Market Musings 10/22/2021

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

Social Media sinking Friday on negative read thru from Snap’s earnings miss

Snap shares fell over -25% today following #earnings yesterday whiffing revenue expectations largely due to iOS privacy changes. Worse than expected impact sent shockwaves through social media peers including Facebook, Google, Twitter and Pinterest.

In the past 6 months, you’ve probably noticed ALL of your iPhone apps requesting permission to track you. Back in April, Apple released iOS 14.5 with new app privacy features including preventing tracking across apps without user opt-in. Definitely a big win for user privacy, but multiple steps backwards for digital advertising.

Previously, a major benefit of digital advertising has been the ability to measure, evaluate and optimize marketing spend. Digital marketers could track ad views, clicks, installs, signups, revenue, engagement, etc. at detailed campaign, demographic and cohort-specific levels. Without opt-in in iOS 14.5, digital marketers can still see ad views and clicks, but are blind further into the funnel preventing spend optimizations. (If you want to hear a long rant, go ask your company’s Growth team about it… 🤣)

Apple announced the iOS 14 privacy changes back at WWDC Summer 2020 and social media companies have had a long time to estimate and mitigate impact. In Snap’s conference call, CEO Spiegel blamed the unexpected impact on “the new Apple-provided measurement solution”-aka StoreKit Ad Network (SKAdNetwork). SKAdNetwork provides anonymous attribution basically apps can send Apple events to get aggregate data without tracking individual users. However, SKAdNetwork is very limited compared to other measurement solutions and feels like a make-shift band aid vs. a viable solution.

Snap’s whiff has other social media peers sinking on Friday. A negative read thru with investors expecting similar customers will experience similar issues on other social platforms. Facebook already highlighted customer struggles in a blog post last month. However, we expect larger social media companies like Facebook and Google to be better positioned given more robust ad platforms and higher quality internal data.

All eyes will be on Facebook, Google and Twitter reporting #earnings early next week. Buckle up!

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