Apple and Google’s Privacy Changes Are a Huge Benefit for the Creator Economy
Earlier this year, Apple announced sweeping changes to their privacy policies, which sent shockwaves through the online advertising world. Beginning with iOS 14.5, which was released in April, Apple implemented Ad Tracking Transparency (ATT), a feature that requires apps that wish to track users for advertising purposes to ask for their permission first. Google has taken baby steps in the same direction with their Android OS and took a big step by moving to phase out tracking cookies. Privacy laws like California’s CCPA are discouraging the gathering of tracking data, too.
It’s hard to overstate how big a deal these changes are for the world of online advertising. Advertisers have grown accustomed to gathering data on basically everything you do online, including the specifics of nearly every purchase you make, every site you visit, and much more, in order to serve you targeted ads. According to Sav Khetan, Vice President of Product at data company Tealium, “brands should see Google’s update as a warning sign." The old model of gathering tons of data — often without users' knowledge — and then leveraging it to sell them things is dying.
That will mean massive changes to the business models of many advertising-driven companies and lots of disruption to the basic fabric of how the Internet runs. But one group stands to benefit tremendously from the move away from data-driven advertising: creators and influencers.
Even before Google and Apple’s changes, influencer marketing was growing exponentially. According to Influencer Marketing Hub, the industry grew from $1.7 billion in 2016 to a projected $13.8 billion in 2021. The Covid-19 pandemic and a massive increase in online shopping were major factors. In a May 2021 report on what it dubbed the “Creator Economy,” the Economist said that a new “creator middle class" is rapidly emerging, fueled by increasing competition for content and a shift towards subscription models.
I’ve seen the shift happen firsthand. I’m a YouTuber, Amazon Influencer, and a creator on multiple additional platforms, and over the last year I’ve seen a massive increase in the number of brands reaching out to me and offering collaborations. A typical collaboration might involve a company giving me access to its top execs for an interview, or providing early access to a new product so I can review it before it’s released. Other influencers--especially those in the health, wellness, and beauty space--might receive thousands of dollars from a major brand in exchange for a single Tik Tok video or Instagram post.
Even without Google and Apple’s advertising changes, influencer marketing and the creator economy would likely have continued to grow.
Brands lavish this attention (and money) on creators and influencers because influencer marketing works shockingly well. According to a survey by marketing company Hubspot, 80% of marketers find influencer marketing effective, and almost half of consumers depend on influencers’ recommendations when they look to purchase a product. The average influencer campaign generates an 800% return on investment.
I can vouch for this effectiveness personally. In a piece about my YouTube channel, I wrote about a video that I made reviewing the Honeywell HYF290B tower fan. On one of my influencer platforms (I can’t say which one due to a confidentiality agreement), the two-minute video has resulted in the sale of 133 fans so far this year, bringing in $8,103 in gross revenue for its sellers. People trust influencers, and value seeing products in use before they buy online— hearing me talk about and demonstrate the fan for a couple of minutes was enough to motivate over 130 people to buy it.
Even without Google and Apple’s advertising changes, influencer marketing and the creator economy would likely have continued to grow. But now that the tech giants are radically changing their advertising models, it’s likely to grow far faster. Why? To answer that question, it helps to first look at the current business model for online ads.
You might think you’re just doing some research, but in reality, you’re sending valuable signals to multiple companies about your purchasing intentions.
Brands like targeted advertising because it allows them to slice and dice potential audiences, serving them ads that they’re likely to find relevant. Imagine that you love fly fishing. You search on Google for a new type of lure, click through on an article about the lure, and read the article.
You might think you’re just doing some research, but in reality, you’re sending valuable signals to multiple companies about your purchasing intentions. Google sees and logs both your initial search which site you clicked through to. Once you’re on the site, it’s likely that the site’s owner is reporting your activities both to Google and to other platforms like Facebook. These platforms record the fact that you’re interested in a new lure, adding that tidbit to the remarkably detailed profile they’ve already built about you.
Now, imagine that the manufacturer of the lure comes along and buys some Facebook or Google ads. Knowing that you looked at their product in the past, Google and Facebook will target you with ads for the lure, both on their own platforms and on third-party sites. For days or weeks, you’ll see the ads all over the place, and in many formats. Maybe you’ll see a video of the lure in use when you go to YouTube, or see ads showing which of your fishing friends follow the brand on Facebook.
In time, and with enough prompting, you’ll probably buy the lure. You might not even remember your initial research session, or realize that ads played a role in your purchasing decision. You’ll just feel like you’re suddenly seeing that lure everywhere, so perhaps it’s worth opening up your wallet, clicking Buy, and trying it out. Once you buy it, you can count on receiving more ads for lures and other fishing products, starting the cycle anew.
This strategy of intensively targeting ads works reasonably well for brands, and exceptionally well for the platforms which sell the ads. But it relies on a level of data gathering which consumers--and regulators--are increasingly finding unacceptably creepy and invasive. That’s driven the backlash against targeted ads, and moves by Google and Apple to shut down the third-party data gathering on which they rely.
The move away from targeted ads, though, leaves brands with far fewer options to reach customers. Scrambling for ways to target ads without reams of customer data, many are reportedly turning to influencers. As Khetan told me in an email, “Data deprecation (loss of third party cookies and device identifiers) will inevitably prompt marketing and advertising behaviors to revert back to known strategies that have worked well for so long”, including collaborating with “personalities that have access to the audience that advertisers want to reach.”
Imagine that our theoretical fly fishing company could no longer perform the complex data alchemy needed to target you with ads. Instead, they might find a fly fishing influencer who frequently posts YouTube videos about the hobby, reach out to her, and either send her free lures or pay her directly to make videos about the company’s product. Perhaps they’d even send her on a sponsored fishing trip, or have her create her own custom line of lures with her name attached to it. In researching lures, you might find one of her videos, see the company’s lures in use, and buy one.
Influencers do the hard work of building and cultivating audiences around hyper-specific topics. They also actively work to keep their audiences engaged by constantly publishing content, responding to comments, connecting directly with their followers via platforms like YouTube Live, and the like. That makes influencers’ audiences pre-targeted to specific areas of interest, and unusually engaged. I eschew niches, but my own following generally cares deeply about home automation, gadgets, and tech culture. Brands are realizing that by working with influencers, they can leverage this audience-building work and target customers with specific interests, all without the messiness of tracking their every move online.
Overall, this is a net benefit to brands and customers. Customers still get the benefits of discovering new products, without the privacy concerns of ubiquitous tracking. Brands get targeted audiences, and the benefits of having their products presented in the influencer’s own voice, which builds credibility. Influencers also serve as a filter to weed out bad products. As long as they’re ethical (or at least interested in preserving their reputation with their audience), most influencers won’t recommend a product unless they’ve actually used it and enjoyed it.
Still, there are challenges. Influencer marketing risks blurring the lines between organic and paid content. Most people can tell when they’re seeing a banner ad, but the majority can’t tell the difference between organic and sponsored content. Influencers are required by law to disclose when content is sponsored or when they’ve received a free product or other incentive to create it, but many don’t. This risks hurting both the reputation of the brand and the influencer. As Khetan told me, “If brands do turn toward influencers, authenticity and customer experience will be key. Today more than ever, consumers want brands to know them and build a trusted and transparent relationship.” Proper disclosures are key to that transparency.
Influencer marketing is also much harder and more hands-on than traditional advertising. Anyone can buy Google or Facebook ads for their product in a few minutes, whereas cultivating relationships with influencers (or even finding the right ones in the first place) is often much harder. Dedicated agencies like Obviously, the Influencer Marketing Factory, and Hire Influence have sprung up to connect brands with influencers. But many brands still do the work themselves. This can offer huge payoffs, especially for small brands. Banza, a chickpea pasta startup, reportedly built a successful specialty food company primarily by sending free samples to influencers.
If Google and Apple’s ad changes do indeed send brands towards influencer marketing, you can expect to see this manifest through increased growth of the platforms where influencers spend their time (YouTube, TikTok, Instagram, and the like), the emergence of additional dedicated influencer marketing agencies, and perhaps the creation of new platforms geared specifically towards sharing product-focused content from influencers.
Expect to see traditional retailers courting influencers as well — popular kids’ product channel Ryan’s World reportedly inked a deal with Walmart to sell a branded line of products in the retail giant’s stores. More such deals are likely, and it’s likely that big retailers will begin to feature influencer content directly on their own websites and in their physical stores, too. It’s also likely that we’ll see a backlash against undisclosed sponsored content — indeed, Ryan’s World already faced at least one FTC complaint over YouTube videos with alleged undisclosed sponsored content.
In many ways, the move from targeted ads to influencer marketing mirrors broader trends in the content world. Many platforms (this one included) were already moving away from data-driven, algorithmically targeted content and towards relational content focused on specific voices and personalities. As the Economist shares in their report, platforms like Patreon, Substack and even the often-risque OnlyFans give creators a way to develop (and monetize) direct and personal relationships with their fans and followers.
Influencer marketing also revives the tried-and-true model of celebrity endorsements, adapting it to the dynamics of the Internet. Influencers are the new celebrities. Except unlike the celebrities of yore, nearly anyone with passion and a willingness to create tons of content can become an influencer in their own niche. Before, you had to be a Michael Jordan or David Beckham caliber celebrity to secure endorsements. With the shift of ad dollars online--and now, I predict, towards influencers--a creator in a field as obscure as fly fishing can reasonably expect to make a living from her content channels.
With Google and Apple’s move towards privacy and an overall trend towards less-invasive tracking of online behavior, it’s a good time to be a web user. But it’s an even better time to be a creator.