The post-pandemic optimsm has seen the ASX rise to all-time highs. Investors now look for value stocks – fearing inflation and a correction in the innovative growth stocks like Afterpay (ASX:APT) and Zip (ASX: Z1P) that have provided great returns until now.

That push towards more “ordinary” businesses that stand to benefit from the end of lockdowns is making retail, travel and tourism stocks fare better.

But one factor that has yet to play out on the balance sheets of these businesses is the difference in marketing power between small and large companies – something that has emerged since the pandemic.

No ‘back to normal’ in marketing

Pre-pandemic, small companies had quite a level playing field to their larger rivals when it came to marketing on the big platforms. Yes, big companies had more budget, but smaller players could carve out a niche on Google Ads, and Facebook Ads by carefully deploying the budget they had to make sure they got some airtime too.

The privacy changes by Apple announced last month have begun to change this story. By limiting the amount of data that can be gathered on any user, this means fewer targeted advertisements are possible.

How big of an impact are we talking about? On Facebook, up to half of its users are on iOS, so we have seen conversions (i.e. making a sale from an ad) and ROIs already severely diminished across the board.

Practically 100% of advertisers will have noticed some diminished return in advertising on the platform.

Previously on the Facebook advertising platform, a large portion of ad expenditure by advertisers was used on bottom funnel re-marketing, as this generated the largest ROI on ad spend. But now this tactic is severely impacted by the inability to obtain data, which in turn is translating into an inability to generate leads and sales effectively as before.

We’ll see these changes hit hardest on the more specialised consumer stocks like Shaver Shop (ASX:SSG). And If you only really want to reach, for example, ‘high net-worth women who are interested in working out’ (like say, Lululemon) – those businesses will be burning more money going forward on digital ads to make the same number of sales happen, because there’s simply going to be more ‘wasted’ ads going to irrelevant targets.

What can we do?

Right now, a good shortcut for consumer stock assessment could be ‘do they mostly target iOS users?’ and to take away points if the answer is ‘yes’. Even more if they are also small-midcap stocks and competing against larger rivals. But that only works for as long as Google/Microsoft keep their data policies the same – if they match Apple, all bets are off.

Marketing however is an innovator’s game. If digital advertising gets worse, dollars will be moved to other tactics.

Other existing digital marketing avenues like Search Engine Optimisation (SEO) are good but take time to deliver great results, while small and mid caps are looking to prove themselves quarter by quarter.

Investors may need to stomach a few lean quarters as things adjust.

Digital marketing has been an unprecedented success in helping small but good businesses scale and compete. But there’s just no guarantee that whatever innovations come in the future, they’ll be able to provide the same boost.

Invest carefully, and if in doubt, let the next quarter or two play out first.

Zac Basara is the founder of leading digital marketing agency SEO Advantage.