In a recent blog post (16 Feb) Alphabet-owner Google dropped a bombshell for the online advertising eco-system.

It revealed a new policy that will prevent advertisers tracking users’ activities, using apps on Android phones. The decision mirrors that taken last year by Apple, that enabled users to opt-out of being tracked by apps on their iPhones and iPads.

The move follows increasing questions regarding the ethics of tacking users’ online activity. 

Currently Google ascribes specific identifiers to each Android device. This enables advertisers to build granular profiles of individuals, and target advertisements accordingly.

The decision to end this process is significant because Google is the largest global advertising company, and numerous advertisers depend on its tools to reach people online. Its dominance is reflected in its ability to generate $61 billion in advertising revenue in the fourth quarter alone.

WHO WINS AND LOSES FROM THE NEW POLICY

Although the changes are not due to be fully implemented for at least two years, when they do go into effect, Facebook’s parent company Meta Platforms is likely to be severely impacted.

After Apple introduced its privacy changes, early reports indicated that over 95% of iPhone users who had downloaded the update, were opting out of ad tracking.

Meta has suggested it stands to lose $10 billion this year due to the privacy changes implemented by Apple.

This provides some indication of the magnitude of the hit that Meta could face from Google’s new privacy initiative.

Looking at the Apple precedent, it is interesting to note that Amazon benefited. This is because Amazon’s internal advertising system draws from a massive database of customer purchasing history.

In marked contrast to its rivals, Amazon is not focused on cross-site and cross-app digital advertising. Rather, it utilises its vast amalgamation of shopper profiles to target relevant advertisements to those browsing on its site. Approximately 75% to 80% of US consumers shop on Amazon, at least occasionally.

Given that Amazon’s data does not leave Amazon’s site (or app), it is considered first party data. Consequently it is not subject to the new privacy requirements.

It is becoming increasingly apparent that companies who are able to demonstrate superior knowledge of their core audience, and extract a high return on investment will emerge as winners.

In the UK market native ad platform Dianomi (DNM:AIM), publisher Future (FUTR), and digital ad play S4 Capital (SFOR), appear well positioned to navigate this new environment.

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