Apple’s privacy features to cost Facebook $12 8 bn in 2022, Marketing & Advertising News, ET BrandEquity
That could make them more reliant on Facebook ads to drive traffic and sales, and boost revenue for the social network. It could also benefit Facebook’s efforts to monetize WhatsApp and Messenger with more tools for businesses to connect with customers and complete sales through direct messaging. Apple’s announcement of iOS 14 —and the changes it would bring to device/user identification — was the latest blow to Facebook’s deteriorating relationship with amazon direct decision to stop accepting the tech giant. Soon, iOS 14 will limit apps’ ability to leverage IDFA (Apple’s unique identifier for each consumer device) for the purpose of user tracking, targeting, and attribution between apps — starting in early 2021. However, the Metaverse is a long-term bet for Meta, and it comes at a time while the company is losing revenue in its core advertising business. Zuckerberg also announced the company would be spending billions to make this pivot.
This means Meta will have to be bold in its strategy, and I do believe its commitment to the Metaverse certainly represented a high risk, high reward change. I am cautiously optimistic that Meta can persevere here and turn the ship toward its next wave of growth by leaning into the opportunity here. If Meta gets this right, this could be the start of the next digital revolution. After almost a year of the app tracking transparency changes, it seems like Facebook is faring worse than other companies. Last week, after the earnings call, Meta stock dropped 26%, Snap fell 18%, Twitter fell 8%, and Pinterest fell 11%. And while it can seem like Meta is being disproportionately targeted by Apple’s changes, it comes down to the fact that a big chunk of Facebook’s ad revenue relied heavily on IDFA data.
The technology enables ad firms to measure the number of users who purchase goods after viewing, but not interacting with, an ad. We can likely anticipate Meta to take a percentage of the sale of these virtual goods as it facilitates the marketplace — just as Minecraft and Roblox make money. It’s hard to know at this point, but it could very well be, and betting against Zuck has rarely been prudent.
According to a study from ad measurement firm AppsFlyer, 62% of iPhone users were choosing to opt out of sharing their IDFA. Apple’s upcoming privacy changes will inform users about device ID tracking and ask them if they want to allow it. The tracking is based on a unique device identifier on every iPhone and iPad called the IDFA. Companies that sell mobile advertisements use this ID to help target ads and estimate their effectiveness.
Apple’s ATT has been available for download for a year as part of iOS 14.5, and if you’ve already updated to iOS 15, you’ve been using it for quite a while. The main issue may be seeing ads that aren’t all that relevant to your interests. So what exactly is ATT, and how can it have such an outsized impact on some of the biggest social networks around?
This week Google announced massive and similar changes on Android, prompting another 6% drop this week and ousting Facebook from the world’s top 10 biggest companies by market cap. In July, when the plans for the pivot to the Metaverse were announced, Zuckerberg took time to explain where the potential revenue will come from, and we’ve already seen some of it come to fruition in the last 8 months. Some revenue will obviously come from the sale of hardware like the headsets needed to enter the Metaverse. Some revenue will come advertising, but majority of the revenue will come from the sale of virtual goods and possibly even virtual real estate.
Facebook has been put in a spin by this because user data – and the advertising it can generate – is what makes the company so profitable. For the individual app marketers who rely on Facebook to acquire new customers and boost revenue — what’s next? Most platforms are still attempting to navigate this storm and identify ways to honor user privacy while delivering solutions for marketers of all sizes. Apple’s privacy moves via App Tracking Transparency vastly disrupted Facebook’s ability to see our activity in third-party apps.
An IDFA is Apple’s randomized identifier that allows advertisers to track your activity across apps and the web without pulling in your personal information. Shares of Facebook parent Meta were hammered Thursday, falling 26% after the company revealed that privacy changes Apple made to its iOS platform last year have begun to sink their teeth into the social networking giant’s bottom line. Then Facebook’s CEO Mark Zuckerberg reported that his company would see a $10 billion revenue hit in 2022. In October 2021, Snapchat’s parent company Snap saw its stock price fall 25 per cent over fears regarding the impact of ATT. Months after tech giant Apple launched App Tracking Transparency , a new analysis has predicted its second year will still see major disruption to advertisers, with Facebook, YouTube and more collectively losing around $16 billion. With over ten years in the technology industry, one of them being at Apple, Joe now covers the company for the website.
That near-instant disruption of data flow impaired Facebook’s ability to both target ads to the right people, and prove that people who saw ads took action. Amid rising concerns over online privacy, such an approach is expected to bring dividends to its owner. In Q3 2022, according to Canalysis’ report, the global smartphone market recorded its third consecutive decline this year, dropping 9 per cent year-on-year, marking the worst Q3 since 2014. This was attributed to decreased consumer spending and economic uncertainty.
In simpler terms, the feature prevents any app from tracking your activity outside of the company’s own apps. For example, Facebook might be able to track your activity across its services like Messenger, Instagram, and WhatsApp without your authorisation, but it will require your permission to track your activity with other companies’ apps or websites you visit. Facebook has prepared for the looming Apple changes by introducing more commerce products. The Facebook Audience Network provides advertisements in non-Facebook apps, and it uses IDFA numbers to determine the best ads to show to each user based on Facebook’s data. For instance, a soft drink maker could decide to target 18-to-34-year-old gamers in the San Francisco Bay Area with a new promotion. The company could use the Facebook Audience network to have those ads placed before the right audience within mobile games; Facebook would split the ad revenue with the game makers.