Tech Fix: With rumored DSP, Apple faces tricky balance between ad revenue and privacy

Tech Fix: With rumored DSP, Apple faces tricky balance between ad revenue and privacy

Welcome to The Tech Fix, a weekly newsletter where we break down the latest technology news and trends from the advertising and marketing industry, curated by technology editor Jessica Heygate.

Hot topic: Apple appears to be building a demand-side platform (DSP), according to a job posting from April seeking a product manager to design “the most privacy-forward, sophisticated demand-side platform possible.” The news was first reported by Digiday and has caused a stir in the industry, which has been at odds with Apple since its abrupt crackdown on ad tracking last year. 

While Apple has positioned itself as a bastion of user privacy, revelations that it is quietly building ad tech add further fuel to the argument that it is attempting to grow its monopoly. A DSP would give Apple much greater control over its user data and which advertisers it permits on its services, enabling it to scoop a larger portion of ad spend.

A key question on many people’s minds is how Apple will balance its public privacy stance while simultaneously providing a channel for advertisers to access its users.

Joshua Palau, a seasoned ad exec who is currently SVP of growth marketing and media at LendingTree, said Apple’s move to grow its ad business is “not surprising” given its treasure trove of first-party data. Moreover, doing so will provide Apple with a revenue stream that is protected from hardware and supply chain issues.

“But I am curious how they keep to the same brand theme of privacy and become a DSP. It is not impossible but balancing those two sides is a fine line,” Palau said.

Apple will have to decide what is fair game and what constitutes a privacy violation, said David Zapletal, COO at ad tech firm Digital Remedy. “It's left to be seen what sort of data ingestion and targeting restrictions will be in play as the company will have to reconcile its own focus on privacy and using data and tracking for targeting and optimization.”

Apple did not return a request for comment.

Under the hood: Are marketers losing interest in cookieless ad strategies? Continued delays from Google in removing cookies from Chrome is causing a lack of urgency among brands to test alternative targeting, measurement and attribution solutions, according to agency and brand executives. Everyone seems to be asking: why invest time and money in something new, when cookies work well and aren’t going away anytime soon? 

There’s another factor: cookies are predominantly a desktop-based tool, and ad spend is increasingly moving to mobile and streaming. “There has been an overall shift in how consumers are accessing the digital world. With the rise of apps like TikTok and CTV, the overall impact of third-party cookies is declining,” says Myles Younger, VP go-to-market, data at Media.Monks. As a consequence, marketers are far more preoccupied with figuring out audience and data strategies on mobile post-IDFA than they are on cookie alternatives, according to LendingTree’s Palau.

Regulatory developments: Meta has been sued for allegedly violating medical privacy law HIPAA by collecting data on millions of people’s health conditions and using it to target advertising, The Verge reported.

Two lawsuits, filed in California in June and July, allege that major U.S. hospitals sent private medical data to Facebook via its pixel tracking tool — code that allows websites to track conversions and create custom audiences for ad targeting. The Meta Pixel can collect a range of data including email and home addresses shared on websites.

In one lawsuit, a patient said she was targeted with ads related to her heart and knee conditions after her healthcare provider sent data to Facebook via the Meta Pixel.

The lawsuits allege the data sharing violates HIPAA, which requires healthcare organizations to obtain patient consent to share personally identifiable health information to third parties. The hospitals are also defendants in the suits. 

It follows a June investigation by nonprofit The Markup that found 33 of the top 100 hospitals in the U.S. had installed the Meta Pixel on their websites, including on password-protected patient portals.

Trends: AI is expected to have a “transformational impact” on digital advertising within the next decade, but privacy concerns, bias and accuracy remain obstacles, according to Gartner’s Hype Cycle. The ad industry is increasingly using AI to identify and target users as personal data becomes harder to come by, as well as in consent and preference management and content creation. 

Beyond AI, digital ad investment dollars are moving to other emerging channels and platforms such as retail media networks, data clean rooms, NFTs and OTT.

Dollars and deals: The Brandtech Group said it has entered into exclusive negotiations to acquire performance and digital marketing agency Jellyfish. The UK-headquartered Google specialist agency was launched by chief executive Rob Pierre in 2005 and now has 40 global offices with 2,250 employees.

Reading list: Read Sarah Krouse, Suzanne Vranica and Jessica Toonkel’s feature for The Wall Street Journal which chronicles how Netflix is scrambling to learn about advertising after years of disdain.

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