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Apple’s privacy features reportedly cost social media companies $10 billion in ad revenue

By Sanuj Bhatia November 1, 2021, 4:42 am
apple glasses

Apple’s privacy boost has been a boon for some, bane for some. While users have enjoyed the features Apple introduced with iOS 14.5, such as App Tracking Transparency, and will continue to experience more privacy-focused features like App Reports in iOS 15.2, it’s not been a joyful experience for social media companies like Facebook, Twitter, and Snapchat. A report last month claimed that due to Apple’s privacy features, Snap missed its ad revenue targets. And now, another report, from Financial Times, claims that companies like Snapchat, Facebook, Twitter, and YouTube have lost around $9.85 billion in ad revenue in the second half of this year due to privacy changes implemented by Apple.

facebook apple privacy impact financial times
Image source: Financial Times

Facebook has been the biggest loser in the companies named, simply cause of the size of its ad business — it’s huge! Nearly $8 billion of the $10 billion cited by Financial Times, was Facebook’s loss. Facebook has long been protesting against Apple’s changes. The company ran a full-page newspaper ad when Apple forced developers to add App Tracking Transparency to their apps. And now Facebook’s chief operating officer has said the iPhone changes meant “the accuracy of our ads targeting decreased, which increased the cost of driving outcomes for our advertisers. And . . . measuring those outcomes became more difficult.”

Thanks to Facebook becoming costlier (and difficult) for advertisers, people in the ad business are moving to TikTok which costs cheaper. “If your ability to advertise on Facebook is no longer economic, you’re going to move away immediately,” Aidan Corbett told the Financial Times. “So TikTok is becoming extremely popular because it’s a lot cheaper (from a cost per 1,000 impressions basis).”

Ad business consultant Eric Seufert told Financial Times that social media companies and advertisers will have to come up with their own tools soon. Many companies are already developing their own tools. However, their belief is that “it takes at least one year to build new infrastructure.” “New tools and frameworks need to be developed from scratch and tested extensively before being deployed to a high number of users,” he said in the report.

It’s becoming hard for Facebook. The company’s chief financial officer, David Wehner, has said that Apple’s privacy changes have been “challenging” and “a little bit more disruptive than we anticipated”. However, this isn’t the case with everyone. Alphabet and Twitter have seen their ad revenue grow. Twitter says its ad business grew, and is not affected by Apple’s privacy changes, as their ad push is more about being context-based and branding, and not about tracking users.

And, in the middle of all this, Apple continues to defend its mark. The company’s ad revenue grew by $5 billion and it continues to say that “advertising is a growing business like everything else.” Many in the industry are calling Apple’s privacy push just a “PR play” and say that the company “wouldn’t be doing this if there weren’t money in it.” Tim Cook, Apple’s CEO, on the other hand, continues to say that Apple believes that “privacy is a basic human right. And so that’s our motivation there. There’s no other motivation.”

All in all, social media companies have lost money and it’s affected some businesses as well. For now, it looks like it has started a chain reaction, and the companies will continue to lose money until they develop their own technology. Have you noticed a difference in ads that appear in apps after enabling app tracking transparency? Let us know in the comments section below!

Via: Financial Times

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