Media

How Google and Apple Are Using ‘Privacy’ to Kill Ad Tech

For years, ad tech CEOs have agonized over various crises—the rise in ad blocking, rampant bot fraud, a pervasive lack of quality control. Yet in the end, it may be none of these worrisome trends that puts these CEOs out of a job.

Instead, the threat may come from a familiar set of names. Google, Apple, and other tech giants have targeted ad tech for disruption. And when they set their sites on a target, they rarely miss.

Why native ad blockers are such a big deal

Earlier this month, Google and Apple both announced they’d be launching native blockers for their browsers (Chrome and Safari, respectively).

Apple’s blocker, called Intelligent Tracking Prevention (ITP), uses machine learning techniques to block tracking scripts used by most websites. Basically, the browser automatically purges cookies from websites you don’t use—meaning after a month of inactivity, sites can’t use that data for re-targeting programs and other behavioral/identify-dependent advertising.

The result is that users are only tracked by websites they actually use. Some cookies are legitimately useful—such as ones that remember your preferences—so it makes sense that Apple would only shutter cookies from sites you rarely or never visit. But it also means ad exchanges have much less data to work with from Safari users. So far, the blocker is only on the desktop version of Safari, though many have hypothesized (myself included) that Apple is moving towards positioning its products as premium, private, and mostly ad tech-free environments.

Google’s blocker goes much further. On the surface, that’s surprising. Unlike Apple, which makes the majority of its revenue from hardware, Google is—at its core—an ad tech company. Around 90 percent of its 2015 revenues came from selling advertising across its various ad tech products such as DoubleClick and AdWords.

So why would Google—who, along with Facebook—account for more than 85 percent of digital ad growth, introduce an ad blocker that comes automatically installed on the most popular browser in America?

The most important thing to understand is that Google’s ad blocker is not really an ad blocker. According to the tech giant, it’s a “filter”. It’s function, they say, is not to block all ads: It’s to block “bad ads”. So what are “bad ads”? Well, they’re whatever Google says they are.

Technically, the company says they will follow the standards set by the trade group Coalition for Better Ads. Yet, Google and Facebook—not surprisingly—are founding members. Fordham Law scholar Mark Patterson told Vox that the group is basically a “cartel orchestrated by Google.”

The result is that Google can set standards for digital advertising that align with their best interests. That equates to a better experience for Chrome users, which Google likely hopes will drive more adoption of Chrome. It also squashes ad tech companies that can’t or don’t meet these standards, driving more ad buyers to Google’s “approved” advertising.

There’s nothing technically illegal about what the company is doing, unless you want to bring up anti-trust laws. And the result—more privacy and a better user experience—means that any sort of customer backlash is unlikely.

Lessons to learn

Advertisers and ad tech vendors alike should take two lessons from Google and Apple’s moves.

First, vertical competition is very real, and should be taken seriously. Major platforms like Amazon, Apple, Google, and Facebook can use their huge scale to pivot and dominate almost any industry.

Second, and more importantly, is that digital advertising is becoming increasingly content-based and targeted. Rather than disruptive advertising like banner ads and pop-ups, Google and Facebook are pushing a more friendly, personalized version of digital advertising. On Facebook, ads run just as any other content does on the News Feed. And on Google, Google AdWords ads link back to content meant to provide some sort of value.

The scary thing for ad tech companies deeply invested in the banner world is that there won’t be backlash against Google and Facebook and Apple for a very consumer-centric reason: it’s what people prefer. And the tech giants are more than happy to give it to them.

Image by Creative Commons
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