This summer, Apple introduced its new App Tracking Transparency system which requires users to explicitly consent to apps tracking their behaviour for advertising purposes. Bad for Snap, who was gaining a lot of revenue from small image ads that redirected consumers to other apps or services to be downloaded or purchased. With the new Apple settings, Snap now cannot personalise and optimise these image ads anymore. Not being able to detect if certain apps are already installed, how fast users react to the ads being shown or how long they look at them, makes advertising less effective.
While Snap was in favour of these changes at first, they are now admitting that the lack of personalisation has affected their revenue coming from in-app advertising. Snap expects its fourth-quarter revenue to come in between $1.16 billion and $1.20 billion, which is short of the $1.36 billion in revenue that analysts were expecting.
However, it is worth noting that giving users more control over what happens with their data, has reportedly increased the amount of daily active Snapchat users by 4%, from 293 million in April to 306 million in October.
Why should you care?
The future is private. Consumers are getting more and more aware of what happens with their personal data, and they are ready to turn away from businesses that they feel don’t deal ethically with it. This is why Apple, who have positioned themselves as strong privacy advocates these past years, did the only right thing. While seemingly making things more difficult, more trust and transparency will lead to happy customers and more revenue in the long-term.
Our take on it
We love to see huge corporations and global players are taking privacy practices seriously and start putting them above revenue. Despite recognising that the Apple privacy update would lead to a drop in revenue, Snap CEO was positive about the improvements to the privacy of their customers saying that it aligned to the company's values. These values are reaping benefits as the number of Daily Active Users has grown since April. To learn how to better serve your customers with a privacy-first approach, check out our Attitudes to Data report. If you have any questions, we are happy to chat with you – contact us via our website!
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