Partnerships and privacy updates are set to impact Google, Amazon, Apple, and Facebook to varying degrees over the course of 2019, with many storylines playing out across multiple members of the big four. Here are a few key developments to keep an eye on and which companies they stand to impact the most.
1. Apple Intelligent Tracking Prevention (ITP) 2.0
Impacted Platforms: GOOGL, AMZN, AAPL, FB
The Impact on Advertising:
The original version of Apple’s ITP limited tracking of users after 24 hours and removed any third-party cookies. However, beginning in September 2018 ITP began removing cookies completely and blocking all tracking of users, limiting the ability to measure conversions on Safari.
The change mainly affects mobile campaigns within Safari, as Safari is rarely a desktop search engine and cookies within apps are unaffected by ITP. Apple is trying to do the right thing by users but has created some challenges for ad platforms to monetize re-marketing campaigns because of diminished ability to target fully-known individuals. While Google initially saw a dip in the amount of search ad traffic attributed to audiences when the update was rolled out, it has since rebounded.
2. Google Safari Search Deal:
Impacted Platforms: AAPL, GOOGL
The Impact on Advertising:
Google pays Apple an estimated $9B-$12B to remain the default search engine within Safari, and while many speculate that Google wants access to Apple user data/targeting, Google’s main purpose for acquiring search browser traffic by default is likely to attract advertising clicks. While that may seem a steep price to pay, we calculate that Google can make $4 for every $1 invested in this deal. In other words, money well spent. Tim Cook was criticized for the deal in the name of privacy, but he stood by the deal citing Google as ‘the best’ search engine.
3. GDPR:
Impacted Platforms: GOOG, AMZN, AAPL, FB
The Impact on Advertising:
General Data Protection Regulation (GDPR) is an EU-based law aimed at protecting customers by ensuring EU citizens are not tracked by 3rd party companies or affiliates without their expressed, active consent. This regulation spelled big trouble for brands and platforms alike, racing to comply with the May 2018 deadline. There was great anticipation and fear that the EU would dole out a large fine to ‘make an example’ out of a major brand or platform, but it took until January 2019 for the first major ruling – a $50 million Euro fine levied on Google for mishandling user data.
Still, it appears that spending has not shifted away from Google, but rather many of the smaller publishers such as OAT, AppNexus or Rubicon. This trend confirmed suspicions that the regulation would only further augment the stronghold of the duopoly of Google and Facebook in the digital marketing ecosystem.
4. Apple to sell products on Amazon
Impacted Platforms: AAPL, AMZN
The Impact on Advertising:
Right before the 2018 holiday shopping season, Apple began selling some of their hottest products on Amazon, conceding to consumer preference and further feeding the product marketplace giant. This came at a time when iPhone sales slowed, though the iPhone is notably not one of the devices that will be offered through Amazon. The arrangement seems to be a clear win for Amazon, as it takes on a new revenue stream paid for by Apple and also gains Apple customer information, which may prove useful in furthering audience and look-a-like audience intelligence.
5. Product Marketplace War:
Impacted Platforms: AMZN, GOOGL
The Impact on Advertising:
Though Amazon continues to dominate e-commerce, Google is growing its resources as an alternative platform, seeking to benefit smaller e-commerce companies. 2019 will be a make or break year for Google’s effort to ‘save retail’ in the US across Google Shopping and Google Express.
For Express to succeed, Google must change consumer behavior to shift well-formed buying habits (particularly for tens of millions of paying Prime subscribers) away from Amazon and to the Google product marketplace environment – especially for quick purchases via mobile and voice (digital assistants). This will be an uphill battle, a challenge highlighted by recent news that Walmart is no longer available as a Google Express retailer.
Regardless of how well Express does, traditional Google Shopping had a banner Q4 in which Y/Y click growth accelerated to 33% and continues to provide advertisers with a huge opportunity for growth outside of the Amazon ecosystem.
6. Fight for #2 ad platform:
Impacted Platforms: FB, GOOGL, AMZN
The Impact on Advertising:
eMarketer predicts Amazon will surpass Oath and Microsoft to become the 3rd largest digital ad platform in the US. As many vendors are moving more of their search budget to Amazon, they have their sights set on challenging Facebook on their #2 ranking. 2019 growth will predominantly come from search advertising formats, with growth in video advertising to ramp up over the next few years.
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