Apple’s Privacy Rules Leave DTC Companies Scrambling

Easy Out

Apple (APPL) launched a privacy initiative about a year ago which aims to give users of the company’s products an easy way to avoid having their digital activity tracked. With the policy change, apps that want to follow you online will have to ask you first.

The upgraded privacy feature means users are no longer required to control trackers, which used to be more difficult. The move may be applauded by users, but for companies that relied on the practice to identify their target markets, having their view-in blocked was a blow.

Meta’s Popularity Wanes

Direct-to-consumer startups in particular were adversely affected, as their ability to focus ads on well-matched potential customers is now more limited. The smaller companies who lack the marketing budget and name recognition to support alternative ad campaigns have been hit hard.

In response to Apple’s policy changes, some of these companies are cutting their ad spend on Meta Platform’s (FB) Facebook and Instagram. TikTok, LinkedIn (MSFT), original website content, and even influencers are being leaned on instead to attract consumers’ attention.

Some Upside

Market observers contend the shift isn’t all bad news for these companies. There is the potential that ads will be less diluted and more effective if consumers are less likely to encounter them.

However, as companies shift to a new mode of marketing, they may find their budgets stretched. All while their campaigns are less effective. In the meantime, while Meta’s revenue growth has been slowing, it remains king of the online advertising market.

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