In recent years, industry news has been collected daily from different sources. On the one hand, in order to follow up the industry dynamics, on the other hand, it also precipitates materials for scientific research work. News sources include comprehensive media such as the Wall Street Journal and the New York Times, covering industry media such as AdExchanger, AdAge, Insider, etc., as well as communication with major domestic manufacturers and third-party technology companies.
In the future, every Monday, we will update the "Advertising Week", select at most five news that are of great value to the development of the industry, present facts and provide some brief views of our own, hoping to help everyone.
01 Apple, Dragon Slayer Boy?
"This is one of the most important issues of our time," Apple CEO Tim Cook said of the importance of privacy protection.
The speech was made at the Global Privacy Summit of IAPP (International Association of Privacy Professionals), an association of privacy personnel founded in 2000 and with a wide range of influences. Cook's speech dominated the IAPP agenda, making Apple look like the "flag bearer" of the current privacy agenda in the global tech world.
Unlike other companies' relatively balanced attitudes on privacy issues, Apple has always held a clear and even somewhat "extreme" position on privacy policies, the most typical of which is the "ban" of the advertising identifier IDFA under the FRAMEWORK OF ATT.
The reason why the ban is put in quotation marks is because Apple did not directly ban IDFA, but gave users the space to choose whether to authorize or not. However, due to the use of words such as "tracking" in the prompt box that can easily cause panic among users, idFA's authorization rate has always been sluggish. Monitoring data from mobile analytics platform Flurry shows that the proportion of authorized users has increased in the past few quarters, but it is currently only about 25%. In other words, up to 75% of Apple users are in the signal blind spot of the digital advertising industry.
This has far-reaching implications for the global digital advertising industry. According to the latest calculations of data management company Lotame, Facebook, YouTube, Snap and Twitter will reduce revenue by $16 billion this year because of Apple's privacy policy changes. Among them, Facebook was the most damaged, and its revenue reduction is expected to reach $12.81 billion. The conflict of interests has inevitably sparked tensions in Apple's relationship with other tech companies.
Other companies' dissatisfaction stemmed from the decline in revenue on the one hand, and apple as a major beneficiary of its privacy policy adjustments. Due to the decline in advertising accuracy on other platforms, some of the advertising budget has been shifted to Apple's own search advertising business. After reviewing reports from multiple monitoring companies on this topic, I found that the industry generally believes that Apple's search advertising business will grow between 238% and 264% in 2021, which is obviously a steep growth.
While on the issue of Internet regulation, Apple has responded positively to lawmakers around the world — for example, in his speech at IAPP, Cook once again called on the United States to enact privacy legislation at the national level. Unlike the European Union and China, which have enacted gdpr and personal information protection laws, the privacy legislation in the United States is basically concentrated at the state level, the most typical of which is the California Consumer Privacy Act (CCPA) – but it is worth noting that Apple's response to lawmakers is selective, especially when the bill involves its own interests.
For example, in response to the "Open App Market Act" being promoted by the US Congress, Cook has clearly expressed his opposition. The bill would require Apple to relinquish its monopoly and allow iOS users to bypass the App Store and download apps through other third-party stores or channels (a way known as sideloading). On this issue, Cook also raised the banner of privacy, threatening that this bill will make users' privacy and security unprotected.
As the initiator of the Open App Market Act, Republican Congressman Ken Buck of the United States hit back: "Apple obviously doesn't care about your privacy, Apple only cares about Apple." According to his expectations, even in the face of strong opposition from Apple, the bill will be passed this summer.
Under the image of Apple's intention to continuously strengthen privacy protection, the "privacy" issue may become the key issue that Apple's WWDC will be involved in in June this year. But how to avoid the strange circle of "slaying dragons and eventually becoming a dragon", Apple needs to think more.
02 Musk pushed Twitter "no ads", but it is unlikely to succeed
The battle between Musk and Twitter's board of directors has become a major event in the tech world over the past week.
Earlier this month, Musk abruptly announced a buy-in of Twitter stock, acquiring 9.2 percent of the company's shares for $2.89 billion and becoming the largest shareholder. Subsequently, Twitter invited Musk to the board, an invitation to prevent Musk from continuing to increase his stake, as the upper limit of holdings as a board member is 14.9%. Musk declined the invitation while offering a $43 billion acquisition of Twitter. The latest development in the story is that Twitter's board of directors may launch the "poison pill project" to prevent Musk from owning more than 15% of the shares.
Behind this exciting business war, there seem to be two main differences between Musk and Twitter:
The first is on "free speech", Twitter has moved closer to "political correctness" in recent years, implementing harsh content censorship measures, which Musk sees as an "absolutist of free speech";
Secondly, in "advertising", Twitter is a platform that is highly dependent on advertising revenue, and its advertising business development has accelerated significantly in recent years. Last year, for example, its advertising revenue grew by 40 percent, the highest since 2016. But Musk wants to reduce the platform's reliance on advertising revenue, at least by eliminating ads in its paid subscription version, Twitter Blue. It's nearly impossible to reverse the business model anytime soon, but Musk doesn't seem to care about revenue streams at the moment — in a recent speech, he used grand narrative tactics to claim that he was concerned about the "future of civilization" rather than "the economy."
Dissecting it carefully, you will find that these two differences are intertwined.
Unlike other platforms that focus more on performance advertising, Twitter is similar to Domestic Weibo in that they are more dependent on brand advertisers. According to monitoring by digital marketing intelligence firm Pathways, Twitter's top five advertisers are Kraft Heinz, Mondelëz, Amazon, Nestlé and Disney. Because brand advertisers are more focused on brand image shaping than small and medium-sized enterprises, rather than the realization of immediate effects, they have higher requirements for the context of advertising exposure. When the content presented by the platform does not guarantee that the brand is in a safe environment, these companies withdraw their budgets.
Perhaps in Musk's view, the "kidnapping" of brand advertisers is the reason for Twitter's strict content censorship; to break this bond, twitter needs to be rescued from its high dependence on advertising revenue. But after "no ads", the core question of how Twitter can build a business model that can be driven for a long time, Musk seems to have no intention of giving a truly feasible solution.
It is also worth noting that Musk's ability to come up with $43 billion is also questionable. The vast majority of his wealth comes from his own stock, but selling it means reducing control of the company, and the pledge doesn't seem to be able to buy him enough cash. The final direction of this business drama is confusing, but the entanglement between freedom of speech, brand safety and advertising revenue behind it provides us with a new perspective on the development of the digital advertising industry.
03 Byte Recognition Area Layout "Post-Algorithm Era"
The dramatic contradiction between the launch of a "de-algorithmic" product by an algorithm-based company can explain why byte's new app "Zhi District" has attracted widespread attention.
Since the beginning of this month, the discussion of "zhi district" on the Internet has increased significantly. Because the app still needs an invitation code to register for use, it has led to the phenomenon that a code is difficult to find. "New Feed, Create Your Own", in the product information introduction that pops up after downloading the App, the sentence you see shows the special features of the Zhi district.
Each user who enters the "Knowledge Zone" has the right to create three "Knowledge Zones" based on their interests. People can customize information sources and filtering rules based on topics, for example I created a campaign called "What's Happening In Advertising and Marketing Lately?" In the zhi district, the article information source covers 36Kr, Titanium Media, Morketing, TopMarketing and other technology and marketing media, and the screening rule is that there are articles with "advertising", "marketing" or "creative" in the title.
After a series of operations, me and users who follow the area will be able to receive high-quality articles on relevant topics in real time, without the intervention of algorithms and user behavior data.
In the past, today's headlines, vibrato and other byte systems were dominated by algorithms. Through accurate prediction of user needs, algorithms largely have the power to determine the life and death of a piece of information. Due to the significant increase in the operational efficiency of the entire system, this practice has also begun to be used by more platforms to learn from - the major portal news clients have gradually moved closer to the algorithm, and the WeChat public account message list has also abandoned "timeline sorting" and launched "intelligent sorting" in the first half of 2020.
There is a technical term in journalism and communication called "gatekeeper", which originally means that mass media people who have received professional skills training are responsible for collecting, sorting, screening, processing, and ultimately deciding what information the audience sees. In the new media era of "all-to-everyone communication", people seem to have got rid of the "gatekeeper" and have the right to freely access information, but algorithms have become the new "gatekeeper". Especially when the information presentation model is changed from "subscription + timeline" to "intelligent distribution", the relevant power is quietly transferred from the audience to the platform.
User resistance to the algorithm and some controversies over algorithm distribution (such as the so-called "information cocoon room", "echo chamber", "filter bubbles", etc., but whether these negative effects are really caused by the current algorithm technology is still controversial in the academic community, Tsinghua University Professor Chen Changfeng in two papers in early 2020 has discussed this issue in depth) led to the specification of the algorithm become stricter - on March 1, the "Internet Information Service Algorithm Recommendation Management Regulations" jointly issued by the Cyberspace Administration of China and other departments officially began to be implemented.
In the increasingly stringent state of data and algorithm compliance environment, byte's launch of "recognition zone" is obviously aimed at the post-algorithm era. Although there are no plans for commercialization at present, models such as "Zhi District" cater to the future development trend of the digital advertising industry, that is, relatively weakening the prediction based on the user's fine-grained behavior data, relying more on the existing active expression of user wishes and interests (such as through search, attention, etc.), and balancing the contradiction between privacy and precision in this way.
If you imagine the future commercialization capabilities of the "recognition zone" model, it can be divided into two points:
First, the anchor point of advertising distribution can be transformed from individual users into interest groups, because each "recognition area" gathers users with distinctive characteristics, which naturally completes the user grouping.
In Google's latest Topics API, you can see similar ideas. The Topics API is a new system for interest-based advertising that replaces third-party cookies that may invade users' privacy. In the Topics API, Google will group websites and users into about 350 available topics (e.g., "Advertising & Marketing", "Investing", etc., and the size of the topics may eventually expand to thousands) to achieve precise interest-based targeting and matching. In fact, each "recognition zone" plays a similar role to the topic in the Topics API.
Second, due to the traditional information flow mixed with a large number of good and uneven information, the complicated environment makes the brand easily exposed to high-risk contexts, which makes large brand advertisers prohibitive. The "Awareness Zone" has achieved environmental purification through user self-construction, which caters to the increasing importance of brand safety by large advertisers.
To a large extent, byte-launched "knowledge area" can be regarded as a game of "instrumental rationality" and "value rationality" - the so-called "instrumental rationality" emphasizes efficiency first, while "value rationality" emphasizes the pursuit of value. When algorithms have increased the efficiency of the entire information distribution system to an unprecedented degree, people will begin to reflect on the dark side of algorithms and hope to re-understand and even shape their own information world with values. Although it is difficult to say that it has been successful, it at least reflects that a new value orientation is moving from virtual to real and beginning to land.
04 "Remarkable": The digital advertising market in the United States has soared
In the latest report released by the Interactive Advertising Bureau (IAB) and PwC, "tremendous" is used to describe the U.S. digital advertising market in 2021. This "Internet Advertising Revenue Report" provides a panoramic view of the changes in the US advertising market last year. The U.S. digital advertising market grew 35.4 percent year-over-year last year, the highest growth since 2006, the data showed.
"We had expected 2021 to be a year of extraordinary growth in digital advertising, but even then we were surprised at how much it accelerated," the IAB said. The high market growth rate is reflected in almost all digital advertising types: digital video advertising represented by CTV/OTT has grown by 50.8%, digital audio advertising has grown by 57.9%, social media advertising has grown by 39.3%, and search advertising has also increased by 32.8% year-on-year.
In addition, the report also lists four major trends in the industry that are worth paying attention to in the near future:
Budget flow into digital markets: Advertising budgets are expected to continue to tilt toward digital channels as users' attention converges on digital media, and as games and emerging devices/experiences such as VR and metaversities converge with advertising. In addition, as more commodity transactions take place online, advertisers also want to convey information where the transactions take place.
Implications of privacy and addressability: New regulations, the evolution of new business and technology requirements, and platform upgrades at tech companies such as Apple, Google, and Facebook are all reducing the size of the addressable audience and the ability to attribute ad metrics.
Trust and transparency: Digital advertising systems place higher demands on trust and transparency, and this trend involves complex issues such as ad seller verification, manual traffic, viewability exposure, content correctness, and brand safety.
Values: Consumers are demanding more values, and advertisers need to show information that aligns with those values.
Compared with the 35% growth of the digital advertising industry in the United States, the growth rate of the Chinese market of about 20% last year lagged behind significantly, reflecting that Chinese counterparts are facing a more stringent external environment. Due to its high dependence on the macro economy, the development of the advertising industry is not only seen as a bellwether for economic development, but also sometimes can stimulate economic vitality – for example, the rise of new consumer brands in the past few years has been closely linked to emerging advertising, marketing and operating models.
In the IAB report, the "advertising-backed Internet" has been repeatedly discussed to emphasize the importance of advertising, and China should also build a similar awareness, with the good news that the recently released "Opinions on Accelerating the Construction of a Unified National Market" specifically mentions "improving the influence and awareness of Chinese brands". As an indispensable means of brand building, the advertising industry should not always be "regulated" or "regulated", but also worthy of being "guided" and "encouraged".