Specialist
Former executive at Meta Platforms Inc
Agenda
- Impacts of Apple’s (NASDAQ: AAPL) IDFA (Identifier for Advertisers) on digital and social media businesses, most notably on Meta Platforms (NASDAQ: FB) and its key Facebook and Instagram services
- How the industry, and Meta in particular, are adjusting to IDFA, and the potential for Google (NASDAQ: GOOGL) to do something similar
- Longer-term implications for Meta, Facebook and Instagram, as well as other digital and social media businesses
Questions
1.
Snap pre-announced adversely for Q2 2022 on 23 May, indicating that the macro environment had taken a faster and more significant turn for the worst. I think a lot of people were surprised by that, because the company had provided previous guidance one month before, so that’s a pretty substantial update. What’s your take on the current environment and how these companies are managing?
2.
How significant do you think Apple’s IDFA [Identifier for Advertisers] and related developments have been and will be to further pressuring these types of companies and their businesses?
3.
I think a lot of people were taken off guard by the announcement from Snap, simply because iOS 14.5 was rolled out over the summer in 2021, so a lot of people are wondering why there would be a connection between something that was rolled out over last summer and a pre-announcement that took place in mid-May 2022. It sounds as though one of the implications is with the macro environment weakening, IDFA-related shortcomings become more impactful in the current environment. Is that one way to look at it? What do you attribute that disconnect to, from a time-frame perspective?
4.
We saw Snap pre-announce, and the company could be a lagging indicator, but to what extent do you think Meta, Facebook and Instagram have taken their medicine, so to speak, by reining in their guidance and disappointing Wall Street already? Do you think there’s another shoe to drop for that company and those businesses?
5.
Could you walk us through what IDFA is, why it was rolled out and implemented, and some of the broader operational implications of it?
6.
How should we be thinking about the most significant practical implications of IDFA for major digital and social media companies in terms of KPIs? Essentially, you’re talking about these kinds of companies having less information about its users, and thus can’t target advertising as comprehensively or effectively as before. Is it more that companies can’t charge the pricing they previously had? Is it that the conversion rates go down because the targeting isn’t effective enough, or the ROIs go down because of similar reasons?
7.
Meta initially seemed to be the company people thought of as being most impacted by IDFA, I don’t know if it was because of the size of the indicated impact or the percentage indications the company provided, or the fact it seemed as though other companies weren’t as affected. What types of companies and businesses do you think are more or most vulnerable to IDFA, and what does this mean? Alternatively, which do you think are less or least influenced by some of those changes?
8.
You noted re-targeters, re-marketers and agencies who have been noticeably impacted by IDFA. What have they been doing to address what must have been a significant issue over the last 9-12 months at least?
9.
We discussed the effects and implications of IDFA, but you correctly highlighted that more is to come from Alphabet and Google on a similar plane. What are your expectations in terms of the changes, timing and impacts?
10.
I understand companies have been implementing some workarounds. I think Snap, ironically enough, might have made a comment about 90% workaround as it pertains to direct-response, and a specialist in a previous Interview [see Snap Inc – Product Differentiation & Global Opportunities – 3 May 2022] said this was pretty commonplace across the industry. You talked about huge companies and creating these data repositories that can connect directly with large online advertising companies. What is Meta specifically trying to do? What is working for the company and what should it be doing?
11.
I think it’s widely acknowledged that what Meta has been doing with shopping and Reels hasn’t really been gaining the level of adoption and engagement that some were perhaps hoping for. Does it matter that the company hasn’t been able to directly monetise those things as much, because it’s garnering benefits in the way you were talking about?
12.
You referred to data repositories as clean rooms. I would imagine that as you get smaller, it’s harder to either finance this or make something like this work for you. How does Meta deal with that challenge where the most important cohort of its customer base is exactly the kind of company that isn’t in a position to collect this data and put it in one of these clean rooms?
13.
You said CPMs are the same. How is that sustainable if people presumably can’t get as much and as helpful data and information about users to target more effectively? Who is going to pay the same amount for that?
14.
You seem to suggest Facebook will be sustainable until it isn’t, and it won’t be when there are adequate alternatives. What might those alternatives be now and in 1-3 years? Are there any companies other than TikTok that you see grabbing market share from Meta, Facebook and Instagram, given the current backdrop?
15.
If you were helping Facebook and Meta make decisions related to advertising, what 2-3 things would you be doing to put these companies and Instagram in a better position now, in 1-3 years and for as long as we can imagine?
16.
Do you see other companies rising to the challenge of introducing new products more readily? Or are they offering similar solutions that are being more embraced because of their approach to privacy or their related corporate reputations?
17.
Could you see more solutions or services companies emerging or gaining a stronger position because they can essentially facilitate some of the less delineated or structured undertakings?
18.
Meta said IDFA is having a continued negative impact on its revenues and it expects to see a USD 10bn hit to revenues in 2022, but it expects the impact to decline over time. Is there any reason to think this is actually what’s going to happen? It sounds to me as though there aren’t a lot of good solutions, workarounds or alternatives. What do you think about IDFA’s current and sustained impact on Meta, given these comments?
19.
What’s your 1-3-year outlook for the digital and social media and advertising industry and Meta, Facebook and Instagram as it pertains to IDFA and what Alphabet and Google are potentially doing? What should we be anticipating and looking for?
20.
Do you think companies will be successful in creating their own alternatives with scale that can match Facebook? I think they’ve been trying this for as long as I can remember, and I think they’ve had mixed success at best.
21.
We discussed CPMs in the context of Meta, and we said they very likely could have peaked. What decline percentage would you see from the introduction of IDFA until the one-year anniversary or the end of 2022?
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