The Near Memo, Episode 14

Apple Ad Tracking Opt-in at 4% in US is much lower than anticipated;<br> Shopify focuses on helping SMB be better & retain customer relationships & gain access to better rates and capital; Facebook Neighborhoods, a NextDoor clone, is likely to be worse due to poor moderation

The Near Memo, Episode 14

Referenced Articles


Greg: All right. Welcome to Episode 14 of the Near Memo with Mike David and me, Greg Sterling here to talk about social, search, and commerce. And what we think is interesting that happened in the past week,  say hi.


David: Hey everybody. Thanks for listening again.

Greg: Exactly. We very much appreciate you listening to us in our, sometimes coherent, sometimes exasperated musings.  The item that I wanted to talk about, even though I've been talking about this for seemingly weeks and weeks and weeks, but the thing that has the most gravitational force for me is the iOS 14.5 opt-in tracking app tracking transparency numbers.

Is that a siren in the background somewhere?

Mike: Yes it is

David: It's a hot story, Greg,

Greg: Or hot story alert, urban sounz with Z. All right.

Flurry Analytics, which is part of Verizon media, formerly part of Yahoo,  I don't know how they've organized it internally, but they track a lot of apps.

They've got a lot of data on a lot of apps,  over a million apps across 2 billion devices. And what they've determined is that the global opt-in rates so far two weeks in or 11 or 12 days in is 12%. So that in other words, 12% of users seeing those pop ups are allowing tracking.

And that means that. 88% are not, but in the U S the numbers are even more significant because it's only 4% that are opting in. So this represents a kind of doomsday scenario for a lot of these developers and publishers.

There was a survey done by Harris on behalf of Ad Age that  was done in the last week or two, that suggests that as many as 47% of people would allow brands to track them, meaning Facebook and others. And that's attitudinal and this is actual behavior of what's really going on. And this is far more significant, because what it indicates to me is the consumers really understand what's going on here.

And they're speaking very loudly with their behavior sayin: “we do not want to be tracked”. “We like having this control. We understand what this is, and we're saying no to being tracked”.

I think it's quite profound and we'll see what happens over the coming weeks. And whether these numbers stay flat or go up a little bit, but best case scenario, I was thinking it was going to be like, you know, 60% that were not going to allow it or 70%that were not going to allow it, but now it's like 90 plus percent saying no, that's pretty, pretty serious.

Mike: It sends a strong message to our government that we need better privacy protections. But the question I would have though is that internationally Apple is 17% or 20% market share so 12% of that is not a huge number. In the United States it's a much bigger impact because they have 50% market share. So clearly,  90% of 50%, so a much bigger number, 40% or whatever it turns out to be. It's quite a bit of a bigger number. So it's primarily an impact in the United States at this point where privacy rules are much more rodeo, wild west like.

David: I also think it's interesting, like you brought up, that it's a signal to the government  to give us better privacy regulations. I also think it's potentially a signal to antitrust regulators, particularly as it relates to Facebook and Google, and to some extent, Amazon around, “Hey, 96% of people think these companies are doing bad things and have too much power”.

I think that there's probably some of that is a reaction to just big tech generally.  and I think that it certainly could be a death blow for a lot of publishers. As you said, Greg,  who are now gonna have a harder time monetizing their,

Greg: Well, they're going to go to subscriptions is what they're going to do.

David: Right. That's what you also highlighted this week,  in a recent semi daily newsletter.  but I just think it's indicative of, of,  I'm surprised with surprised actually that the number was so substantial. I mean, you can't get 96% of Americans to agree on anything or even 45% of them, of Americans, Mike.

if we're just looking at, if we're looking at the segment of iPhone users,  overall, so,  I think it's a pretty stark finding.  and I'm glad that you highlighted it, and I'm glad that you've been banging this drum for as long as loudly as you can. And

Mike: it still leaves unsaid though, other than the Apple’s a nutrition label, what they really know about us and how much they're tracking.

I mean, even the equally disquieting thing to me is that, and we had ran an article or saw an article this week of that company that ran the ads on Facebook, showing people what fake

Greg: Signal.

Mike: Right. What Facebook knew about them and it's just a terribly disquieting amount of information. Well, and that's all first party.

Right. We have no insight into that at all. And I think that's the death knell, or ultimately will be a Facebook’s downfall.

Greg:. I mean, what's, what's also significant about this. Something we've talked about before is the ease of use, the user-friendliness and the ease usability of this pop-up right. It's very clear what this is about.

People only have to hit a single button to express their preference, and then it's done at least in theory, whereas in a lot of these other privacy frameworks, GDPR, CCPA, you know, individual companies, you've got to jump through so many hoops and it's really confusing and difficult. I was canceling my Amazon web services account today and it was just impossibly difficult to do that. You know, it took me 20 minutes to figure it out and then it was just, it wasn't simple. This is really simple. And people are responding to it accordingly. They understand what this is there and they're doing it because it's made easy.

So that's a message to the government is that you have to compel these companies to make it easier to express your privacy preferences and control your data. That's been one of the sticking points and one of the friction points. In this whole discussion, nobody does CCPA. Nobody does GDPR really. I mean, unless the companies make it super easy to do that because you just have to go in and click a bunch of buttons, read things, and it's just too much effort.

And then the companies themselves sort of treat that like, well, consumers don't really care that much because they're not expressing their preferences. You know, they're leaving it untouched, but this stands in stark contrast to that.

Mike: Preach it brother.

Greg: Okay. All right. So I think,  Mike, you were up next is if I'm not mistaken,

Mike: The piece that struck me this week was the interview at the verge, with Harley Finkelstein of Shopify.

He's the president of Shopify. Now, I don't know. Finkelstein sounds like a Jewish name and Harley sounds like not a Jewish name. I have no idea, but,

Greg: you're living, you're living, you're living in America. This is America. Anything is possible.

Mike:Well, I just not Harley Finkelstein. It's just like, you know it sort of grates on the ears, you know,  Anyways,

Greg: You would be happier with Moishe Finkelstein?

Mike: I would think it more consistent.

That's all. All right. David's shaking his head at my Jewish jokes.

It was a fascinating interview because Shopify has clearly positioned itself on the side of the small business, as the crucial service that small businesses need at the center of their business. They understand that they're leveraged that.

They aggregate businesses as opposed to Facebook or Google sort of circumventing the ad world by aggregating customers and thus gaining control of that customer and Shopify understands that the critical thing for all these businesses is to retain that relationship with our customer.

And I just thought they positioned themselves very clearly in that spot where they're, they know who their customer is, they're going to help those small businesses do better, run better businesses, retain better relationship with their clients and do so while leveraging the size of their network, which I think you said, Greg, that in aggregate they're the second largest e-commerce.

David: that's their claim.

Mike: Yeah. Right. Well, I believe it, but they're gonna leverage it for the benefit of the people in that network by providing cheaper capital and other joint services. And I thought this is a company that I can look up to and respect, and I really enjoyed the interview.

So thoughts?

David: I totally agree. I think Shopify is built not only a great business, but a great platform.  and it's, it's one of the few examples I think of someone or a company that is doing well by doing good,  by its customers. So I think it does stand in stark contrast to,  not necessarily their competitors.

I think there are a number of players as we've highlighted in recent podcasts that are also building great products that really help small businesses. But,  I think that they've really,  Shopify is, has done a great job in particular. I think. At the business targeting the business, who already, I, I don't think it's quite as good for nascent businesses that are just getting started.

It's a little bit complex to still figure things out, but for a business that you know, needs to go from 10 miles an hour to 60 miles an hour,  I think that they offer a lot of really compelling features by default.  as you were saying, Mike, that helped them stay in touch with their customers.

Their app store is fairly easy to integrate specific features that you're looking for, that they may or may not offer,  natively.

So I think they've done a great job of identifying exactly who their target customer is and building things that are genuinely useful to them.

Mike: And that scales from pretty small businesses to very big ones. I thought that the scale of the, who was interesting as well.

David: That there's,  they've, at least from what I've seen on the outside, it seems like they're putting more energy into the sort of enterprise shop.

I think they call it Shopify pro or something like that. The sort of more enterprise tier plan.  I think that they've enabled a lot of businesses to grow to such a level where they need more advanced,  e-commerce features in Shopify, their product team or their executive team, or whoever understands that we probably shouldn't try to put all those in the sort of base-level product.

Greg: One quick comment. I mean, I agree with what you guys are saying. One quick comment. Some of the surveys I looked at this week, one of the pieces today is really about sort of the post COVID shopper. How they may be different from, from pre COVID shopping and they're more decisive yet sort of impulsive and willing to experiment on new brands.

There's another survey that sort of wraps into that, that talks about people's impatience and frustration with bad online experiences. And one of the things we discussed in a previous podcast was how everything that's happened over the last year required. And the dependence upon online as a kind of an initial exposure point to the brand and experience... how websites are going to have to upgrade. The whole user experience is going to have to upgrade.

And I think that that's, you know, that's, that's one of the things that Shopify is helping these small businesses do is create better online experiences for their customers, which emerges as a more and more important thing, you know?

David: For sure. Their default theme,  for a business that's just getting started on Shopify is quite good,  you know, it's responsive, the images, you know, all resize appropriately. The checkout experience on Shopify is phenomenal as is Square’s and others, which has never been the case with e-commerce platforms pre you know, Shopify 2012. Everyone had just terrible checkout experiences.

And I think that.  that in and of itself, even if the backend of Shopify were impossible to use, which it's not, but presenting customers with an easy checkout experience has probably tripled or quadrupled conversion rates for small businesses.

Greg: Right. And undoubtedly, and that's a huge part of the whole sort of friction,  problem for, for in many cases. All right. So in our remaining time, David, I think the floor is yours to talk about.

David: Sure.

I was going to talk about the new NextDoor knockoff,  which is Facebook's Neighborhoods feature they announced this week, something that's been,  Greg you've pointed out, this is sort of been rumored.

Greg: It's been in Canada for, for quite a while.

David: it's interesting, you know. NextDoor I think, is hoping to go public later this year. I've seen some articles,  to suggest that,  clearly Facebook is trying to sort of get ahead of that public offering.

I think that you guys are, at least you, Greg are maybe a little more bullish on the potential success of Neighborhoods.  I have been a long time NextDoor user.  I actually canceled my account this week. I just found myself getting very,  for me, it's been the law of diminishing returns, the posts all feel repetitive.

I actually don't have close personal friendships with anyone on the NextDoor platform.  and maybe that's Facebook's differentiator is that I do have friends on Facebook, even though I'm not very active.  and that there's some sort of connection there,  where,  you know, they're, they're doing a better job at serving relevant posts to me, but,  frankly I find the posts on NextDoor,  you know, fairly low quality, not particularly engaging and, and frequently about many of the same topics over and over again

Which unfortunately, we talked about this offline catalytic converter theft that's rampant,  coyotes in our neighborhood are a daily occurrence.  To me, it seems like the content is fairly low value. So I'm less convinced that this is really gonna move the needle for Facebook in terms of engagement.

I also think that they're going to have a hard time moderating, which is one of the things they do very poorly.  Typically they are loath to get involved in moderating posts. In fact, they outsourced the decision of whether to moderate The Former Guy off of their platform.  And so I wonder how many decisions around moderation they will be able  to offload onto some third party  body when it comes to Neighborhoods, which is one thing that is a very controversial topic on NextDoor.

People hate that their posts are getting censored, all of those kinds of things. So I think that sets the potential to blow back in a very negative way for Facebook,  and with very little upside from what I can see.

Greg: Well, so you're saying a couple of different things. I mean, you're critiquing NextDoor and then you're, then you're sort of by analogy.

David: So Facebook's going to do an even worse job of it. Yeah.

Greg: Well, so I think  the origin of NextDoor was really around crime and neighborhood safety, and that culture has never really been fully expunged or changed or evolved.

I mean, it's still the core of a lot of the user experience there. Facebook has an opportunity for that not to be the case.

It's like disappointing to see the clone process happening again and again,  you know, with Facebook They started Reels in response to tick-tock and there are a bunch of examples of that.

These examples, what I think is interesting from my point of view about Neighborhoods is that Facebook has never really had a good local consumer experience. Despite this being something that seems natural and logical for them. I mean they've taken a couple of runs at it, but they've never committed and they've never developed anything particularly useful.

And I think this has the opportunity to be that, but I think you're right, that they could get caught up in the trap of cloning NextDoor and then replicate all NextDoor as problems. But as a local referral tool, as a recommendations tool,  I think it has some potential. And that, that to me is what was most interesting about NextDoor was the business referrals.

“Hey, can somebody recommend a painter or landscape architect or whatever,.”

Mike: isn't that happening in Facebook groups now?

Greg: Right. I'm sure it is. I'm not in any Facebook groups at this point, but I'm sure it is, but, and it does happen on Facebook in the newsfeed as well.

You know, Facebook ironically is like the number one or number two small business marketing platform. And yet it doesn't have a consumer facing kind of dedicated local experience, which is weird. And I think this has the opportunity to become that if they do it well, I'm not confident that they will, but at least the opportunity is there like any disagreement?

Mike: I am not a big Facebook user. My social network is my iMessage network.

Those people that I grew up with. I messaged with, I have a couple of business associates, a couple of friends, a couple of families. Sometimes they overlap. That's my social networking. And that's, I'm very happy there because it's all people I trust and love. And I know they won't give me any heat. They don't give me bullshit back.

So, I'm very rarely on Facebook. I'm on Twitter and I'm on LinkedIn because they're one to many as I, you know, I publish things. I want people to read them. I'm happy with one to many, but the idea of a peer to peer thing on Facebook is just so unappealing to me. I can't really speak to it,

David: frankly yes. I'm more likely to trust a recommendation from a friend. Uh that's that's for sure. I'm not so sure that I would trust a recommendation from a neighbor, right? Like, uh so-and-so did you know, love their gutter cleaner? Okay. Like how big is your house?

Like w you know, well, at least you have the service. Oh, I still have all the same questions that I would, that I would have. I just read that, read that person's review on Google or Yelp or wherever.

Greg: So, yeah, but you know, at least with that, right there are multiple sources for local service business re recommendations, and at least with something like a kind of a real time word of mouth, quasi word of mouth thing, somebody had some experience and you can put them into the, onto the shortlist, hypothetically.

I mean, we talked about the Wire Cutter about how they're expanding, but we've talked about the sort of utility of the Wire Cutter because they give you, you know, it's an editorial decision.

They gave you three choices. It short-circuits all the stuff you have to do. And I think there's a version of that going on with these local referrals is that you can get a few trusted recommendations and then you do your own due diligence on them.

But just for me to go out to Yelp and then to Google, and then to this one, to that one, and look for, you know, look for somebody to build a fence. I mean, I've had some nightmare experiences just trying to get a simple fence on the side of my house built. I could talk at length about it and it's, you know, with all the reviews and all the listings and it's, it's just not right.

David: But I guess my question is Facebook already has the potential to ask your friends for a referral, right? And those referrals will be far more valuable, far more useful than getting the list of three referrals from neighbors.

Greg: But I mean, I suppose if you're always on Facebook and always paying attention and I'm not that that works.

I mean, I guess that could work pretty well, but it's I guess,

David: I think your critique of Facebook,  that they have done a very poor job of building a real sort of local business recommendations product, is entirely valid. I don't think that Neighborhoods is going to, well, succeed.

Greg: I guess this is wishful thinking, you know, it's like for years and years and years, I used to talk to Facebook and I would say, why haven't you guys done this or that or the other?

And, and. It was just mystifying and,  and they sort of took a run in and when they turned their events into Facebook local, but they never really developed that. I mean, it's a logical thing and they've never done it. And I guess there's some part of me that still has some fantasy. I see that they will, although I'm much less enamored of the company than I was years ago,  today.

So yeah, you're probably right that they're going to blow this, but I mean, at least it has some potential there. All right.

David: Okay on that happy note, it seems like, well, it's like every, every episode ends on a down note for us.

Greg: What can we say? That's positive?

David: The first story about Shopify was positive.

We should have….

Mike: To add a personal story, this week was my wife's birthday. And it was the first time that our family had eaten unmasked, the six of us together in a room for well over a year, obviously. And it was a wondrous experience. So there's a happy note for you all and something you can look forward to.

David: That is great news. So my wife and I got our second Pfizer shots on Monday. So we will be close behind you in about 10 days.

Greg: Excellent. Yeah. And I had, I had mine two weeks ago, so I'm fully vaccinated, but that is great.

And it's a reminder that, you know, we need to appreciate these very simple things.It's a kind of a psycho-spiritual cliche, but as we sort of emerge from this period, there's an opening to really appreciate ordinary things in life. And you need to do this.

Mike: Nothing better than a hug. The one thing about this,  I have generally been pretty happy in COVID. I don't mind being in my little office by myself with the exception of missing hugs.

And I got a lot of them the other night.

David: You should have a cheap t-shirt

Greg: nothing better than a hug

Mike: It's absolutely the truth.

Greg: Okay. Nothing Better than a Hug Foundation. There you go. All right. We will, we will see you next time. Thanks again for listening.

David: Thanks everyone.