Startups and scaleups have been impacted heavily by changes to data protection policies and regulation.
Over 12 months ago Apple rolled out iOS 14 changes that required users to opt in to third-party advertising at an app level (as opposed to at an operating system level). This has resulted in much higher levels of opt-outs and a reduction in the quality of conversion data that can be used for campaign optimisation.
To add to this, a few European countries' data regulators deemed Google Analytics as GDPR non-compliant.
What does this all mean? Well, there seems to be a trend toward increasing data protection for consumers, and the reality is that if regulatory changes restrict tech companies’ ability to store and use data for optimisation purposes, then it’s small businesses (startups, scaleups etc) that are going to suffer the most. Here’s why.
All businesses should be ROI-focussed, however businesses that are starting out don’t have a choice. There’s a lot more financial pressure, and therefore more of a requirement to have tighter controls on marketing spend and demonstrate ROI. Restrictions on data collection impact small businesses ability to be targeted in their marketing activities and can actually inhibit their ability to compete with larger, more established businesses with bigger marketing budgets.
Apple are a big business. They run mass-marketing campaigns that include celebrity endorsements from Kendrick Lamar, Billy Eilish, Serena Williams, Jet (the band) and more. They can afford these campaigns, whereas small businesses can’t. Did they think about small businesses requirements for growth when they rolled out iOS14 changes? We’re not so sure.
To be clear, data privacy is important. However, maybe the general public needs to be educated on how their data is collected, what type of data is collected, how it’s used and who it helps so they can make an informed decision on whether they would like it to be collected or not.
You’ve probably heard people discussing whether tech companies are listening to their conversations based on ads they’ve received…We find it very difficult to believe that all conversations globally are being listened to 24/7, all of that data is then stored, processed and mined for very specific statements that identify you as someone that’s in the market for a specific product so that Company X can sell you more shoes…It’s an extremely difficult and expensive task. What’s more likely is that you’ve been reached by a Facebook lookalike audience.
So how do small businesses get around the above? Well, the “let the algorithm do the work” approach should be thrown out the window. Machine learning-driven bid strategies are only as good as the data that’s being fed to them, and if less and less people are opting in we can’t see this being a valid solution.
Move more spend away from digital? Potentially, but what if your target audience spends more time on digital platforms? Should you not invest in something because you can’t attribute it? Probably not.
The first thing we’d recommend is that you have a sound first-party data strategy and are collecting/storing via a customer data platform.
Secondly, strategy and experience are key. It’s an old cliche, but you need to understand your customer and their behaviours, understand the competitive landscape, have a solid understanding of market size and you need to have staff/partners that can drive revenue without leaning too heavily on machine learning features that may become less effective in the years to come.
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