On the other side of the globe, some tech giants like Meta Platforms Inc (NASDAQ: FB) are suffering significant share price drops. What does this mean for the Appen Ltd (ASX: APX) share price?
APX share price
Stay alert to the advertising landscape
The Facebook share price dropped significantly as its founder, Mark Zuckerberg emphasised the adverse impact of competition on its advertising revenue.
A key reason for this was the big number of Apple iOS users choosing to not allow Facebook to track usage.
Why is this important though?
Facebook’s mission is to dominate the advertising space and if users allow the tech giant to track usage, this enables them to provide tailored advertising based on user behaviours.
How does Appen come into play?
All this data that Facebook extracts from users are in an unstructured form. Appen uses its large labour hire network to transform these massive sets of data in a form that Facebook and Google can use to automatically spit out targeted advertising at scale.
What this means for Appen
If Facebook continues to struggle in the face of the Apple iOS privacy changes, it would result in a decline in demand for Appen’s services.
However, Facebook could very well ramp up its spending on ad targeting to outmuscle the likes of TikTok and Alphabet Inc (NASDAQ: GOOGL).
Appen’s customer base is heavily concentrated in the big tech companies and that’s why it’s trying to diversify its revenue streams across China.
My thoughts
I believe it’s important to understand whether targeted advertising is still the most effective method to capture eyeballs.
With the sudden surge in short-form videos, one has to evaluate whether this will eventually replace targeted advertising.
At the moment, Facebook has conceded that it’s having engagement problems due to the popularity of short-form videos, so investors ought to monitor Appen’s strategy to diversify its revenue streams.
Check out the entertaining debate between Lachlan and Value Downunder if you want to find more insights about Appen.
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