Background: Meta changed its max ad-attribution window, in early 2021, from 28-days to 7-days due to Apple’s App tracking transparency (ATT). So, what is an ad-attribution window and why does it matter to Meta, and how it’s helpful to Amazon Ads? An ad-attribution window is the number of days between when a person viewed or clicked an ad and subsequently took an action to purchase. This ad-attribution is used by advertisers to calculate the effectiveness of their ad campaign (ROI) on any particular platform.
The Challenge: Since the ad-attribution window on Meta reduced significantly, anywhere from 10-30% of attributions were lost. Facebook & Instagram advertisers were quite confused by the lower accuracy; they were used to high accuracy with Meta. It is also a structural issue and a competitive disadvantage for Meta since Amazon APIs allow a 30-days maximum attribution window. Amazon ads don’t rely on Apple’s App tracking and hence could offer this 30-days attribution while Meta can’t.
Advertiser’s response: Confusion led to decision paralysis and advertisers reduced the spending on Meta. It’s a moot point whether all or some of those Meta Advertising dollars were diverted to Amazon-Ads since not all Meta advertisers sell products on the Amazon-Ad supported network and Amazon-Ads is not the only option apart from Meta. Our channel checks suggest any advertiser that could spend on Amazon-Ad-network did divert a significant amount to it. Meta’s CY22 ad-revenues are expected to decline by 1.4% YoY while Amazon’s ad-revenues are expected to grow by 26% YoY.
Conclusion: This issue is unlikely to be resolved anytime soon. Amazon has an edge in Ads since 74% of U.S. consumers begin their product searches on Amazon and it’s a perfect closed-loop ad-attribution network (preferred by advertisers) as it doesn’t involve any third-party tracking mechanism. Amazon ad-revenues are expected to be $40B in CY22 while Meta’s is estimated at $116B. Moreover, Meta’s Ad-revenues are clubbed with the retail segment which is a negative EPS contribution business; purely from an EPS basis, there’s no contribution from such a lucrative, high EBITDA margin, business. Finally, AMZN has many such high-growth businesses which are overshadowed by negative EBITDA/EPS from the retail segment.
Don’t miss an update, Subscribe to our Linkedin Newsletter (https://lnkd.in/d3A7mpVP )
or join our open to all Telegram group for daily updates at: https://lnkd.in/dxAwgBQk
#stockmarket #stockmarketnews #sp500 #stocks #Amazon #Meta