1984: Thread

[grarpamp]

Apple's original "smash" advert widely seen as 1984.



Apple's Diabolical Plan To Control The Ads

https://www.youngmoney.co/p/apples-diabolical-plan-control-ads

Season 19 of the popular comedy television show "South Park" premiered
in Fall 2015. If you are an avid South Park fan, you may remember this
season for its introduction of "PC Principal," an over-the-top social
justice warrior/elementary school principal.

However, there was an underlying sinister plot to the entire season as
well: Internet ads had become sentient, and they were taking over the
world by manipulating human behavior.

In the clip linked below, Eric Cartman gives a detailed monologue
about the rise of ads from simple television advertisements to
cleverly disguised internet ads.

The idea that internet ads are sentient beings trying to wipe out
mankind is as comical as it is preposterous, but Cartman's timeline of
ad development is surprisingly accurate. A little bit too accurate.

On a long enough timeline, every large company eventually becomes an ad network.

Don't believe me? Facebook (Meta?), originally a social network that
allowed friends to connect over the internet, built a $500B business
as an advertisement platform.

Alphabet, the parent company of both Google and YouTube, generated
$55B in ad revenue in Q1 2022.

Amazon may very well be the fastest-growing ad network in the world right now.

Search for literally anything on Amazon. Maybe... vacuum cleaners.
Check out the results. At first glance, it's just a list of products,
right? Look closely in the bottom-right corner:

Do you see it?

Tricky tricky, Hoover Vacuum Cleaners! These sponsored product
placements are, in the world of advertising, prime real estate. Amazon
is the one-stop shop to purchase literally anything online, and Amazon
has more data on consumer product purchases and inquiries than any
other e-commerce platform.

A gold mine of consumer data and millions of page views per day means
that Amazon can charge top dollar for these ad placements. And charge
top dollar they have. In 2021, Amazon's ads were worth more than the
entire global newspaper industry.

    I wondered when Amazon would start disclosing advertising revenue.
Answer: $31bn in 2021 - roughly the same size as the entire global
newspaper industry.
    AWS produced $18.5bn operating income - it's plausible that the ad
business is now more profitable. pic.twitter.com/MCq3zjp3Kc
    — Benedict Evans (@benedictevans) February 3, 2022

This is a feature, not a bug, of well-scaled businesses. While we
traditionally think of "advertising" as a media-focused activity
primarily allocated to television, print, and radio, advertisers
aren't worried about the medium. They are concerned with the reachable
audience.

Pre-internet, massive audiences were only reachable through
traditional media channels. Post-internet, massive audiences are
reachable... everywhere. In scaling billion (and trillion) dollar
businesses, the world's biggest tech companies have all built large,
engaged audiences.

These large, engaged audiences are extremely valuable.

Facebook built an audience of friends who want to connect. Amazon
built an audience of online shoppers. Google built an audience of
people who need to find information right now.

You get the idea.

No one sets out to build an ad business from scratch, but every
business, at a certain scale, eventually sells advertisements as a
byproduct of its own success. If advertisers are willing to pay
thousands, millions, or billions for access to your audience, it's a
no-brainer.

Last quarter, Netflix suffered its first subscriber loss in more than
a decade. The result? They announced a partnership with Microsoft for
an upcoming lower-priced, ad-supported subscription. Growth stalled on
their primary product, may as well sell ads.

With large enough audiences, individuals can become ad platforms too.
Look no further than TikTok and Instagram stars for evidence. Fitness
junkies sell supplements and athletic clothing. Travel influencers
shout out different hostels and vacation spots.

Even Uber also offers car-top advertisements through its "Out of Home"
program, which lets your local barbershop buy ad space on the roof of
your 3 AM ride home.

On a long enough timeline, regardless of the business model, everyone sells ads.

Yet for a while, one tech giant largely avoided the ad game
altogether: Apple. Despite the rest of the tech giants building
advertisement empires, Apple remained focused on its hardware and
software products.

While Apple has long included app store advertisements at the top of
its search results, its 2019 ad revenue was a "measly" $500M.

In comparison, Facebook did $69B in 2019 ad revenue, and Amazon did
$13B in ad revenue in the same year.

However, everything changed in April 2021 when Apple launched its iOS
14.5. While iOS 14.5 brought several updates, the biggest by far was
an overhauled stance on user privacy. With this update, targeted
advertising became much more difficult.

Before 14.5, 3rd-party sites (read: Facebook and Google) could access
your data through software development kits (SDKs) and application
programming interfaces (APIs) embedded in different applications. I
could try to explain the intricacies of this, but I'm not a tech guy.

This Vox article, however, does a fantastic job of explaining what
this process looked like.

    For instance, if a developer wants to let users sign into an app
with their Facebook accounts, they’d want Facebook’s Login SDK. If
their app needs maps or map data, they could use Google’s Map SDK.
Without SDKs, developers would have to build those things entirely
from scratch. That’s time-consuming and could be beyond a small
developer’s abilities or budgets. SDKs may also help apps communicate
with third parties through what is called an application programming
interface, or API. Using the Facebook Login SDK as an example again,
the SDK helps the developer build and implement the sign-in feature in
their app, while the API allows the app and Facebook to communicate
with each other so the sign-in can happen...

    Here’s where the tracking comes in. The data your device’s app
sends to a third party can be used to build a profile of the app’s
user, which advertisers can then use for targeted ads.

    Vox

Because Facebook and Google sign-ins were on pretty much every
application, these sites had access through their APIs to a ton of
consumer information. This information was then used by these sites to
build a profile of "you", which would be used to share more relevant
ads with you when you were on these sites.

Your first reaction is probably "tracking is bad!" because we
consumers tend to value our privacy. However, this "tracking" provides
you with more relevant ads, and it provides many businesses with
higher sales conversions.

If I'm planning a ski trip, and I'm researching different ski resorts,
it would be much better for me, the consumer, to receive social media
ads for ski rentals and lift tickets, not swimsuit discounts.

Because of the accuracy of these ads (especially Facebook ads), many
small businesses, such as e-commerce shops on Shopify, would use
Facebook ads to drive traffic. These ads were extremely effective for
generating high conversion rates at low costs, making them a primary
marketing method for online businesses.

Before 14.5, iPhone users could technically opt out of API tracking,
but you had to dig deep into your settings for the switch. Since the
release of 14.5, you have seen this pop-up window anytime an app wants
access to your information.

This change, which Apple calls App Tracking Transparency (ATT), has
been quite effective. Now, only ~20% of users opt-in to 3rd-party
tracking.

Facebook was, of course, furious. Mark Zuckerberg launched a massive
PR campaign saying that Apple was attacking the "free internet", and
small businesses could see a 60% reduction in sales per dollar spent
on social media ads.

Facebook certainly wasn't launching this campaign out of the goodness
of their hearts; their bottom line would be materially impacted by
less effective targeted ads, as business spend on these ads would
drop. However, Zuck and Co still make a convincing argument: small
business sales would be impacted.

Tim Cook didn't back down. In fact, he painted Apple as a guardian of
consumer data.

    “Technology does not need vast troves of personal data, stitched
together across dozens of websites and apps, in order to succeed,”
Cook said. “Advertising existed and thrived for decades without it.
And we’re here today because the path of least resistance is rarely
the path of wisdom. If a business is built on misleading users, on
data exploitation, on choices that are no choices at all, then it does
not deserve our praise. It deserves reform.”

And Cook makes a good argument! The case for minimizing the tracking
capabilities of technology companies in the name of consumer privacy
is respectable.

But was Apple really concerned with protecting privacy, or was it
looking to kneecap the competition?

AppsFlyer released an advertising Performance Index that covered the
second half of 2021, and guess who was the best ad network for mobile
marketers on iPhones and iPads?
Apple Search Ads!

These are what you see in the App Store at the top of search results.

Apple’s ad network has significantly expanded since Apple changed
marketing practices, hitting 60% of all its business from the first
half of 2020 in just seven weeks in 2021.

Consider me shocked, and I mean shocked, that after implementing
"privacy updates" that hurt other sites like Facebook Meta, Apple
crushed its 2020 numbers in a fraction of the time in 2021.

Why the outperformance? Because of a quirk with iOS 14.5. This update
prevented the sharing of information between different parties (i.e.
Facebook accessing data from other apps). It did not prevent the
exchange of information within a single platform.

Since iPhone owners are Apple customers, and Apple Search Ads is part
of Apple, Apple Search Ads can use different standards and
methodologies to identify the right people for marketers’ ads.

ASA shows ads primarily in the App Store, and if you’re there, you’re
likely there to search for and install apps. If Apple can get the
right ad in front of you, you’re very likely to click on it and
install it.

Tl;dr: Apple can gather and share your data with itself, but different
parties can't share your data with each other.

Pretty convenient outcome from this privacy update, considering that
113M+ Americans have iPhones, isn't it?

And to top everything off, earlier this week, Apple's VP of
Advertising, Todd Teresi, said that he wants Apple's ad business to
increase from $4B annually to "double digits."

So to recap the whole thing, Apple made a new rule that makes it
pretty much impossible for companies to share consumer data with each
other, and they publicly vilified "data sharing" to paint themselves
as a guardian of consumer interests.

Meanwhile, they quietly benefited from their own rules that they don't
have to abide by, thanks to having a near monopoly on cell phone usage
in the US.

While the FTC has been busy shutting down every Mark Zuckerberg
acquisition under the sun, Apple has quietly positioned itself to
dominate the online advertising market of the 2020s.

Shoutout to evil emperor Tim Cook for the power play of a lifetime.