Privacy Sandbox Puzzle ??

Welcome to Katalys Connect?- your weekly shortcut to the latest in performance marketing.

[Read time: 4 minutes]

What’s in this issue? Each week, we pack the latest trends, actionable insights, and industry breakthroughs into a quick read - ensuring you're not just keeping up, you're staying ahead.?

• Monetization: Discover the details behind Google's Privacy Sandbox push, Reddit's crackdown on AI scrapers, and generative AI’s impact on website rankings.
• Growth: Explore why TikTok's new image ad format is transforming advertising for SMEs, Apple's extended 30% ad fee is facing scrutiny, and Gen-Alpha's strong recall of YouTube ads can mold marketing strategies.
• The Future of Commerce: Uncover how social selling is driving e-commerce, Microsoft's "Skeleton Key" AI could potentially impact financial services, and Meta's upcoming personalized AI chatbots may enhance customer engagement.

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?? Monetization

Privacy Sandbox Puzzle ? Google’s efforts to replace third-party cookies are causing financial headaches for publishers and would increase reliance on its ad tools.

• According to recent testing, Google's Privacy Sandbox could slow down publisher sites by more than 100%, leading to lost impressions, non-viewable ads, and poor user experience.
• Industry experts propose improvements in machine learning, audience qualification, critical functionalities, and governance to make the Sandbox viable - but time will tell if Google will implement the feedback.

Reddit’s AI Warning ? Reddit is implementing stricter measures on AI scrapers, requiring prior agreements to access its content, following numerous reports of AI companies bypassing the robots.txt protocol.

• Reddit plans to charge AI firms for accessing its data, aiming to monetize the extensive content on its platform.
• The decision reflects a growing awareness and action among digital platforms to protect their data assets from unauthorized use.

Traffic Takes a Hit ? Generative AI is proven to alter search behavior, resulting in higher search volumes but significant traffic declines.

• AI-driven results are increasing searches but cutting average click-through rates by 60%, resulting in a 30% drop in organic traffic.
• Google's reduced crawl budget for high content velocity sites means thin, generic content may not be indexed, emphasizing the importance of unique, experience-based content.

?? Growth

Simplified Ads for SMEs ? TikTok's new image ad format offering is directed at SMEs, aiming to empower them with more accessible advertising tools.

• TikTok’s image ads mark a shift towards native advertising, allowing brands to leverage paid opportunities without creating extensive video content.
• This format offers cost-effective advertising options, making it easier for smaller businesses to reach their target audience on TikTok - even without extensive creative resources.

Apple's Ad Fee Expansion ? Effective July 1, Apple has extended its 30% fee on Facebook and Instagram ads purchased through iOS devices globally - however this can be avoided by using desktop browsers to purchase ads.

• Earlier this year, Meta updated its web platforms to provide the same ad-boosting features as mobile apps, helping advertisers bypass the fee.
• EU regulators and a U.S. federal judge have criticized the fee as “anti-competitive,” adding to the ongoing scrutiny of Apple's App Store policies.

Gen-Alpha Loves YouTube Ads ? Gen-Alpha remembers YouTube ads better than those on TV - thanks to precise targeting and engaging content.

• According to a study by Precise TV, kids ages 2-12 recall YouTube ads 2.3 times better than TV ads and 2.6 times better than video-on-demand.
• Co-viewing with family members boosts ad effectiveness, with 60% of parents more likely to buy products seen in YouTube ads watched with their kids.

?? Future of Commerce ?

Social Selling's Rising Power ? Social media is a key driver in e-commerce, with 25% of consumers influenced by social media recommendations.

• Hubspot reports that 17% of consumers made purchases directly through social media apps in the last three months, showing the impact of integrated shopping features.
• Social media also enhances customer service, with 19% of consumers using direct messages to contact brands, improving customer satisfaction and loyalty.

AI Flaw Hits Big Tech ? Microsoft has uncovered a serious AI vulnerability, "Skeleton Key," with the potential to impact eCommerce and financial services.

• Skeleton Key can bypass safeguards in AI models, allowing for manipulation that risks eCommerce, financial services, and customer support operations.
• Microsoft has implemented new security measures in its AI services and recommends businesses use input filtering to block malicious intent and output filtering to prevent the release of harmful material.

Chatbot Takeover ? Meta will soon let users create personalized AI chatbot characters for enhanced engagement, with a possible launch by the end of summer 2024.

• Creators and businesses will be able to design AI chatbots that can respond to messages and hold live conversations on Instagram.
• This development is part of a broader push among tech giants like Google, Microsoft, Apple, and OpenAI to lead in the chatbot space.?

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