shiny beautiful digital billboards.
DOOH screens are not between the content people try to watch, read or listen to. In fact, they are a natural part of the content.
So you can’t hear many people complaining about DOOH screens. Which is great. But then, why does it have such a low share in the ad budgets?
Well, unlike digital advertising, our industry suffers from lack of data. We can’t offer great targeting options to the advertisers. Furthermore, we can’t tell them with 100% confidence that their budgets are spent as planned. We can’t even offer them a proper ad platform where they can track their campaigns in real-time. Most of the time all we can offer is some old-fashion proof-of-play pictures and some Excel/PDF reports.
The digital-out-of-home industry should become truly digital, and fast. Thankfully some technology companies address some of the issues the industry is facing (full disclosure; our company is one of them), but we have to be quicker. There is a great opportunity to modernize our industry and increase our share of the pie.
In any case, companies like Facebook will lose billions of dollars, and some advertising channels will benefit from this trend. The advertising industry will keep growing in general. And our industry will be an interesting space to watch closely in the next few years.