Meta and Snap invite advertisers inside the walled garden

The Future. Meta and Snap took a third-quarter tumble because of Apple’s new privacy features, and now both platforms are segueing to an ad strategy that invites brands to do most of their business inside the platform. But, until enough advertisers switch to the new models, ad revenue (and stock prices) could keep taking a hit.

Live inside us
Facing Apple’s new privacy features, which prohibit user tracking, social platforms are opening their doors to skirt around them.

• Meta (so long, Facebook) is wooing back ad money by allowing brands to track data on user behavior, convincing brands to open in-app storefronts, and educating them about the possibilities of advertising in the metaverse.
• Snap is showing advertisers the benefits of building “native experiences” within Snapchat, such as “commerce-centric augmented reality lenses and business profile pages,” allowing Snap to collect data on user interests.

Additionally, platforms are rolling out live-shopping capabilities as a way for brands to engage directly with potential customers. Just yesterday, Pinterest announced the launch of Pinterest TV, which should pique the interest of advertisers that wrote off the platform in the wake of Apple’s changes.

Joshua Lowcock, the chief digital officer at ad agency UM, sums up these strategies perfectly: “Social apps are prioritizing commerce because on-platform commerce means they can capture more data that will help drive their media business.”

Products on products
Why did Apple’s App Tracking Transparency hurt platforms like Meta and Snap so severely?

• Both rely heavily on mobile advertising, and Apple represents 47% of U.S. smartphone users.
• Both make most of their ad revenue from “direct-response advertisers” — the kind that makes ads to drive website clicks or app installs.
• The success of that type of advertising relies on being able to track users across the web.

And with 80% of iOS users opting out of app tracking, the problem for Meta and Snap will persist until their ad strategies are totally transformed to be measured mostly inside of their respective platforms.