Consumer Privacy Concerns May Affect Future of Digital Ads

Apple and Google are introducing privacy protections to thwart marketers from gaining access to consumer data when displaying ads, a change that is expected to seriously impact the online advertising schema that is the bedrock of ‘free’ apps and websites like Facebook and TikTok. In April, Apple iPhones debuted a pop-up window that asks people for permission to be tracked by apps. Google has outlined plans to disable a tracking capability in its Chrome web browser. And Facebook announced last month that is working on a new type of ad display that will not rely on personal data.

The developments may seem like minor tweaks, but they are part of “an intensifying battle over the future of the Internet” with serious implications for the ways that businesses monetize digitally, warns The New York Times. “More than 20 years ago, the Internet drove an upheaval in the advertising industry” by gutting classified and print ads that were the lifeblood of newspapers and magazines, then encroaching television advertising as the medium for reaching large audiences.

Although it seems hard to believe companies like Facebook, Google and Twitter will self-regulate the ad tracking that fuels their businesses because consumers want more privacy, they appear to at least be paying lip-service to the business model that enables consumers to enjoy their social services free of subscription charge. That business model involves enabling cookies that help marketers get a beat on practically every move consumers make online then use the information to target relevant ads.

“Now that system, which ballooned into a $350 billion digital ad industry, is being dismantled” as companies heeding privacy concerns rewrite the rules of online data collection, NYT reports.

Apple has introduced tracking blockers that some speculate will result in even higher prices for its platforms and devices — sort of privacy as luxury. Google, NYT reports, “is trying to have it both ways,” reinventing the ad paradigm in a way that will allow it to continue targeting people with personalized ads without actually providing access to their personal data.

Jeff Green, chief executive of ad-tech firm The Trade Desk, suggested that while this battle may “initially hurt tech giants like Facebook,” the fallout won’t last long, since “businesses that can no longer track people but still need to advertise are likely to spend more with the largest tech platforms, which still have the most data on consumers.”

David Cohen, chief executive of the Interactive Advertising Bureau, said the changes will continue to “drive money and attention to Google, Facebook, Twitter.” The end result may be some sort of opt-in with a subscription fee as alternative. Possibly, the Internet may begin looking different on different products: on Apple devices, ads may be only tangentially relevant to a user’s personal interests, compared with more targeted ads on Google apps.