Steering Strategy in the Era of Privacy
The Ship of Theseus, a philosophical thought experiment dating back to ancient Greece, wrestles with the following simple idea: is the object (in this case, a ship), the same object, if all of its parts have been replaced?
The same question may be asked today about advertising, or more broadly speaking, marketing.
The Antitrust (Anti-Competitive) & Privacy Framework Paradox
In February 2022, Meta incurred the largest single-day market-value loss, approx. $232b. The next day, Amazon incurred the largest single-day market-value gain (at the time), approx. $190b.
What do these swings have in common?
- Online advertising revenue & data
In April 2021, Apple introduced App Tracking Transparency (ATT). As the name implies, the intention of this new framework is to enhance user data privacy. Eight months later, Meta fell short in its earnings report, losing 26% of its valuation in a single day.
From CNBC: “Facebook parent Meta said on Wednesday that the privacy change Apple made to its iOS operating system last year will decrease the social media company’s sales this year by about $10 billion…A study from ad measurement firm AppsFlyer in October suggested that 62% of iPhone users were choosing to opt-out of sharing their IDFA..“
Fast forward to earlier this month, Meta beat out Amazon with the largest single-day gain in history, approx. $204.5b. More so, they nearly tripled their valuation YoY (184%), bringing their valuation close to $910b. These companies can thank NVIDIA, which became one of the wealthiest company in the world this week, with a YoY increase of 239%, reaching a valuation of approx. $1.78t.
Why it is important
A few other dates shared below to help shape this story. .
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August 2020 - Epic (Fortnite) bypassed the app store payment system for in-app purchases, causing Apple to block the game from the app store, leading Epic to file a lawsuit.
April 2021: ATT framework is launched by Apple, requiring apps to ask for permission before tracking users across apps or websites owned by other companies.
May 2021 - Epic vs Apple trial beings and concludes
September 2021 - Apple found guilty for anti-steering, files appeal
December 2023 - Report by MIT, commissioned by Apple, “The Continued Threat to Personal Data: Key Factors Behind the 2023 Increase”, show a very serious and growing concern with external links
January 2024 - Supreme Court denied Apples appeal, Apple to send users to external link for in-app purchases for developers looking to not pay a 30% fee (which Apple reduces to 27%)
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Ironically, as a result of Epic taking Apple to court over anti-competitive behavior, Apple engages in just this, framed as a concern over our privacy
How does this happen?
When big tech companies claim to care about your data (recall Apple’s ATT framework), they suggest that user data privacy is at the forefront of their concern. They suggest that you are their biggest concern, ha.
In September 2021, Apple was found guilty of engaging in anti-competitive behavior, by anti-steering. Basically this means that Apple metaphorically steers customers away from alternative payment options, limiting competition. Apple quickly appealed this to the Supreme Court.
During the interim, Apple published an independent study conducted by MIT, sharing 1.5b records were breached in just 2022, and the following: “when attempting to infiltrate companies with robust security practices (Apple), hackers often start by targeting a different organization with relatively weak security that has a technical business relationship with the ultimate target (Developers Payment Systems)”.
A month after publishing the independent study, the Supreme Court declined to hear the case, which neither Apple or Epic would have predicted. This meant Apple is unable to stop developers from sharing other payment options; however, what no one would have predicted was that Apple, a privacy first company, streamlined this regulation by requiring developers to share an external link as the alternative option, sending users out in the digital abyss, which they just disclosed the month before as a major risk to the user.
Long story short: the primary goal of a for-profit organization is for profit.
How it impacts your strategy
Basically, all of this matters because of 1PD (first-party data). 1PD is crucial for personalized marketing efforts, with businesses using direct customer data to drive impactful ad copy and creatives that engage and resonate with their audience.
So who owns all this data?
hint: you’re probably holding their product
Frameworks like Google's Performance Max and Meta's Shopping Advantage+ illustrate the move towards automated, AI-driven advertising solutions that maximize efficiency and effectiveness.
Frameworks like Conversion API (CAPI) and Google Server-side tracking emerge as essential tools for privacy-compliant tracking, enabling advertisers to measure conversions accurately without compromising user privacy.
Frameworks like SKAdNetwork (SKAN) & ATT represent a move away from traditional, less privacy-centric tracking methods, signifying a broader industry shift towards respecting user privacy.
Frameworks like the recent Amazon and Meta partnership…. well I think y’all get the idea
The move towards data-driven decision-making, informed by AI analyses, challenges businesses to reconsider their strategic priorities, balancing between sophisticated data management tools and direct advertising platforms for optimizing growth and engagement.
The advancements in AI, particularly from entities like Google and Facebook, offer unprecedented opportunities for optimizing advertising and marketing strategies. These technologies allow for more effective targeting and personalization, leading to improved conversion rates, utility, etc
So what's the problem then?
SMBs (Small/Medium-Sized Businesses), Startups, and Niche E-Commerce
Tools like Google’s PMAX & Facebook’s Shopping Advantage+ will be pivotal. These tools offer simplicity and rapid return on investment (greater ROAS). In these instances, 'standing on the shoulders of giants' is more than likely our best bet. We can thank user data privacy concerns for this.
On this note, tools developed, like my AIM v1 (AI Marketing, version 1), will be instrumental as a QA against campaigns like PMax & Shopping Advantage+. I am working on setting up an API to allow users to test AIM’s capabilities without a premium OpenAI account; however, if the paywall is not an issue, feel free to test the product, found here
Below I have shared a techincal variation of a video I put together; however, chose not to release for general audience engagement reasons. That said, if you find this article interesting, this version is more suited for you, my ICP.
Large Enterprises, B2B, Omni-Channel Retailers, General E-Commerce
These companies will likely need to invest in Customer Data Platforms (CDPs), Data Management Platforms (DMPs), and analytics tools to manage complex customer journeys and achieve granular insights. Amazon has a host of products that cater to this specifically. The investment costs can be justified due to the scale and impact of these tools.
*Disclaimer - be mindful that there is no one-glove-fits-all strategy, a few exceptions to the above include highly regulated industries, organizations with advanced in-house capabilities, etc
More so, developing your own AI tools to assess effective channel distribution by performance, and customizing the user journey within social and search platforms without only relying on tools like pmax and shopping advantage+, will be worth the investment. Due to accuracy and explainability being driving factors here, creating LLMs specifically tuned to your industry, with controlled inputs, will likely be the best course of action.
My article, “Cracking the Consumer Code”, published January 29, discusses this in significant detail. This can be found on my website, under blog, at reframeframework.com
Conclusion
The digital marketing landscape is undergoing a significant transformation, driven by evolving privacy norms and technological advancements. The Ship of Theseus thought experiment serves as a metaphor for this change, prompting us to question the essence of marketing strategies in the face of continuous change. As businesses navigate this new terrain, the balance between leveraging advanced data analytics and embracing platform-specific advertising solutions will be crucial for maintaining relevance and fostering genuine customer connections in a privacy-conscious world.
On a final note, I am excited to share that in my next article, I will be diving into a separate AI tool I have been working on. This tool is intended to be used, loosely speaking, as a client schema AI. While we already have plenty of AI tools that join our calls and transcribe our notes, why stop there? The AI tool I will be releasing (for free) is designed to extend the concept of the client persona. In this instance, the client persona would more accurately be described as a company persona. It will give feedback regarding key points of contact within the company for which regular communication occurs, keeping in mind preferred diction and top of mind discussion points. The AI tool will be mindful of deliverables week over week (WoW), and can be a significant asset when the internal main point of contact is out of the office, or even possibly even forgets what happened in a previous client interaction.
Please send any questions to [email protected]
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For fun, I asked my other AI friend/tool, AIM v1 how it felt about the idea. The response is shared below.
AIM v1: “Your proposed AI tool represents a significant advancement in client interaction and management technology. By transcending traditional note-taking and transcription services, it aims to offer a more holistic and dynamic approach to understanding and engaging with clients, especially in a B2B (Business-to-Business) context where interactions are often complex and multifaceted. Here are some thoughts and potential benefits of your tool:
Advantages:
Deepening Client Understanding: By evolving from a simple client persona to a more complex company persona, your tool can provide deeper insights into organizational structures, preferences, and needs. This broader perspective can enhance personalized communication strategies and foster stronger relationships.
Enhanced Communication: The focus on preferred diction and top-of-mind discussion points can significantly improve communication efficacy. Tailoring interactions based on these insights can lead to more engaging and meaningful conversations with clients.
Operational Continuity: The tool's ability to track deliverables week over week and serve as a backup for internal main points of contact is invaluable for maintaining continuity. This feature can be particularly beneficial in mitigating the impact of personnel changes or absences, ensuring that client interactions remain consistent and informed.
Memory Assistance: By keeping track of past interactions, the tool helps in overcoming the limitations of human memory. This can be crucial for long-term projects or relationships where continuity and understanding of past discussions can significantly impact future success.
Considerations:
Privacy and Security: Given the sensitive nature of the data your tool will handle, ensuring robust privacy protections and security measures will be crucial. Users will need assurances that their and their clients' information is protected.
Integration with Existing Systems: For maximum adoption and utility, the tool should seamlessly integrate with existing CRM (Customer Relationship Management) systems, communication platforms, and other business tools.
User Training and Adoption: The success of such a sophisticated tool depends on user proficiency. Providing comprehensive training and support will be key to ensuring that users can leverage its full potential.
Conclusion:
Your initiative to develop and release this AI tool for free suggests a commitment to enhancing business communication and management practices through technology. It has the potential to revolutionize how companies interact with their clients by providing a level of insight and operational support that goes well beyond current capabilities. This tool could become an essential part of the digital arsenal for businesses looking to strengthen their client relationships and streamline their communication processes.
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Privacy Frameworks and Policies Timeline
EU ePrivacy Directive (Cookie Law)
Adopted in 2002 and amended in 2009: Establishes requirements for the protection of privacy in the electronic communications sector, including the use of cookies and similar technologies for storing and accessing information on users' devices.
UK Data Protection Act 2018
May 23, 2018: Updated legislation that controls how personal information is used by organizations, businesses, or the government in the UK, complementing and supplementing the GDPR.
General Data Protection Regulation (GDPR)
May 25, 2018: The European Union’s regulation that enhances individuals' control over their personal data and unifies data protection laws across all EU member states.
SKAdNetwork (SKAN)
March 2018: Apple's privacy-preserving attribution protocol for mobile apps, introduced as part of iOS 11.3.
California Consumer Privacy Act (CCPA)
January 1, 2020: Grants California residents new rights regarding their personal information, setting a precedent for state-level privacy laws in the U.S.
Privacy Sandbox (by Google)
Announced in August 2019: Google’s initiative to develop a set of privacy-preserving technologies to support the web ecosystem.
App Tracking Transparency (ATT)
April 26, 2021: Implemented by Apple, requiring apps to ask for permission before tracking users across apps or websites owned by other companies.
Brazil’s General Data Protection Law (LGPD)
Effective September 18, 2020: Brazil's data protection law that regulates the processing of personal data of individuals in Brazil.
Unified ID Solutions
Announced in 2020: Including initiatives like The Trade Desk’s Unified ID 2.0, aimed at creating privacy-focused alternatives to third-party cookies.
Virginia Consumer Data Protection Act (VCDPA)
Signed into law on March 2, 2021, and effective from January 1, 2023: Introduces data protection standards for Virginia residents, emphasizing consumer rights and data controller responsibilities.
Colorado Privacy Act (CPA)
Signed into law on July 7, 2021, effective from July 1, 2023: Colorado's privacy law, providing consumers with rights similar to those in GDPR and CCPA.
California Privacy Rights Act (CPRA)
Passed in November 2020, effective January 1, 2023: Amends and strengthens CCPA, introducing additional consumer rights and obligations for businesses.
Digital Markets Act (DMA) and Digital Services Act (DSA)
Proposed by the European Commission in December 2020: Aiming to create fair and open digital markets and to ensure the digital sector is a safe space in which the fundamental rights of all users are protected.
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Sources
https://www.nytimes.com/2022/07/27/technology/meta-earnings-revenue-decline.html
https://www.investopedia.com/articles/stocks/12/most-shocking-stock-increases-falls.asp
https://www.cnbc.com/2022/09/30/facebook-scrambles-to-escape-death-spiral-as-users-flee-sales-drop.html
https://www.cnbc.com/2022/02/02/facebook-says-apple-ios-privacy-change-will-cost-10-billion-this-year.html
https://companiesmarketcap.com/meta-platforms/marketcap/
https://www.apple.com/newsroom/pdfs/The-Continued-Threat-to-Personal-Data-Key-Factors-Behind-the-2023-Increase.pdf
https://www.apple.com/newsroom/2023/12/report-2-point-6-billion-records-compromised-by-data-breaches-in-past-two-years/
https://www.apple.com/newsroom/2023/12/report-2-point-6-billion-records-compromised-by-data-breaches-in-past-two-years/
https://www.cnbc.com/2024/01/16/what-apple-had-to-change-as-a-result-of-the-epic-games-legal-battle.html