iOS 14 tracking changes sees big ad spending drop, tumbling prices

Uber’s [1] experience is one example:

“We turned off two thirds of our ad spend – $100m out of annual spend of $150m – and basically saw no change in our number of rider app installs. What we saw is a lot of installs we thought had come through paid channels suddenly came through organic.”

[1] https://mackgrenfell.com/blog/how-did-uber-waste-so-much-ad-...

I mean... No again. Kinda. Advertising isn't magically gonna make money appear in the pockets of your customers.

Advertising influences how people distribute their income, influencing them this way or that (at least that's the goal).

If advertising becomes worse for everyone, which it did, those weights are just scaled by a fixed amount, arriving at the same end result.

The only winners are those who didn't advertise at all and only competed only on value. Those may see an uptick.

There are three possible theories about how advertising works:

A) Advertising increases consumer spending and makes consumers spend dollars less efficiently based on attributes like branding that are unrelated to quality. In which case, all of this "advertising makes apps free" talk has been really deceptive, because consumers who are viewing ads are spending more money for worse/inflated products to compensate.

In this world, it's worth asking what the costs of advertising are and whether we want it to be the primary way of funding the Internet.

OR

B) Consumer spending/efficiency doesn't change, consumers are smart enough to buy the best product anyway, and the only thing that changes is which companies get that money and have brand recognition. In which case, it starts to become difficult to argue that consumers opting out of ads they don't want to see is particularly harmful. In the world where advertising is just making people aware of new information and helping them make informed purchasing choices, then it's probably a good thing that across the board everyone is being forced to cut down on the pointless noise that amounts to companies trying to scream over each other and increasingly hyper-target people in creepy ways.

If advertising does not increase consumer spending, and if everyone is reducing spending and effectiveness by the same amount on iOS, then this should be good for advertisers -- they'll spend less money on ads, and consumers will still spend the same amount of money themselves. The only reason that wouldn't be the case is if highly targeted ads actually changes consumer behavior and spending habits in meaningful ways -- but if we admit that, we need to admit that the advertising industry is a lot more problematic and a lot less "free" for consumers than it likes to claim.

OR

C) Advertising is a public good, and consumers actually want to know about these products, and ultimately people want targeted ads.

But this is obviously not the case for the majority of advertising. If it was the case, than iOS's changes wouldn't be a big deal. If consumers want targeted ads, they have the option to keep allowing them in iOS. The whole reason we're in this situation is because consumers have overwhelmingly demonstrated that they do not want targeted ads.

So at best, the advertising industry can position itself as a kind of metaphorical "vegetable", claiming that everyone hates them but ultimately the world would be better if more things were commercialized. But it's just not a realistic theory, the data is pretty clear that consumers don't like ads and it's very hard to argue that unrestrained commercialism and forced targeting is good for society. There are more efficient ways we could be doing this if our goal was really just to make it easier for people to compare products and learn about new solutions to their problems.

Of course, this may not be the case for Facebook et al, but it’s definitely the case for a lot of apps and websites that live off advertising. Now, without super narrow targeting, they are suddenly able to sell a lot more inventory.

A recent study says otherwise.

https://pubsonline.informs.org/doi/pdf/10.1287/mksc.2019.118...

Do you have any studies supporting your claim that it "works amazingly well"?

https://en.m.wikipedia.org/wiki/List_of_highest-funded_crowd...

Because nothing else is going on in the world besides your ad campaign, right?

Like you I find the comments about the ad industry here on HN largely ignorant, but I also think most advertisers and agencies are dumb as rocks, or at best high on their own supply. Like, a piece of analysis I saw recently had some claimed weirdass causation along the lines of, X days is the optimum period between first indication of intent in a product and showing an ad for that product, if the user didn't convert immediately. They had run an experiment like you suggest with varying intervals for audiences. But, the way better correlation was with stimulus payouts. That wasn't in their model, because their model only had the inputs they controlled, before and after, and measured delta.

Everyone is selling snake oil because every advertiser is demanding snake oil. It's so fucked up.

I find the whole jargon of this post dystopian.

though it might be changing with the normalization of the fb marketplace, folks aren't usually looking for the things that require advertising inducement on facebook, so there's a significant intent/context mismatch.

I am a single geek with disposable income, why is my feed not filled with ads for cool tech products? I just checked and the only Facebook ad was for cancer awareness.

The ideal system is one where people pay for services and see no ads on the services they pay for and nobody can monetize their data.

Ban advertising, and suddenly this statement is not true anymore: "If you start a new B2C business the only way to do inbound sales is advertisement, as by definition no one knows about your company/brand/products/services."

... for the simple reason that people will look for other means to find products online. For example non-biased search engines, product catalogues, review sites, etc. etc.

And no, listing your product with objective info is not the same as advertising.

This is not strictly true. Inbound sales is one tactic, there is also inbound marketing (aka SEO). The tactic or set of tactics available to a new B2C business largely depends on what trade offs they are willing to make between time and money. A cash-strapped B2C could invest time in SEO, while a decently-funded competitor could invest money in paid search ads. A well-funded rival could do both while also investing in social media ads. The tactics that will prove effective will largely depend on how clear the messaging is relative to more established competitors.

> Outbound sales is (usually) impossible in B2C for cost reasons. Almost every successful B2C company is evidence that advertisement works.

Again, not totally correct because you are using terms in a non-standard way. For instance, you refer to ‘advertisement’ when you really mean ‘marketing’.

Sales and marketing as human activities, have existed from the beginning.

Advertisements, the thing so derided on HN, only became feasible (and widespread) with the help technology. In other words, all ad forms depend on a enabling technology for their existence.

The spread of printing presses eventually made one of the first ad formats—handbills—economically feasible when compared to the traditional practice of shouting to draw attention from patrons to the market square. The telephone made telesales/robocalls economically feasible at a scale that far surpasses doing cold calls on foot (i.e. door-to-door sales). Same with radio, television and ad formats enabled by the modern Web.

Only professional influencer would need to pay in this kind of model that doesn't seem all that bad to me.

If you’re serious about dating, you could afford to spend $10 a month. Most people can make $10 in less than an hour of work. You could probably afford $40 dollars a month easily. Don’t worry, your actual dates will probably cost you more than that and often you’ll get nothing in return...

People have been sucking on the teet of free social media for so long that the thought of even paying a couple dollars for something makes them feel they are buying a luxury good, when you are literally just giving up some pocket change.

Meanwhile, they buy $5 lattes and $10 burgers a few times a week and pay god knows how much for a myriad of streaming services, without a second thought.

It could be the opposite.

The ambitions of social media operators need to be downsized. One of the most salient data points is that WhatsApp served a half billion users with 50 employees when they were acquired by Facebook. And reportedly they were profitable at that point by charging $1 per user per year after the first year. By 2018 Signal had already made a substantial entry into the messaging market with [only 2.3 FTE engineers on average](https://signal.org/blog/signal-foundation/) (I'm not sure on the current headcount but I'm guessing it's still on the order of magnitude of the WhatsApp numbers), and it is self-sustaining based largely on a $50m endowment provided by one individual (Brian Acton, not ironically the co-founder of WhatsApp).

It's totally conceivable that for the type of social media that people prefer (no algorithm in the timeline, no tracking, etc.) a very small organization could provide it.

Could the Signal foundation develop a competitor to Twitter or Facebook, or could the social features and groups in apps like Signal or Telegram (also a relatively small team) continue to chip away at the jobs that people hire Facebook for? I don't see a strong argument against this.

Andrew Carnegie decided to put libraries in cities all across America because he thought he could make a major contribution to the needs of the day through improving access to literacy and self-education to those who otherwise couldn't afford it. From what I can tell [Brian Acton](https://www.forbesindia.com/article/special/i-am-the-david-g...) is doing the same by ensuring that private communication is free and available to even the least amongst us. Why would we assume that we'll see less and not more of this sort of thing?

> Acton: In some ways, I'm the David going against the Goliath that I created. I think that I stand on my principles the most, having been in the industry and seeing how the industry has developed around advertising and behaviour-tracking and user-tracking, I’m here to stand on my principles and present alternatives. I’m not going to just say the world should be a different place. I’m actually going to try and build the world a better place and that’s why I wake up every morning. That’s why I go to work every morning and that’s why I don't sit on a beach and sip cocktails.

As always there is a loud but tiny minority that thinks all ads are bad. Most of us (I assume) think ads are mostly fine but tracking is bad.

This is a lie to children. It's like saying the decision to drop nuclear bombs in WWII was made to bring Japan to surrender and not a show of force to Russia. It's simply a false dichotomy.

Ads exist to maximize profit and its done by pushing individual rights back. Nobody voted to give up privacy to the government or private sector.

The answer to your burning question is simple: people don't give a shit about your product or your ad. Sheep are shaped by what they see. You're paying for a stake in the perverse attention economy.

Then there's some kind of phase change. Like maybe when costs reduce enough for Metcalfe's Law to kick-in.

[I don't quite recall what some other theorists have said. Shirky's observations about cost of coordination. McLuhan's distinctions between passive and active engagement (aka push vs pull).]

Apple's privacy power play may be the first time someone manages to put the toothpaste back into the tube, for an entire medium and by extension ecosystem.

Some mediums, like rail and phones, manage to remain pay to play. Maybe there's something to be learned by compare and contrast.

100k+ metal 3d printers and other industrial engineering equipment. I am a disabled, unemployed student.

I also have serious doubts that "personalized" ads even really exist. It's like they're trying to show me the least applicable products to my life.

Context adjacent ads have worked fine on TV and in magazines for quite a long time. NYT claimed their ad revenue went up by getting back to that.

If you substitute “predatory” for “personalized” whenever the subject comes up, it better represents my thoughts.

> why do you feel that voluntarily purchasing something based on an ad is “manipulation”?

There's nothing in the definition of manipulation that says it has to be involuntary.

I agree it's hard to say how reducing income for app developers of free apps helps users.

If 90% of the ecosystem survives just fine I would call that an unqualified success.

This reads like a very big win for users if "the ecosystem" is adtech.

Apps can still display ads. They may not build a user profile and attach it to your identity across apps.

HN has neither paywalls nor ads.

Fastmail has a paywall compared to gmail - and I gladly pay it. There’s no ad supported option ttbomk.

The only two that don’t have a real alternative are the metcalfed Twitter and FB (and the live traffic feature in maps)

With my mail service, I pay 1€ per month for my mailbox (on a pre-paid model where I deposit 20€ at a time into my account and get reminded when the balance runs low). That's a price that I gladly pay for the benefit of knowing that I'm actually the customer.