Eric Seufert Profile picture
Aug 4 22 tweets 8 min read
APPLE ROBBED THE MOB'S BANK: How Apple's App Tracking Transparency (ATT) policy blew up the digital advertising ecosystem, bolstering its ads business while positioning itself as a champion of consumer privacy. A masterclass in corporate strategy. (1/X)…
2/ Last year, I characterized ATT as a bank robbery: Apple used privacy as a competitive vector to steal advertising market share from Facebook. Facebook has no recourse: it is perceived as so disreputable and unsavory that no one is willing to defend it… Image
3/ Some background on ATT: in 2017, I posited that Facebook's platform ambitions put it on a collision course with Apple. FB continuously pushed Apple policy boundaries and attempted to obviate the gatekeeping mechanism of the App Store.…
4/ I hypothesized that Apple might cut off access to the iOS advertising identifier, the IDFA, so as to cripple Facebook's remarkably lucrative app advertising business. The IDFA is the critical component of identity on mobile & it allows behavioral profiles to be aggregated Image
5/ And in February 2020, before Apple introduced ATT at WWDC 2020, I proposed that Apple might deprecate the IDFA that year by turning the Limit Ad Tracking (LAT) setting on for devices by default. LAT allowed users to "zero out," or obfuscate, their IDFAs…
6/ This is important because LAT was effective: I have been told by multiple measurement platforms that the "LAT on" rate--the percentage of people whose IDFAs were obfuscated to all zeroes through LAT--in the US had reached 40% from inception in 2016.…
7/ But despite LAT, in-app advertising as a percentage of total mobile revenue had grown. Apple famously takes a 30/15% cut of in-app purchases, but it takes no cut from in-app ads. Apple had spawned a massive market from which it gleaned no benefit.…
8/ And meanwhile, Apple's iron grip on iOS payments had weakened: large consumer apps began monetizing off-platform, and Apple was forced to post hoc justify this with convoluted platform guidelines like the reader app rule and the cross-platform app rule.…
9/ And regulators were closing in on Apple's platform policies related to payments and distribution: the company's critical services revenue was threatened by regulatory intervention, hastened by lawsuits from Spotify in the EU and Epic Games in the US.…
10/ In the 2018 timeframe, Apple likely saw a disruption of its control of platform payments as ineluctable. This is also when the company introduced SKAdNetwork, a framework for ad attribution that didn't rely on the IDFA. It was a curiosity at the time.…
11/ Everything made sense in June 2020 when Apple revealed ATT at WWDC 2020. But ATT went further than interrupting mobile app advertising measurement: as a broad policy, it disrupted behavioral profiling across apps & websites, breaking the digital advertising paradigm wholesale
12/ This was not obvious at first but was clarified over time. It must have been a devastating realization for Facebook: app advertising was important, but eComm and retail were its largest categories, & ATT breaks ad measurement & targeting for those, too…
13/ I speculated in January 2021, before its launch, that ATT would engender a 7% headwind for Facebook. That was optimistic: in reality, it was probably closer to 12-15%, across both app and web advertising from within its mobile apps (95% of all revenue)…
14/ And because of the way ATT demarcates between 1st and 3rd party data, Apple's own collection of data from iTunes Connect is considered compliant--meaning the targeting it does with its own ad network is permissible.…
15/ This, coupled with the total inadequacy of SKAdNetwork relative to the efficacy of the separate framework that Apple's ad network uses for measurement, created a clear competitive advantage. I explore Apple's self-preferencing in this piece.…
16/ Relatedly: Apple requests consent for ads-targeting-related data collection with a separate prompt that characterizes its use as "Ads Personalization." This contrasts with the "Tracking" language in the ATT prompt. Image
17/ This is not a semantic quibble: I argue that the ATT prompt doesn't provide for real consumer choice because the benefits of ads personalization--clearly recognized by Apple through the wording of its own prompt!--aren't communicated.…
18/ Note that the UK's Competition and Markets Authority agrees: in a report, the agency takes issue with the wording of the ATT prompt and comes to the following conclusion… Image
19/ Against the backdrop of all of this, Apple's ads business has grown dramatically: in the 2nd entry in the Robbed the Mob series, I cite an analyst who estimates that Apple's Apple Search Ads revenue might grow to $20BN by 2025--up from $2BN in 2021.…
20/ And that's before Apple introduced new placements, which the company announced just last week. Apple very clearly has growth ambitions for its advertising business: as cited in the article linked in the OP, Apple currently has nearly *200* jobs open for its ads platform Image
21/ Concurrently, Apple has conducted a pervasive public relations campaign, buying up billboards and TV airtime to promote its privacy efforts and draw attention to the ways in which advertising platforms build behavioral targeting profiles.
22/ The end result of ATT is that Apple is granted exclusive access to consumer data for ads targeting, ad platforms like Meta and Snap--as well as countless small businesses--have seen revenues severely diminished, and the iPhone is perceived as the vanguard of consumer privacy.

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More from @eric_seufert

Nov 17
What’s the future of mobile free-to-play gaming in the wake of ATT? I outline three ways in which I see the business model evolving in this piece (1/X)…
2/ Back in the summer of 2020, almost immediately after ATT was announced, I wrote a piece in which I presented a taxonomy of meaningful historical changes that have defined the mobile free-to-play ecosystem
3/ I argue in the piece that ATT is an evolution: a market-level event that fundamentally alters the character of the free-to-play gaming business model across distribution, monetization, and engagement.
Read 10 tweets
Nov 5
I question these claims in Scott Galloway’s recent essay on headwinds facing digital ad platforms. TikTok is a convenient red herring, but: 1) TT growth has slowed too & Ive seen no meaningful increase in spend from existing advertisers, 2) TT absolutely is impacted by ATT (1/X)
2/ Certainly TT attracted new trial budgets after ATT as advertisers attempted to recover lost spend on FB, but I havent witnessed TT being able to fully absorb that for performance. And many advertisers are deploying their first dollars of spend (ie cant perceive the headwind)
3/ Performance advertisers *dont* see ad spend as zero-sum across channels. Given payback periods and availability of financing, performance advertisers strive to spend as much as they can, wherever they can.…
Read 9 tweets
Nov 1
Thoughts on Twitter, brand safety, & advertising: brand safety is important to advertisers, most acutely at the extremes. If Twitter becomes 4chan, advertisers will flee. But transforming into a more distilled & homogenous platform would necessitate shedding DAU, anyway (1/X)
2/ Elon raised money from some of the savviest institutional investors in the world to finance the acquisition, & their desire of seeing the value of their investment increase meaningfully over a medium-term timeline is implicit. Declining DAU would obviously jeopardize that.
3/ In order to promote user growth, Twitter must become more broadly appealing, more accessible, & more habitual in its users' lives. That doesn't preclude the existence of fringe subcommunities, but it can't be accomplished if those subcommunities dominate the platform.
Read 4 tweets
Oct 28
It’s impossible to separate Meta’s cost structure with its decline in revenue, since a large proportion (if not all) of its expenditure profile is intended to address the cause of its revenue impairment: ATT (1/X)…
2/ Meta is fighting battles across multiple fronts that span different time horizons. It must: a) extract every penny of value from existing ads infrastructure, b) manage the transition to an open graph, c) build the next gen of ads infra, and d) sever its platform dependency
3/ Any one of these initiatives would be eye-poppingly expensive. In aggregate, and with costs incurred simultaneously, they present a narrative challenge for the company as investors lose faith. But the alternative is simply to manage a slow decline.
Read 6 tweets
Oct 26
$META down nearly 10% AH after a bleak Q3 earnings report: revenue down 4% y/y with Q4 guidance of $30-32.5, which, at the high end, would be a 3% decrease y/y.

This is ATT.…
Read 4 tweets
Oct 25
Alphabet just released its Q3 results: overall ad revenue is up, as is Search, but YouTube revenue is down 2% year-over-year. As I've said: the decline we're seeing in digital advertising is driven by ATT, not macro (1/X) Image
2/ Google Search is totally immune from ATT whereas YouTube is very much impacted by it. The divergence in performance between Search and YouTube is an imperfect but instructive comparison. Why would Search Advertising be up if a recession was depressing digital ad spend broadly?
Read 6 tweets

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