CMO Confidential Podcast: Dan McCarthy on "The Unfairness & Disparate Impact of Privacy Policy"

Date: September 9, 2025
Host: Mike Linton
Guest: Dr. Dan McCarthy, Professor – University of Maryland
Episode Theme: The Unintended and Disparate Impact of Apple’s App Tracking Transparency (ATT) on e-commerce and marketing

Overview

This episode dives deeply into Dr. Dan McCarthy’s research on the effects of Apple’s App Tracking Transparency (ATT) policy and its ripple through the digital marketing world. The focus is on the "unfairness" created by privacy regulations, particularly against smaller, direct-to-consumer (DTC) companies, and the broader financial, practical, and operational implications for marketers. Mike and Dan also touch on the behavioral economics of subscriptions and the impact of generative AI on education.

Key Discussion Points & Insights

1. Understanding ATT and Its Implications

[03:07]

• ATT Explained: Apple’s ATT asks iOS users if they want to allow apps to track them across other companies’ apps and websites.

• Most people opt out (“ask app not to track”), killing a key method for linking ad impressions and conversion actions.

• Quote:
  “80, 90% of people have no idea what exactly that means. But they say, ‘Well, this kind of sounds like something that's bad. I don't want that to happen to me.’” — Dan McCarthy [03:38]

• Impacts:

  • Attribution, especially for Facebook and Instagram ads, has become significantly less accurate.
  • Marketers can’t see holistic customer journeys, making ROI harder to assess.

2. When and How ATT Was Rolled Out

[06:18]

• Introduced in late April 2021 with iOS 14.5; Apple nudged users more aggressively by June 2021.
• Only affects iOS devices—Android and desktops were unaffected but had indirect "spillover" impact.

[07:56]

• Differentiates between Apple’s self-regulation (ATT) vs. government regulations like GDPR/CCPA.

3. Direct Effects on Marketing Metrics

[13:01]

• Results:

  • 37% drop in click-through rates (CTR) on Facebook ads post-ATT.
  • Direct-to-consumer brands (DTCs) saw customer acquisition cost (CAC) skyrocket due to loss of targeting/attribution.

• Quote:
  “Click-through rate effectively got 37% worse after ATT went into effect.” — Dan McCarthy [13:01]

• Revenue impact:

  • For smaller companies, revenue declines were “north of 60%” relative to previous levels.
  • Larger brands were much less affected due to diversified marketing channels.

[19:32]
“The downstream consequence for revenue was like super bad for the smaller companies. They were the ones who took almost all of the hit...for the smaller companies, it was like north of 60%.” — Dan McCarthy

4. Disparate Impact on Small vs. Large Companies

• Larger brands: More diversified; could shift spend, had more channel experience.
• Smaller/DTC brands: Dependent on Facebook, with little ability to pivot. Many likely went out of business or saw flatlined growth while others recovered.
• Quote:
  “If I'm a little company, I only have practice with one channel. This is why you think it's really unfair, right?” — Mike Linton [19:32]
  “Yeah, so for the small companies...they really got flacked. This was very tough for them.” — Dan McCarthy [19:49]

5. Data & Methodology of Research

[15:15]

• Two key data sets:
  • Ad budget allocation by companies (“show you mine if you show me yours” model).
  • Grips Intelligence platform: thousands of companies’ site visits, revenue, purchase attribution by channel and device.
• Method: Allowed before/after comparison for spend changes and revenue impact.

6. Strategic Implications for Marketers

[22:59]

• Actionable Advice:
  • Track CAC and customer lifetime value (CLV) metrics by channel, not in aggregate.
  • Monitor these metrics closely over time; don’t “average” performance across channels.
  • Loss of targeting = less efficient ROI, risk of “spray and pray” spending.
  • Attribution will only get more challenging as privacy and AI reshape user journeys.
• Quotes:
  “If you are averaging CAC across all your channels and you're averaging customers across all your channels, you will be lost in this world.” — Mike Linton [24:23]
  “You're leaving so much money on the table, you wouldn't be able to see, oh this channel's doing like really well and this other one seems to be, you know, doing terribly...it all gets glossed over into the average.” — Dan McCarthy [24:40]

7. Updates on Peloton, DoorDash, and Subscription Models

[25:49]

• Peloton continues to struggle post-pandemic despite leadership change.
• Subscription models: Recent updates show that the impact of launching a subscription depends on market maturity:
  • First-time subscribers expand category spend (“honeymoon effect”).
  • Existing users of other subscriptions just shift spend between brands.
  • Even after canceling a subscription, customers spend more than those who never subscribed.
• Quote:
  “The subscription has brand power even after it's gone.” — Mike Linton [31:42]

8. The Impact of Generative AI on Education

[32:19]

• LLMs (large language models) outperform students on standard business school questions.
• Professors must revamp evaluations to keep students learning, not just regurgitating answers.
• Experiential learning, real projects, and ill-defined problems are more valuable than ever.

[34:02]

• “I often say that you're learning when you're kind of struggling with something...the learning is in the struggle.” — Dan McCarthy

9. Behavioral Economics of Subscriptions

[36:10]

• Most people lose money on paid subscriptions but keep them anyway due to irrational behavior.
• 80% of users lose on their subscription; the longer they lose, the more likely they are to keep it.
• Quote:
  “Most of them are...in terms of practical advice, look at your subscriptions, look at your order history. Are you making money on this or not? And you might want to take a closer eye to that, because if you're like the average person, you might be losing money on your subscription.” — Dan McCarthy [38:09]

Notable Quotes & Memorable Moments

• On privacy changes:
  “This is actually blowing up a lot of the attribution in the funnel...” — Mike Linton [12:05]

• On small businesses:
  “They were the ones who took almost all of the hit... north of 60% [revenue decline].” — Dan McCarthy [19:49]

• On tracking effectiveness over time:
  “Your CAC today is going to be different from your CAC a year from now.” — Dan McCarthy [22:59]

• On behavioral economics:
  “Predictably irrational. So I think a great way to end the show.” — Mike Linton [38:09]

Timestamps for Key Segments

• [03:07] — What is ATT and how does it work?
• [06:18] — Timeline of ATT’s rollout & pre/post ad landscape
• [13:01] — Quantitative impacts: -37% CTR, rising CAC
• [19:32] — Small vs. large company impacts; why it's unfair
• [24:23] — Why “averaging” performance metrics is dangerous post-ATT
• [25:49] — Updates on Peloton, DoorDash, and subscriptions
• [32:19] — AI, cheating, and the future of education
• [36:10] — Behavioral subscription losses—practical advice

Practical Advice

• Audit your paid subscriptions regularly—most people lose money and don’t quit.
• For marketers: Drill deep into channel-level metrics, don't operate off blended averages.
• Adapt your strategies and attribution as privacy laws—and AI—keep evolving.
• For educators: Focus course designs on experiential learning that LLMs can’t solve.

Episode Tone & Style

Frank, analytical, a little irreverent (“Predictably irrational!”), and focused on the real-world, in-the-weeds experience faced by marketers and business leaders—just as Mike Linton promises.

Summary for New Listeners

Even if you missed the episode, this breakdown clarifies how privacy policies like Apple’s ATT dramatically reshaped marketing effectiveness and disproportionately hurt small, Facebook-dependent brands. Dan McCarthy’s research quantifies the impact, outlines why “averaging” marketing data is a dangerous relic, and provides tips that are immediately actionable. Bonus content explores the sticky psychology of subscriptions and what AI means for business education. Essential listening for anyone in marketing, analytics, or digital business.