Advertising Tech

SocialRank sells biz to Trufan, pivots to a mobile LinkedIn

Posted by | Advertising Tech, Apps, Enterprise, Exit, funding, Fundings & Exits, M&A, Mobile, Personnel, Recent Funding, Social, Startups, TC | No Comments

What do you do when your startup idea doesn’t prove big enough? Run it as a scrawny but profitable lifestyle business? Or sell it to a competitor and take another swing at the fences? Social audience analytics startup SocialRank chose the latter and is going for glory.

Today, SocialRank announced it’s sold its business, brand, assets, and customers to influencer marketing campaign composer and distributor Trufan which will run it as a standalone product. But SocialRank’s team isn’t joining up. Instead, the full six-person staff is sticking together to work on a mobile-first professional social network called Upstream aiming to nip at LinkedIn.

SocialRank co-founder and CEO Alex Taub

Started in 2014 amidst a flurry of marketing analytics tools, SocialRank had raised $2.1 million from Rainfall Ventures and others before hitting profitability in 2017. But as the business plateaued, the team saw potential to use data science about people’s identity to get them better jobs.

“A few months ago we decided to start building a new product (what has become Upstream). And when we came to the conclusion to go all-in on Upstream, we knew we couldn’t run two businesses at the same time” SocialRank co-founder and CEO Alex Taub tells me. “We decided then to run a bit of a process. We ended up with a few offers but ultimately felt like Trufan was the best one to continue the business into the future.”

The move lets SocialRank avoid stranding its existing customers like the NFL, Netflix, and Samsung that rely on its audience segmentation software. Instead, they’ll continue to be supported by Trufan where Taub and fellow co-founder Michael Schonfeld will become advisors.

“While we built a sustainable business, we essentially knew that if we wanted to go real big, we would need to go to the drawing board” Taub explains.

SocialRank

Two-year-old Trufan has raised $1.8 million Canadian from Round13 Capital, local Toronto startup Clearbanc’s founders, and several NBA players. Trufan helps brands like Western Union and Kay Jewellers design marketing initiatives that engage their customer communities through social media. It’s raising an extra $400,000 USD in venture debt from Round13 to finance the acquisition, which should make Trufan cash-flow positive by the end of the year.

Why isn’t the SocialRank team going along for the ride? Taub said LinkedIn was leaving too much opportunity on the table. While it’s good for putting resumes online and searching for people, “All the social stuff are sort of bolt-ons that came after Facebook and Twitter arrived. People forget but LinkedIn is the oldest active social network out there”, Taub tells me, meaning it’s a bit outdated.

Trufan’s team

Rather than attack head-on, the newly forged Upstream plans to pick the Microsoft-owned professional network apart with better approaches to certain features. “I love the idea of ‘the unbundling of LinkedIn’, ala what’s been happening with Craigslist for the past few years” says Taub. “The first foundational piece we are building is a social professional network around giving and getting help. We’ll also be focused on the unbundling of the groups aspect of LinkedIn.”

Taub concludes that entrepreneurs can shackle themselves to impossible goals if they take too much venture capital for the wrong business. As we’ve seen with SoftBank, investors demand huge returns that can require pursuing risky and unsustainable expansion strategies.

“We realized that SocialRank had potential to be a few hundred million dollar in revenue business but venture growth wasn’t exactly the model for it” Taub says. “You need the potential of billions in revenue and a steep growth curve.” A professional network for the smartphone age has that kind of addressable market. And the team might feel better getting out of bed each day knowing they’re unlocking career paths for people instead of just getting them to click ads.

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Facebook shares rise on strong Q3, users up 2% to 2.45B

Posted by | Advertising Tech, Apps, Earnings, Facebook, Facebook ads, Facebook Earnings Q3 2019, Facebook Political ads, Finance, Mark Zuckerberg, Mobile, Social, TC | No Comments

Despite ongoing public relations crises, Facebook kept growing in Q3 2019, demonstrating that media backlash does not necessarily equate to poor business performance.

Facebook reached 2.45 billion monthly users, up 1.65%, from 2.41 billion in Q2 2019 when it grew 1.6%, and it now has 1.62 billion daily active users, up 2% from 1.587 billion last quarter when it grew 1.6%. Facebook scored $17.652 billion of revenue, up 29% year-over-year, with $2.12 in earnings per share.

Facebook Q3 2019 DAU

Facebook’s earnings beat expectations compared to Refinitiv’s consensus estimates of $17.37 billion in revenue and $1.91 earnings per share. Facebook’s quarter was mixed compared to Bloomberg’s consensus estimate of $2.28 EPS. Facebook earned $6 billion in profit after only racking up $2.6 billion last quarter due to its SEC settlement.

Facebook shares rose 5.18% in after-hours trading, to $198.01 after earnings were announced, following a day where it closed down 0.56% at $188.25.

Notably, Facebook gained 2 million users in each of its core U.S. & Canada and Europe markets that drive its business, after quarters of shrinkage, no growth or weak growth there in the past two years. Average revenue per user grew healthily across all markets, boding well for Facebook’s ability to monetize the developing world where the bulk of user growth currently comes from.

Facebook says 2.2 billion users access Facebook, Instagram, WhatsApp or Messenger every day, and 2.8 billion use one of this family of apps each month. That’s up from 2.1 billion and 2.7 billion last quarter. Facebook has managed to stay sticky even as it faces increased competition from a revived Snapchat, and more recently TikTok. However, those rivals might more heavily weigh on Instagram, for which Facebook doesn’t routinely disclose user stats.

Facebook ARPU Q3 2019

Zuckerberg defends political ads policy

Facebook’s earnings announcement was somewhat overshadowed by Twitter CEO Jack Dorsey announcing it would ban all political ads — something TechCrunch previously recommended social networks do. That move flies in the face of Facebook CEO Mark Zuckerberg’s staunch support for allowing politicians to spread misinformation without fact-checks via Facebook ads. This should put additional pressure on Facebook to rethink its policy.

Zuckerberg doubled-down on the policy, saying “I believe that the better approach is to work to increase transparency. Ads on Facebook are already more transparent than anywhere else,” he said. Attempting to dispel that the policy is driven by greed, he noted Facebook expects political ads to make up “less than 0.5% of our revenue next year.” Because people will disagree and the issue will keep coming up, Zuckerberg admitted it’s going to be “a very tough year.”

Facebook also announced that lead independent board member Susan D. Desmond-Hellmann has resigned to focus on health issues.

Earnings call highlights

Facebook expects revenue deceleration to be pronounced in Q4. But CFO David Wehner provided some hope, saying “we would expect our revenue growth deceleration in 2020 versus the Q4 rate to be much less pronounced.” That led Facebook’s share price to spike from around $191 to around $198.

However, Facebook will maintain its aggressive hiring to moderate content. While the company has touted how artificial intelligence would increasingly help, Zuckerberg said that hiring would continue because “There’s just so much content. We do need a lot of people.”

Zuckerberg Libra 1

Regarding Libra’s regulatory pushback, Zuckerberg explained that Facebook was already diversified in commerce if that doesn’t work out, citing WhatsApp Payments, Facebook Marketplace and Instagram shopping.

On anti-trust concerns, Zuckerberg reminded analysts that Instagram’s success wasn’t assured when Facebook acquired it, and it has survived a lot of competition thanks to Facebook’s contributions. In a new talking point we’re likely to hear more of, Zuckerberg noted that other competitors had used their success in one vertical to push others, saying “Apple and Google built cameras and private photo sharing and photo management directly into their operating systems.”

Scandals continue, but so does growth

Overall, it was another rough quarter for Facebook’s public perception as it dealt with outages and struggled to get buy-in from regulators for its Libra cryptocurrency project. Former co-founder Chris Hughes (who I’ll be leading a talk with at SXSW) campaigned for the social network to be broken up — a position echoed by Elizabeth Warren and other presidential candidates.

The company did spin up some new revenue sources, including taking a 30% cut of fan patronage subscriptions to content creators. It’s also trying to sell video subscriptions for publishers, and it upped the price of its Workplace collaboration suite. But gains were likely offset as the company continued to rapidly hire to address abusive content on its platform, which saw headcount grow 28% year-over-year, to 43,000. There are still problems with how it treats content moderators, and Facebook has had to repeatedly remove coordinated misinformation campaigns from abroad. Appearing concerned about its waning brand, Facebook moved to add “from Facebook” to the names of Instagram and WhatsApp.

It escaped with just a $5 billion fine as part of its FTC settlement that some consider a slap on the wrist, especially since it won’t have to significantly alter its business model. But the company will have to continue to invest and divert product resources to meet its new privacy, security and transparency requirements. These could slow its response to a growing threat: Chinese tech giant ByteDance’s TikTok.

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Facebook staff demand Zuckerberg limit lies in political ads

Posted by | 2020 Election, Advertising Tech, Alexandria Ocasio-Cortez, Apps, Facebook, Facebook ads, Facebook Politics, Government, Mark Zuckerberg, Media, Mobile, Opinion, payments, Personnel, Policy, Social | No Comments

Submit campaign ads to fact checking, limit microtargeting, cap spending, observe silence periods or at least warn users. These are the solutions Facebook employees put forward in an open letter pleading with CEO Mark Zuckerberg and company leadership to address misinformation in political ads.

The letter, obtained by The New York Times’ Mike Isaac, insists that “Free speech and paid speech are not the same thing . . . Our current policies on fact checking people in political office, or those running for office, are a threat to what FB stands for.” The letter was posted to Facebook’s internal collaboration forum a few weeks ago.

The sentiments echo what I called for in a TechCrunch opinion piece on October 13th calling on Facebook to ban political ads. Unfettered misinformation in political ads on Facebook lets politicians and their supporters spread inflammatory and inaccurate claims about their views and their rivals while racking up donations to buy more of these ads.

The social network can still offer freedom of expression to political campaigns on their own Facebook Pages while limiting the ability of the richest and most dishonest to pay to make their lies the loudest. We suggested that if Facebook won’t drop political ads, they should be fact checked and/or use an array of generic “vote for me” or “donate here” ad units that don’t allow accusations. We also criticized how microtargeting of communities vulnerable to misinformation and instant donation links make Facebook ads more dangerous than equivalent TV or radio spots.

Mark Zuckerberg Hearing In Congress

The Facebook CEO, Mark Zuckerberg, testified before the House Financial Services Committee on Wednesday October 23, 2019 in Washington, D.C. (Photo by Aurora Samperio/NurPhoto via Getty Images)

More than 250 employees of Facebook’s 35,000 staffers have signed the letter, which declares, “We strongly object to this policy as it stands. It doesn’t protect voices, but instead allows politicians to weaponize our platform by targeting people who believe that content posted by political figures is trustworthy.” It suggests the current policy undermines Facebook’s election integrity work, confuses users about where misinformation is allowed, and signals Facebook is happy to profit from lies.

The solutions suggested include:

  1. Don’t accept political ads unless they’re subject to third-party fact checks
  2. Use visual design to more strongly differentiate between political ads and organic non-ad posts
  3. Restrict microtargeting for political ads including the use of Custom Audiences since microtargeted hides ads from as much public scrutiny that Facebook claims keeps politicians honest
  4. Observe pre-election silence periods for political ads to limit the impact and scale of misinformation
  5. Limit ad spending per politician or candidate, with spending by them and their supporting political action committees combined
  6. Make it more visually clear to users that political ads aren’t fact-checked

A combination of these approaches could let Facebook stop short of banning political ads without allowing rampant misinformation or having to police individual claims.

Facebook’s response to the letter was “We remain committed to not censoring political speech, and will continue exploring additional steps we can take to bring increased transparency to political ads.” But that straw-man’s the letter’s request. Employees aren’t asking politicians to be kicked off Facebook or have their posts/ads deleted. They’re asking for warning labels and limits on paid reach. That’s not censorship.

Zuckerberg Elections 1

Zuckerberg had stood resolute on the policy despite backlash from the press and lawmakers, including Representative Alexandria Ocasio-Cortez (D-NY). She left him tongue-tied during a congressional testimony when she asked exactly what kinds of misinfo were allowed in ads.

But then Friday, Facebook blocked an ad designed to test its limits by claiming Republican Lindsey Graham had voted for Ocasio-Cortez’s Green Deal he actually opposes. Facebook told Reuters it will fact-check PAC ads.

One sensible approach for politicians’ ads would be for Facebook to ramp up fact-checking, starting with presidential candidates until it has the resources to scan more. Those fact-checked as false should receive an interstitial warning blocking their content rather than just a “false” label. That could be paired with giving political ads a bigger disclaimer without making them too prominent-looking in general and only allowing targeting by state.

Deciding on potential spending limits and silent periods would be more messy. Low limits could even the playing field and broad silent periods, especially during voting periods, and could prevent voter suppression. Perhaps these specifics should be left to Facebook’s upcoming independent Oversight Board that acts as a supreme court for moderation decisions and policies.

fb arbiter of truth

Zuckerberg’s core argument for the policy is that over time, history bends toward more speech, not censorship. But that succumbs to utopic fallacy that assumes technology evenly advantages the honest and dishonest. In reality, sensational misinformation spreads much further and faster than level-headed truth. Microtargeted ads with thousands of variants undercut and overwhelm the democratic apparatus designed to punish liars, while partisan news outlets counter attempts to call them out.

Zuckerberg wants to avoid Facebook becoming the truth police. But as we and employees have put forward, there is a progressive approach to limiting misinformation if he’s willing to step back from his philosophical orthodoxy.

The full text of the letter from Facebook employees to leadership about political ads can be found below, via The New York Times:

We are proud to work here.

Facebook stands for people expressing their voice. Creating a place where we can debate, share different opinions, and express our views is what makes our app and technologies meaningful for people all over the world.

We are proud to work for a place that enables that expression, and we believe it is imperative to evolve as societies change. As Chris Cox said, “We know the effects of social media are not neutral, and its history has not yet been written.”

This is our company.

We’re reaching out to you, the leaders of this company, because we’re worried we’re on track to undo the great strides our product teams have made in integrity over the last two years. We work here because we care, because we know that even our smallest choices impact communities at an astounding scale. We want to raise our concerns before it’s too late.

Free speech and paid speech are not the same thing.

Misinformation affects us all. Our current policies on fact checking people in political office, or those running for office, are a threat to what FB stands for. We strongly object to this policy as it stands. It doesn’t protect voices, but instead allows politicians to weaponize our platform by targeting people who believe that content posted by political figures is trustworthy.

Allowing paid civic misinformation to run on the platform in its current state has the potential to:

— Increase distrust in our platform by allowing similar paid and organic content to sit side-by-side — some with third-party fact-checking and some without. Additionally, it communicates that we are OK profiting from deliberate misinformation campaigns by those in or seeking positions of power.

— Undo integrity product work. Currently, integrity teams are working hard to give users more context on the content they see, demote violating content, and more. For the Election 2020 Lockdown, these teams made hard choices on what to support and what not to support, and this policy will undo much of that work by undermining trust in the platform. And after the 2020 Lockdown, this policy has the potential to continue to cause harm in coming elections around the world.

Proposals for improvement

Our goal is to bring awareness to our leadership that a large part of the employee body does not agree with this policy. We want to work with our leadership to develop better solutions that both protect our business and the people who use our products. We know this work is nuanced, but there are many things we can do short of eliminating political ads altogether.

These suggestions are all focused on ad-related content, not organic.

1. Hold political ads to the same standard as other ads.

a. Misinformation shared by political advertisers has an outsized detrimental impact on our community. We should not accept money for political ads without applying the standards that our other ads have to follow.

2. Stronger visual design treatment for political ads.

a. People have trouble distinguishing political ads from organic posts. We should apply a stronger design treatment to political ads that makes it easier for people to establish context.

3. Restrict targeting for political ads.

a. Currently, politicians and political campaigns can use our advanced targeting tools, such as Custom Audiences. It is common for political advertisers to upload voter rolls (which are publicly available in order to reach voters) and then use behavioral tracking tools (such as the FB pixel) and ad engagement to refine ads further. The risk with allowing this is that it’s hard for people in the electorate to participate in the “public scrutiny” that we’re saying comes along with political speech. These ads are often so micro-targeted that the conversations on our platforms are much more siloed than on other platforms. Currently we restrict targeting for housing and education and credit verticals due to a history of discrimination. We should extend similar restrictions to political advertising.

4. Broader observance of the election silence periods

a. Observe election silence in compliance with local laws and regulations. Explore a self-imposed election silence for all elections around the world to act in good faith and as good citizens.

5. Spend caps for individual politicians, regardless of source

a. FB has stated that one of the benefits of running political ads is to help more voices get heard. However, high-profile politicians can out-spend new voices and drown out the competition. To solve for this, if you have a PAC and a politician both running ads, there would be a limit that would apply to both together, rather than to each advertiser individually.

6. Clearer policies for political ads

a. If FB does not change the policies for political ads, we need to update the way they are displayed. For consumers and advertisers, it’s not immediately clear that political ads are exempt from the fact-checking that other ads go through. It should be easily understood by anyone that our advertising policies about misinformation don’t apply to original political content or ads, especially since political misinformation is more destructive than other types of misinformation.

Therefore, the section of the policies should be moved from “prohibited content” (which is not allowed at all) to “restricted content” (which is allowed with restrictions).

We want to have this conversation in an open dialog because we want to see actual change.

We are proud of the work that the integrity teams have done, and we don’t want to see that undermined by policy. Over the coming months, we’ll continue this conversation, and we look forward to working towards solutions together.

This is still our company.

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Snapchat beats in Q3, adding 7M users & revenue up 50%

Posted by | Advertising Tech, Apps, Earnings, eCommerce, Evan Spiegel, Finance, Media, Mobile, snap inc, Snapchat, Snapchat earnings, snapchat stories, Social, TC | No Comments

The Snap-back continues. Snapchat blew past earnings expectations for a big beat in Q3, as it added 7 million daily active users this quarter to hit 210 million, up 13% year-over-year. Snap also beat on revenue, notching $446 million, which is up a whopping 50% year-over-year, at a loss of $0.04 EPS. That flew past Bloomberg’s consensus of Wall Street estimates that expected $437.9 million in revenue and a $0.05 EPS loss.

Snap has managed to continue cutting losses as it edges toward profitability. Net loss improved to $227 million from $255 million last quarter, with the loss decreasing $98 million versus Q3 2018.

CEO Evan Spiegel made his case in his prepared remarks for why Snapchat’s share price should be higher: “We are a high-growth business, with strong operating leverage, a clear path to profitability, a distinct vision for the future and the ability to invest over the long term.”

Snapchat’s share price had closed down 4% at $14, and had fallen roughly 4.6% in after-hours trading as of 1:50 pm Pacific, to $13.35, despite the earnings beat. It remains below its $17 IPO price but has performed exceedingly well this year, rising from a low of $4.99 in December.

Snapchat DAU Q3 2019

That’s partially because of the high cost of Snapchat’s growth relative average revenue per user. While it notes that it saw user growth in all regions, 5 million of the 7 million new users came from the Rest of World, with just 1 million coming from the North America and Europe regions. That’s in part thanks to better than expected growth and retention on its re-engineered Android app that’s been a hit in India. But since Snapchat serves so much high-definition video content but it earns just $1.01 average revenue in the Rest of World, it has to hope it can keep growing ARPU so it becomes profitable globally.

Some other top-line stats from Snapchat’s earnings:

  • Operating cash flow improved by $56 million to a loss of $76 million in Q3 2019, compared to the prior year.
  • Free Cash Flow improved by $75 million to $84 million in Q3 2019, compared to the prior year.
  • Cash and marketable securities on hand reached $2.3 billion.

Snapchat ARPU Q3 2019

Interestingly, Spiegel noted that “We benefited from year-over-year growth in user activity in Q3 including growth in Snapchatters posting and viewing Stories.” Snapchat hadn’t indicated Stories was growing in at least the past two years, as it was attacked by clones, including Instagram Stories that led Snapchat to start shrinking in user count a year ago before it recovered.

Since Stories viewership is critical to total ad view on Snapchat, we may see analysts insisting to hear more about that metric in the future. Snap also said users opened the app 30 times per day, up from 25 times per day as of July 2018, showing it’s still highly sticky and being used for rapid-fire visual communication.

The other major piece of Snapchat’s ad properties is Discover, where total time spent watching grew 40% year-over-year. And rather than being driving by just a few hits, more than 100 Discover channels saw over 10 million viewers per month in Q3. With Instagram’s IGTV a flop, Discover remains Snapchat’s best differentiated revenue driver, and one it needs to keep investing in and promoting. With Instagram trying to compete more heavily on chat with its new close friends-only Threads app, Snapchat can’t rely on ephemeral messaging to keep it special.

3 TikTok Ad

TikTok buys ads on Snapchat that could steal its users

Surprisingly, Spiegel said that “We definitely see TikTok as a friend” when asked about why it allowed the competitor to continue buying ads on Snapchat. The two apps are different, with Snapchat focused on messaging and biographical social media while TikTok is about storyboarded, premeditated social entertainment. But this could be a dangerous friendship for Snapchat, as TikTok may be taking time away that users might spend watching Snapchat Discover, and its growth could box Snapchat out of the social entertainment space.

Looking forward, in Q4 Snap is estimating 214 to 215 million daily active users and $540 million to $560 million in revenue. It’s expecting between break even and positive $20 million for adjusted EBITDA. That revenue guidance was below estimates for the holiday Q4, contributing to the share price fall.

Snap has a ways to go before reaching profitability. That milestone would let it more freely invest in long-term projects, specifically its Spectacles camera-glasses. Spiegel has said he doesn’t expect augmented reality glasses to be a mainstream consumer product for 10 years. That means Snap will have to survive and spend for a long time if it wants a chance to battle Apple, Facebook, Magic Leap and more for that market.

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App Annie acquires analytics firm Libring, bringing adtech-related insights to its platform

Posted by | ad tech, Advertising Tech, analytics, App Annie, Apps, data, Fundings & Exits, insights, libring, M&A, Mobile, mobile apps, platforms | No Comments

App Annie, a go-to source for mobile app market data and analytics, is expanding its platform with the acquisition of mobile analytics provider Libring. The deal will allow App Annie to present its mobile app market data side by side with advertising analytics data in order to paint a more complete picture of an app’s performance and revenue.

Already, App Annie customers leverage its platform to track key metrics related to their app’s growth and usage, like downloads, active users, retention numbers, demographics, rankings, reviews, competitive analysis and more. But the company said it heard from publishers and brands how it’s still difficult to analyze their user acquisition efforts, including their ad spend and related costs.

Screen Shot 2019 09 26 at 12.42.07 PMWith the addition of Libring, App Annie is integrating adtech insights into its platform.

This includes the ability to combine the ad spend and monetization insights from more than 325 data sources, including Supply Side Platforms (SSPs), Demand Side Platforms (DSPs), app stores and analytics platforms.

This data is then presented in a single dashboard so it’s easier to understand critical metrics — like the customer acquisition cost, the lifetime value, the return on ad spend and the return on investment.

It’s ideal for larger organizations that have outgrown the spreadsheet, as it’s been sort of the App Annie of revenue aggregation, so to speak.

“The most successful companies find a way to capitalize on mobile, yet they have been struggling to maximize its value to their business,” explained App Annie CEO Ted Krantz, in a statement about the acquisition. “Today, this requires custom work to stitch together multiple point solutions, spreadsheets, business intelligence teams, agencies and consultants. We are committed to solving this by applying data science and machine learning to automate these composite metrics for brands and publishers,” he said.

The deal comes at a time when mobile ad spend is continuing to grow rapidly — it’s expected to double to $375 billion globally by 2022, the company noted. It’s now a massive part of the overall app industry, at triple the amount of consumer spending on the app stores.

As a result of the deal, Libring’s 30-plus employees are joining App Annie.

In the near-term, Libring’s current customers will continue to use its product as they do today.

But App Annie tells us there’s only some overlap between the two companies’ respective customer bases. For now, App Annie will work with its customers who want to purchase the new analytics service and find out what sort of enhancements they are looking for in an analytics solution. Libring’s customers can also purchase App Annie’s analytics, if they choose.

Later, App Annie will migrate the Libring backend to the same infrastructure provider the rest of App Annie uses, and will then integrate the front-end so customers can log in and visualize the new analytics and other market data together. More information about how this will all work will be shared when those tools are closer to being available, which is still several months from now.

Going forward, App Annie says its data science team will also offer predictive and prescriptive insights based on the new data.

According to Libring’s website, its customers included SEGA, Slickdeals, Reddit, Jam City, Wooga, EA, Zynga, Next Games, Meet Me, GameInsight, Deviant Art, Webedia, Ubisoft, theChive, saambaa, badoo, textnow and others.

App Annie declined to disclose the deal terms.

Related to the changes and expansion, App Annie also today introduced a new brand that features a gem logomark. The gem is meant to be a tribute to mobile gaming and the idea of “leveling up” while also a reflection of the value of actionable data, the company says.

AppAnnie Rebrand Logo Lockups DARKBLUE 1

The acquisition comes on the heels of several notable milestones for App Annie, including the launch of a product development testing ground, App Annie Labs; plus the addition of mobile web analytics in March — the same time when App Annie passed $100 million in annual recurring revenue.

The company is soliciting feedback about its plans for Libring and will post updates about the project on App Annie Labs, it says.

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Facebook expands its playable and AR ad formats

Posted by | Advertising Tech, augmented reality, Facebook, Mobile, Social | No Comments

Ahead of Advertising Week, Facebook is announcing the expansion of three interactive ad formats.

First, it says that poll ads (which you may already have seen in Instagram Stories) are moving to the main feed of the Facebook mobile app. Second, the augmented reality ads that Facebook has already been testing are moving into open beta this fall. Third, Facebook is making playable ads available to all advertisers, not just gaming companies.

The company showed off each format at a press event yesterday in New York City.

E!, for example, says it ran ads with interactive polls to promote one of its TV shows, leading to a 1.6x increase in brand awareness. Meanwhile, Vans created a playable ad where players could guide skateboarder Steve Van Doren down a mountain, resulting in a 4.4% lift in ad recall. And WeMakeUp ran an AR ad campaign allowing users to virtually try on new shades of makeup, leading to a 27.6% lift in purchases.

Mark D’Arcy, Facebook’s chief creative officer and vice president of global business marketing, said that while the initial playable ad examples had “very literal gaming mechanics, doing brands in a game,” there could be “a whole range” of different interactions over time.

D’Arcy also acknowledged that including polls, games and AR in ads aren’t exactly new ideas, but he suggested that in the past, they’ve generally been “heavy” experiences, requiring things like a separate microsite. By bringing them front-and-center on Facebook, the company is making them “super lightweight, fun and super scalable.”

As result, he suggested that each of these formats will evolve as more advertisers get to experiment with them: “In 12 months, even six months, we’re going to look at these examples and they’ll be fundamentally different.”

And if you’re wondering how these new formats will handle user data, the Facebook team said that only the aggregate results of polls — not individual user data — will be shared with advertisers. Similarly, any images created by users through an AR ad can be saved to their camera roll, but won’t be shared with advertisers.

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Corey Weiner is taking over as CEO of mobile ad company Jun Group

Posted by | Advertising Tech, Corey Weiner, Jun Group, Mitchell Reichgut, Mobile, Personnel | No Comments

After 18 years at the helm, Mitchell Reichgut is stepping down as CEO of Jun Group, with COO and president Corey Weiner taking over as chief executive.

The news comes just about a year after Jun Group was acquired by Advantage Solutions, but Reichgut said the acquisition was a “non-factor” in his decision.

“I think it is the right time for the company to have a leadership change,” he said. “I have been stepping back more and more, so it’s a natural progression, with a bunch of managers here taking on larger roles as I move on.”

In addition to Weiner (who’s been at Jun Group since 2003), other Jun Group executives taking on new roles include Mishel Alon becoming COO, Leslie Bargmann becoming vice president of client services and Jeremy Ellison becoming vice president of technology.

Reichgut, meanwhile, said he’s “stepping back entirely to focus on artwork and writing and community service after a long, long career.”

Looking ahead, Weiner plans to double down on Jun Group’s approach to advertising, where it builds custom audience segments by polling users in its network, then shows video ads and branded content to interested viewers.

“Our primary motivation is to evangelize that format,” he said. “As you know, most advertising is interruptive and consumers don’t like that kind of advertising very much — in some cases, they’re annoyed by it. This value exchange flips the advertising paradigm on its head. By choosing to engage with advertising, they are getting something amazing in return.”

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Most EU cookie ‘consent’ notices are meaningless or manipulative, study finds

Posted by | Advertising Tech, america, Android, cookies, data processing, data protection, data security, ePrivacy Regulation, Europe, european union, Facebook, France, GDPR, General Data Protection Regulation, Germany, Google, information commissioner's office, instagram, law, online advertising, privacy, spamming, TC, United States, University of Michigan | No Comments

New research into how European consumers interact with the cookie consent mechanisms which have proliferated since a major update to the bloc’s online privacy rules last year casts an unflattering light on widespread manipulation of a system that’s supposed to protect consumer rights.

As Europe’s General Data Protection Regulation (GDPR) came into force in May 2018, bringing in a tough new regime of fines for non-compliance, websites responded by popping up legal disclaimers which signpost visitor tracking activities. Some of these cookie notices even ask for consent to track you.

But many don’t — even now, more than a year later.

The study, which looked at how consumers interact with different designs of cookie pop-ups and how various design choices can nudge and influence people’s privacy choices, also suggests consumers are suffering a degree of confusion about how cookies function, as well as being generally mistrustful of the term ‘cookie’ itself. (With such baked in tricks, who can blame them?)

The researchers conclude that if consent to drop cookies was being collected in a way that’s compliant with the EU’s existing privacy laws only a tiny fraction of consumers would agree to be tracked.

The paper, which we’ve reviewed in draft ahead of publication, is co-authored by academics at Ruhr-University Bochum, Germany, and the University of Michigan in the US — and entitled: (Un)informed Consent: Studying GDPR Consent Notices in the Field.

The researchers ran a number of studies, gathering ~5,000 of cookie notices from screengrabs of leading websites to compile a snapshot (derived from a random sub-sample of 1,000) of the different cookie consent mechanisms in play in order to paint a picture of current implementations.

They also worked with a German ecommerce website over a period of four months to study how more than 82,000 unique visitors to the site interacted with various cookie consent designs which the researchers’ tweaked in order to explore how different defaults and design choices affected individuals’ privacy choices.

Their industry snapshot of cookie consent notices found that the majority are placed at the bottom of the screen (58%); not blocking the interaction with the website (93%); and offering no options other than a confirmation button that does not do anything (86%). So no choice at all then.

A majority also try to nudge users towards consenting (57%) — such as by using ‘dark pattern’ techniques like using a color to highlight the ‘agree’ button (which if clicked accepts privacy-unfriendly defaults) vs displaying a much less visible link to ‘more options’ so that pro-privacy choices are buried off screen.

And while they found that nearly all cookie notices (92%) contained a link to the site’s privacy policy, only a third (39%) mention the specific purpose of the data collection or who can access the data (21%).

The GDPR updated the EU’s long-standing digital privacy framework, with key additions including tightening the rules around consent as a legal basis for processing people’s data — which the regulation says must be specific (purpose limited), informed and freely given for consent to be valid.

Even so, since May last year there has been an outgrown in cookie ‘consent’ mechanisms popping up or sliding atop websites that still don’t offer EU visitors the necessary privacy choices, per the research.

“Given the legal requirements for explicit, informed consent, it is obvious that the vast majority of cookie consent notices are not compliant with European privacy law,” the researchers argue.

“Our results show that a reasonable amount of users are willing to engage with consent notices, especially those who want to opt out or do not want to opt in. Unfortunately, current implementations do not respect this and the large majority offers no meaningful choice.”

The researchers also record a large differential in interaction rates with consent notices — of between 5 and 55% — generated by tweaking positions, options, and presets on cookie notices.

This is where consent gets manipulated — to flip visitors’ preference for privacy.

They found that the more choices offered in a cookie notice, the more likely visitors were to decline the use of cookies. (Which is an interesting finding in light of the vendor laundry lists frequently baked into the so-called “transparency and consent framework” which the industry association, the Internet Advertising Bureau (IAB), has pushed as the standard for its members to use to gather GDPR consents.)

“The results show that nudges and pre-selection had a high impact on user decisions, confirming previous work,” the researchers write. “It also shows that the GDPR requirement of privacy by default should be enforced to make sure that consent notices collect explicit consent.”

Here’s a section from the paper discussing what they describe as “the strong impact of nudges and pre-selections”:

Overall the effect size between nudging (as a binary factor) and choice was CV=0.50. For example, in the rather simple case of notices that only asked users to confirm that they will be tracked, more users clicked the “Accept” button in the nudge condition, where it was highlighted (50.8% on mobile, 26.9% on desktop), than in the non-nudging condition where “Accept” was displayed as a text link (39.2% m, 21.1% d). The effect was most visible for the category-and vendor-based notices, where all checkboxes were pre-selected in the nudging condition, while they were not in the privacy-by-default version. On the one hand, the pre-selected versions led around 30% of mobile users and 10% of desktop users to accept all third parties. On the other hand, only a small fraction (< 0.1%) allowed all third parties when given the opt-in choice and around 1 to 4 percent allowed one or more third parties (labeled “other” in 4). None of the visitors with a desktop allowed all categories. Interestingly, the number of non-interacting users was highest on average for the vendor-based condition, although it took up the largest part of any screen since it offered six options to choose from.

The key implication is that just 0.1% of site visitors would freely choose to enable all cookie categories/vendors — i.e. when not being forced to do so by a lack of choice or via nudging with manipulative dark patterns (such as pre-selections).

Rising a fraction, to between 1-4%, who would enable some cookie categories in the same privacy-by-default scenario.

“Our results… indicate that the privacy-by-default and purposed-based consent requirements put forth by the GDPR would require websites to use consent notices that would actually lead to less than 0.1 % of active consent for the use of third parties,” they write in conclusion.

They do flag some limitations with the study, pointing out that the dataset they used that arrived at the 0.1% figure is biased — given the nationality of visitors is not generally representative of public Internet users, as well as the data being generated from a single retail site. But they supplemented their findings with data from a company (Cookiebot) which provides cookie notices as a SaaS — saying its data indicated a higher accept all clicks rate but still only marginally higher: Just 5.6%.

Hence the conclusion that if European web users were given an honest and genuine choice over whether or not they get tracked around the Internet, the overwhelming majority would choose to protect their privacy by rejecting tracking cookies.

This is an important finding because GDPR is unambiguous in stating that if an Internet service is relying on consent as a legal basis to process visitors’ personal data it must obtain consent before processing data (so before a tracking cookie is dropped) — and that consent must be specific, informed and freely given.

Yet, as the study confirms, it really doesn’t take much clicking around the regional Internet to find a gaslighting cookie notice that pops up with a mocking message saying by using this website you’re consenting to your data being processed how the site sees fit — with just a single ‘Ok’ button to affirm your lack of say in the matter.

It’s also all too common to see sites that nudge visitors towards a big brightly colored ‘click here’ button to accept data processing — squirrelling any opt outs into complex sub-menus that can sometimes require hundreds of individual clicks to deny consent per vendor.

You can even find websites that gate their content entirely unless or until a user clicks ‘accept’ — aka a cookie wall. (A practice that has recently attracted regulatory intervention.)

Nor can the current mess of cookie notices be blamed on a lack of specific guidance on what a valid and therefore legal cookie consent looks like. At least not any more. Here, for example, is a myth-busting blog which the UK’s Information Commissioner’s Office (ICO) published last month that’s pretty clear on what can and can’t be done with cookies.

For instance on cookie walls the ICO writes: “Using a blanket approach such as this is unlikely to represent valid consent. Statements such as ‘by continuing to use this website you are agreeing to cookies’ is not valid consent under the higher GDPR standard.” (The regulator goes into more detailed advice here.)

While France’s data watchdog, the CNIL, also published its own detailed guidance last month — if you prefer to digest cookie guidance in the language of love and diplomacy.

(Those of you reading TechCrunch back in January 2018 may also remember this sage plain english advice from our GDPR explainer: “Consent requirements for processing personal data are also considerably strengthened under GDPR — meaning lengthy, inscrutable, pre-ticked T&Cs are likely to be unworkable.” So don’t say we didn’t warn you.)

Nor are Europe’s data protection watchdogs lacking in complaints about improper applications of ‘consent’ to justify processing people’s data.

Indeed, ‘forced consent’ was the substance of a series of linked complaints by the pro-privacy NGO noyb, which targeted T&Cs used by Facebook, WhatsApp, Instagram and Google Android immediately GDPR started being applied in May last year.

While not cookie notice specific, this set of complaints speaks to the same underlying principle — i.e. that EU users must be provided with a specific, informed and free choice when asked to consent to their data being processed. Otherwise the ‘consent’ isn’t valid.

So far Google is the only company to be hit with a penalty as a result of that first wave of consent-related GDPR complaints; France’s data watchdog issued it a $57M fine in January.

But the Irish DPC confirmed to us that three of the 11 open investigations it has into Facebook and its subsidiaries were opened after noyb’s consent-related complaints. (“Each of these investigations are at an advanced stage and we can’t comment any further as these investigations are ongoing,” a spokeswoman told us. So, er, watch that space.)

The problem, where EU cookie consent compliance is concerned, looks to be both a failure of enforcement and a lack of regulatory alignment — the latter as a consequence of the ePrivacy Directive (which most directly concerns cookies) still not being updated, generating confusion (if not outright conflict) with the shiny new GDPR.

However the ICO’s advice on cookies directly addresses claimed inconsistencies between ePrivacy and GDPR, stating plainly that Recital 25 of the former (which states: “Access to specific website content may be made conditional on the well-informed acceptance of a cookie or similar device, if it is used for a legitimate purpose”) does not, in fact, sanction gating your entire website behind an ‘accept or leave’ cookie wall.

Here’s what the ICO says on Recital 25 of the ePrivacy Directive:

  • ‘specific website content’ means that you should not make ‘general access’ subject to conditions requiring users to accept non-essential cookies – you can only limit certain content if the user does not consent;
  • the term ‘legitimate purpose’ refers to facilitating the provision of an information society service – ie, a service the user explicitly requests. This does not include third parties such as analytics services or online advertising;

So no cookie wall; and no partial walls that force a user to agree to ad targeting in order to access the content.

It’s worth point out that other types of privacy-friendly online advertising are available with which to monetize visits to a website. (And research suggests targeted ads offer only a tiny premium over non-targeted ads, even as publishers choosing a privacy-hostile ads path must now factor in the costs of data protection compliance to their calculations — as well as the cost and risk of massive GDPR fines if their security fails or they’re found to have violated the law.)

Negotiations to replace the now very long-in-the-tooth ePrivacy Directive — with an up-to-date ePrivacy Regulation which properly takes account of the proliferation of Internet messaging and all the ad tracking techs that have sprung up in the interim — are the subject of very intense lobbying, including from the adtech industry desperate to keep a hold of cookie data. But EU privacy law is clear.

“[Cookie consent]’s definitely broken (and has been for a while). But the GDPR is only partly to blame, it was not intended to fix this specific problem. The uncertainty of the current situation is caused the delay of the ePrivacy regulation that was put on hold (thanks to lobbying),” says Martin Degeling, one of the research paper’s co-authors, when we suggest European Internet users are being subject to a lot of ‘consent theatre’ (ie noisy yet non-compliant cookie notices) — which in turn is causing knock-on problems of consumer mistrust and consent fatigue for all these useless pop-ups. Which work against the core aims of the EU’s data protection framework.

“Consent fatigue and mistrust is definitely a problem,” he agrees. “Users that have experienced that clicking ‘decline’ will likely prevent them from using a site are likely to click ‘accept’ on any other site just because of one bad experience and regardless of what they actually want (which is in most cases: not be tracked).”

“We don’t have strong statistical evidence for that but users reported this in the survey,” he adds, citing a poll the researchers also ran asking site visitors about their privacy choices and general views on cookies. 

Degeling says he and his co-authors are in favor of a consent mechanism that would enable web users to specify their choice at a browser level — rather than the current mess and chaos of perpetual, confusing and often non-compliant per site pop-ups. Although he points out some caveats.

“DNT [Do Not Track] is probably also not GDPR compliant as it only knows one purpose. Nevertheless  something similar would be great,” he tells us. “But I’m not sure if shifting the responsibility to browser vendors to design an interface through which they can obtain consent will lead to the best results for users — the interfaces that we see now, e.g. with regard to cookies, are not a good solution either.

“And the conflict of interest for Google with Chrome are obvious.”

The EU’s unfortunate regulatory snafu around privacy — in that it now has one modernized, world-class privacy regulation butting up against an outdated directive (whose progress keeps being blocked by vested interests intent on being able to continue steamrollering consumer privacy) — likely goes some way to explaining why Member States’ data watchdogs have generally been loath, so far, to show their teeth where the specific issue of cookie consent is concerned.

At least for an initial period the hope among data protection agencies (DPAs) was likely that ePrivacy would be updated and so they should wait and see.

They have also undoubtedly been providing data processors with time to get their data houses and cookie consents in order. But the frictionless interregnum while GDPR was allowed to ‘bed in’ looks unlikely to last much longer.

Firstly because a law that’s not enforced isn’t worth the paper it’s written on (and EU fundamental rights are a lot older than the GDPR). Secondly, with the ePrivacy update still blocked DPAs have demonstrated they’re not just going to sit on their hands and watch privacy rights be rolled back — hence them putting out guidance that clarifies what GDPR means for cookies. They’re drawing lines in the sand, rather than waiting for ePrivacy to do it (which also guards against the latter being used by lobbyists as a vehicle to try to attack and water down GDPR).

And, thirdly, Europe’s political institutions and policymakers have been dining out on the geopolitical attention their shiny privacy framework (GDPR) has attained.

Much has been made at the highest levels in Europe of being able to point to US counterparts, caught on the hop by ongoing tech privacy and security scandals, while EU policymakers savor the schadenfreude of seeing their US counterparts being forced to ask publicly whether it’s time for America to have its own GDPR.

With its extraterritorial scope, GDPR was always intended to stamp Europe’s rule-making prowess on the global map. EU lawmakers will feel they can comfortably check that box.

However they are also aware the world is watching closely and critically — which makes enforcement a very key piece. It must slot in too. They need the GDPR to work on paper and be seen to be working in practice.

So the current cookie mess is a problematic signal which risks signposting regulatory failure — and that simply isn’t sustainable.

A spokesperson for the European Commission told us it cannot comment on specific research but said: “The protection of personal data is a fundamental right in the European Union and a topic the Juncker commission takes very seriously.”

“The GDPR strengthens the rights of individuals to be in control of the processing of personal data, it reinforces the transparency requirements in particular on the information that is crucial for the individual to make a choice, so that consent is given freely, specific and informed,” the spokesperson added. 

“Cookies, insofar as they are used to identify users, qualify as personal data and are therefore subject to the GDPR. Companies do have a right to process their users’ data as long as they receive consent or if they have a legitimate interest.”

All of which suggests that the movement, when it comes, must come from a reforming adtech industry.

With robust privacy regulation in place the writing is now on the wall for unfettered tracking of Internet users for the kind of high velocity, real-time trading of people’s eyeballs that the ad industry engineered for itself when no one knew what was being done with people’s data.

GDPR has already brought greater transparency. Once Europeans are no longer forced to trade away their privacy it’s clear they’ll vote with their clicks not to be ad-stalked around the Internet too.

The current chaos of non-compliant cookie notices is thus a signpost pointing at an underlying privacy lag — and likely also the last gasp signage of digital business models well past their sell-by-date.

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Luna Labs creates playable ads, directly from Unity

Posted by | Advertising Tech, Gaming, Luna Labs, Mobile, Startups | No Comments

It seems obvious that the best way to advertise a game is to let people play the game itself — and we’ve covered other startups tackling this problem, such as AppOnboard and mNectar.

But Luna Labs co-founder and CEO Steven Chard said that for most developers, the creation of these ads involves outsourcing: “It might take weeks to make an ad, and the quality of the content at the end could be limited.”

The problem, Chard said, is that most games are built on the Unity engine, while the ads need to be in HTML5, which means that developers often have to build playable ads from scratch — hence the outsourcing.

“There’s this huge demand for playables, but the tech hasn’t caught up with it,” he said. “Our view — and I think why it’s really resonating with developers — we’re saying to developers: Use that same [Unity] editor to create a playable ad. You’re going to give the user a playable ad which genuinely feels like the game.”

In fact, while Luna is officially launching its service to developers this week, it’s already been working with a few partners like Kwalee and Voodoo. Luna says that in Kwalee’s case, the results were good enough that the company spent 60% more than they did on other playable ads, and the Luna playables drove more than 250,000 installs per day.

“Luna is solving a real pain point for our studio, and the initial results have been tremendous,” said Kwalee COO Jason Falcus in a statement. “Integrating the Luna service has allowed us to significantly scale our campaigns by a comfortable margin, to the best results so far.”

Jetpack Jump

Luna’s investors include Ben Holmes (formerly of Index Ventures, backer of King and Playfish) and Chris Lee (who also invested in Space Ape and Hello Games).

Chard said the startup is currently focused on providing tools to developers, rather than getting involved in the ad-buying process. More generally, he said the company has been focused on the technology rather than the business model.

“We’re an early company with a very, very complex piece of technology — it’s taken a lot of time to get where we are,” he said. “We’re not doing it for free, but the focus isn’t on short-term profitability. It is, in the longer term, on creating a scalable product which can be used by developers.”

Chard added that eventually, he’s hoping Luna can become more involved in “at the content creation level.” For example, he suggested that developers could use the technology to test out playable concepts and see what resonates, before building a full game.

You can test it out for yourself on the Luna Labs website.

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Sex tech companies and advocates protest unfair ad standards outside Facebook’s NY HQ

Posted by | Advertising Tech, computing, digital advertising, Facebook, Gadgets, Google, instagram, internet culture, Lora DiCarlo, online ads, operating systems, photo sharing, social media, Software, TC, United States | No Comments

A group of sex tech startup founders, employees and supporters gathered outside of Facebook’s NY office in Manhattan to protest its advertising policies with respect to what it classifies as sexual content. The protest, and a companion website detailing their position we reported on Tuesday, are the work of “Approved, Not Approved,” a coalition of sex health companies co-founded by Dame Products and Unbound Babes.

These policies as applied have fallen out of step with “the average person’s views of what should or shouldn’t be approved of ads,” according to Janet Lieberman, co-founder and CTO of Dame Products.

“If you look at the history of the sex toy industry, for example, vibrators were sexual health products until advertising restrictions were put on them in the 1920s and 1930s — and then they became dirty, and that’s how the industry got shady, and that’s why we have negative thoughts towards them,” she told me in an interview at the protest. “They’re moving back towards wellness in people’s minds, but not in advertising policies. There’s a double standard for what is seen as obscene, talking about men’s sexual health versus women’s sexual health and talking about products that aren’t sexual, and using sex to sell them, versus taking sexual products and having completely non-sexual ads for them.”

facebook ad protest nyc

Credit: TechCrunch

It’s a problem that extends beyond just Facebook and Instagram, Lieberman says. In fact, her company is also suing NYC’s MTA for discrimination for its own ad standards after it refused to run ads for women’s sex toys in their out-of-home advertising inventory. But it also has ramifications beyond just advertising, because in many ways what we see in ads helps define what we see as acceptable in terms of our everyday lives and conversations.

“Some of this stems from society’s inability to separate sexual products from feeling sexual, and that’s a real problem that we see that hurts women more than men, but hurts both genders, in not knowing how to help our sexual health,” Lieberman said. “We can’t talk about it without being sexual, and that we can’t bring things up, without it seeming like we’re bringing up something that is dirty.”

IMG 9739

Credit: Unbound / Dame Products

“A lot of the people you see here today have Instagrams that have been shut down, or ads that have been not approved on Facebook,” said Bryony Cole, CEO at Future of Sex, in an interview. “Myself, I run Future of Sex, which is a sex tech hackathon, and a podcast focused on sex tech, and my Instagram’s been shut down twice with no warning. It’s often for things that Facebook will say they consider phallic imagery, but they’re not […] and yet if you look at images for something like HIMS [an erectile dysfunction medication startup, examples of their ads here], you’ll see those phallic practice images. So there’s this gross discrepancy, and it’s very frustrating, especially for these companies where a lot of the revenue in their business is around community that are online, which is true for sex toys.”

Online ads aren’t just a luxury for many of these startup brands and companies — they’re a necessary ingredient to continued success. Google and Facebook together account for the majority of digital advertising spend in the U.S., according to eMarketer, and it’s hard to grow a business that caters to primarily online customers without fair access to their platforms, Cole argues.

“You see a lot of sex tech or sexual wellness brands having to move off Instagram and find other ways to reach their communities,” she said. “But the majority of people, that’s where they are. And if they’re buying these products, they’re still overcoming a stigma about buying the product, so it’s great to be able to purchase these online. A lot of these companies started either crowdfunding, like Dame Products, or just through e-commerce sites. So the majority of their business is online. It’s not in a store.”

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Credit: Unbound / Dame Products

Earlier this year, sex tech company Lora DiCarlo netted a win in getting the Consumer Technology Association to restore its CES award after community outcry. Double standards in advertising is a far more systemic and distributed problem, but these protests will hopefully help open up the conversation and prompt more change.

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