Bad Ads
Advertising is a key part of being a business as you need to appeal your product or service to a consumer and reaching more consumers can grow your business. In the world of e-commerce, the high growth industry that has been dominating in the last few years, advertising is a necessity, and they often use social media apps like Facebook to advertise products. Dropshippers, you guys know exactly what I’m talking about. This is a smart way to advertise as people scrolling through their social media apps can see ads, and they can make purchases off them. It costs money per user to do this, but the revenue often outweighs it.
To access social media apps, though, you need to download them through the App Store. Yes, going through the whole chain of advertising in e-commerce, the top part of the link is Apple, which seems weird. We have seen Apple remove apps before, so they aren’t powerless by any means. Anyways, Apple recently introduced a new privacy change in their recent update, and it’s had a bigger impact than I could’ve imagined. The policy requires apps to ask users if they want to be tracked, and when someone asks you that, your answer is likely no. Statistics show that, with US users allowing tracking only 16 percent of the time when they receive Apple’s prompt, which poses a problem to e-commerce companies. Without the ability to track consumers, they can’t get more data on consumers regarding their habits, which prevents them from targeting ads at specific types of users. This makes ad spending very inefficient, hence higher costs for businesses. Some are seeing a 25 percent increase in ad costs, and others are seeing double the cost. At that point, it isn’t worth it to them, which is hurting the big businesses too. Snap said in their earnings call last week that the Apple policy slowed growth heavily and contributed to the miss in revenue numbers, and Facebook expects the same. I can’t believe I’m saying this, but it looks like Apple is the current demise of the e-commerce industry. Do you think Apple is correct in placing this privacy policy?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
