NEW YORK (NYTIMES) – The Internet industry shuddered last year when Apple introduced privacy measures for the iPhone that threatened to upend online tracking and cripple digital advertising. Google pledged similar privacy actions.
But in less than a year, another type of Internet tracking has started taking over. And it is having the unintended effect of reinforcing the power of some of tech’s biggest titans.
The shift suggests that gathering people’s online data for targeted advertising is not going away. That has implications for how companies make money online and how the Internet operates. It also underlines the advantages built up by some of the largest digital platforms.
“They’ve entrenched their own power,” Mr Eric Seufert, a media strategist and the author of Mobile Dev Memo, a blog about mobile advertising, said of Apple and Google.
For years, digital businesses relied on what is known as “third-party” tracking. Companies such as Facebook and Google deployed technology to trail people everywhere they went online. If someone scrolled through Instagram and then browsed an online shoe store, marketers could use that information to target footwear ads to that person and reap a sale.
But that kind of invasive tracking is being scaled back or blocked by Apple and Google to protect people’s privacy. Last April, Apple introduced a feature so iPhones users could choose not to be followed by different apps. Google also announced a plan to disable the tracking tech in its Chrome Web browser by 2023 and said it was working to limit data sharing on Android phones.
Now, tracking has shifted to what is known as “first-party” tracking. With this method, people are not being trailed from app to app or site to site. But companies are still gathering information on what people are doing on their specific site or app, with users’ consent. This kind of tracking, which companies have practised for years, is growing.
In other words, Google is accumulating data on its own users’ search queries, location data and contact information. Pinterest is doing the same with its users on its site and app, while TikTok is gathering information on the people who are on its app. The New York Times also does first-party tracking.
The rise of this tracking has implications for digital advertising, which has depended on user data to know where to aim promotions. It tilts the playing field toward large digital ecosystems such as Google, Snap, TikTok, Amazon and Pinterest, which have millions of their own users and have amassed information on them. Smaller brands have to turn to those platforms if they want to advertise to find new customers.
Many small businesses already appear to be spending less on digital ads that rely on third-party data, such as Facebook and Instagram ads, and are reallocating marketing budgets to platforms with lots of first-party information, such as Google and Amazon.
“Anybody who is in their right mind and wants to reach a large audience still has to go to them,” computer science professor Douglas C. Schmidt from Vanderbilt University, who researches digital privacy, said of the big tech sites.
Consider Stoggles, a company in Pasadena, California, that sells fashionable protective eyewear online. The firm, which spends about US$250,000 (S$340,000) a month on online advertising, has long earmarked roughly 80 per cent of its marketing budget to buying Facebook and Instagram ads to identify new customers, said Mr Max Greenberg, one of the founders of Stoggles.
But after Apple made its privacy changes, Stoggles trimmed its spending on Facebook and Instagram ads to 60 per cent of its budget, Mr Greenberg said. The company instead bought more Google search ads, Amazon ads to reach shoppers and ads on TikTok to appeal to young people.
“The days of super cheap and very targeted online marketing are over,” Mr Greenberg said. “We need to experiment with other platforms.”