Apple’s tracking opt-in introduced with iOS 14.5 is pushing the advertising revenue of large social networks. Facebook, Snap (chat), YouTube and Twitter have lost sales of nearly 10 billion US dollars as a result of the change over the last few months, like one of the Financial Times quoted ad tech firm appreciates. The four social media platforms lost around 12 percent of their sales in their third and fourth quarters.
Less sales, shares under pressure
Facebook is considered the biggest loser from Apple’s tracking transparency initiative. But even the much smaller Snapchat operator Snap was surprised by the high losses in its advertising business on iPhones recently after the quarterly results were announced – the Snap share price then collapsed by over 25 percent. Facebook recently complained again that Apple’s change is reducing business and harming other companies that rely on advertising.
From iOS 14.5, iPhone users must first be asked by apps whether they want to allow advertising tracking. According to estimates, around 80 percent of those surveyed reject this. Apps can then no longer read the advertising ID (Ad-ID) integrated in Apple’s operating system and thus assign individual users to difficult profiles. This means that advertising can be delivered in a less targeted manner and thus loses its value: Until now, an underwear company would have paid 5 US dollars to show 1000 men their advertising in social media apps, the ad tech company explained towards the Financial Times. Now the same banner has to be shown to 2000 people because it is no longer clear who is a man – the costs for acquiring a new customer are doubled.
Advertising spending is being shifted
Advertisers would not reduce their spending, just shift it, writes the business newspaper. The “lost” billions flow increasingly into advertising that targets Android users – as well as into Apple’s advertising business. Advertising is a growing business for Apple and you have the chance to expand this over time, Apple’s chief financial officer told Financial Times. Apple is currently limited mainly to so-called app install ads, which are displayed in the App Store. Apple CEO Tim Cook recently emphasized to financial analysts that their own customers had reacted “extremely positively” to the tracking transparency initiative.