This year, Meta Platforms Inc.’s revenue will take a multibillion-dollar hit because its social networks can’t collect as much data on iPhone users. Last year, the company publicly chastised Apple Inc. for the change; now, it’s publicly chastising Google as well.
According to the Facebook owner, Alphabet Inc.’s Google, which also sells personalized ads on iPhones, has an unfair advantage under Apple’s new policies. Apps such as Facebook must ask users for permission to track them, but Google’s search results and browser do not, causing some advertisers’ budgets to shift to Google for more effective targeting.
Meta only recently began criticizing other tech titans by name. The social media behemoth, which is currently under antitrust scrutiny around the world, stands to benefit from portraying itself as an underdog facing larger forces. Nonetheless, Meta told investors that it expects to lose $10 billion in ad revenue in 2022 as a result of Apple’s changes, indicating that the company is more severely impacted than others. To make its ads more effective, Facebook relied on data from other apps and websites. Advertisers would have to spend more money to achieve the same results without it.
Facebook ads are “still important, just a lot more expensive,” according to Doug Zarkin, chief marketing officer of Pearle Vision, which uses Facebook and Instagram to drive customers to its eye-care website and stores. He estimated that campaigns are 15% to 30% more expensive than last year.
Google stated last year that it would not prompt consumers about data collection because, following Apple’s change, it decided not to use any of the data on iPhones that required permission.
Google also does not require the kind of data from third parties that Facebook does in order for its ads to work. It has its own mobile operating system, Android, as well as its own advertising exchanges. When users conduct a search, their intent provides enough information to effectively advertise to them across Google-owned properties, which may incentivize marketers to shift their ad budgets to Google rather than Facebook.
“Google just happened to be in the right place at the right time,” Rick Watson, CEO of RMW Consulting, explained. “They were the biggest beneficiaries of the shifted ad dollars due to effectiveness.”
Because of the lack of tracking data, Meta has found it difficult to demonstrate that its ads are leading to sales, making them less valuable. Last Wednesday, Chief Operating Officer Sheryl Sandberg stated that this was a problem for Meta during the holiday season, stating that Meta receives “less granular conversion data on a delayed basis.”
“This makes real-time decision-making particularly difficult,” she explained. “This is especially important during the holiday season, when people are frequently spending a lot of money and really monitoring their ads and adjusting spend not just on a daily basis, but often on an hourly basis.”
More on Meta’s disastrous quarterly earnings report can be found here.
Apple stated that it has a long history of assisting users in preventing unwanted tracking and that in 2017, it began blocking cross-site tracking in its Safari browser. These privacy safeguards extend to Safari search, which reduces the amount of data sent to third-party search engines. It also stated that it provides alternatives to Safari search, such as Duck Duck Go.
Apple’s recent changes are affecting more than just Facebook. According to Branch, a company that analyses mobile app growth and deep linking, people only give the average app permission to track their behaviour 27% of the time. According to Alex Bauer, Branch’s head of product marketing, those figures have remained consistent for months since Apple first began pushing the iOS update to users last summer.
However, Facebook relied more heavily on data than others, including smaller social media competitors such as Snap Inc. and Pinterest Inc. Both of these companies reported strong sales, underplaying Apple’s influence.
Snap announced that it has directed Snapchat app advertisers to Apple’s new measurement tools for tracking ad conversions. Apple’s changes, according to Pinterest Chief Financial Officer Todd Morgenfeld, have not yet had a material impact on the company’s advertising, but he believes they will in the future. “We are not immune to these issues having an impact on our business over time,” he said.
Meta’s criticisms of Apple and Google may increase regulatory scrutiny, but it’s unclear whether that scrutiny will result in any actual changes. In recent years, Apple has become the primary target for Meta attacks, as the social media company has criticized the iPhone maker’s privacy policies and app store fees, claiming that they harm small businesses.
Meta referred to Google’s advantage during a disappointing earnings report last week, which caused the company’s market value to plummet by $251 billion in a single day. Apple’s changes had little effect on Google, which had reported fourth-quarter ad revenue that exceeded expectations the day before.
“We believe Google’s search ads business could have benefited relative to services like ours that face a different set of Apple restrictions,” Meta CFO Dave Wehner said during the company’s earnings call. He implied that Apple was deliberately being easy on Google because the search giant pays Apple to use Google as the default search product on iPhones. “Given that Apple continues to profit billions of dollars per year from Google Search ads, there is clearly an incentive for this policy disparity to persist.”
Apple’s bans have impacted some of Google’s mobile ad sales and YouTube, the company’s video giant, though Google has not disclosed the extent of the damage. Google has imposed lax targeting restrictions on Android, its mobile software, and has postponed a ban on ad cookies in Chrome until 2023.
Learn more about Google’s increased advertising revenue.
However, search ads are Google’s primary business, which Apple appears to have made an exception for, according to Eric Seufert, an analyst at Mobile Dev Memo, a marketing industry publication. “It’s so obvious,” he said.
According to Brian Wieser, president of business intelligence at GroupM, Apple’s new rules may shift advertising market share to any platform with direct data on what people buy. This includes Amazon.com Inc., the other tech behemoth attempting to expand its advertising business.
Smaller competitors benefit as well, according to David Spector, co-founder of the lingerie company ThirdLove. “Facebook does provide you with customers. It’s ideal for this. “However, at some point, it becomes prohibitively expensive,” he explained. “You begin to realize that Snapchat is quite effective.” TikTok is really effective.”
Apple and Meta are starting to compete more directly in areas such as private messaging. Apple’s plans to develop augmented and virtual reality headsets put the companies squarely in competition. The Meta’s Quest VR headsets have become a critical component of the company’s plan to create a more immersive version of the internet known as the metaverse.
Meta hopes to develop more advanced technology that will allow targeted ads to be served without the need for as much precise personal user data. This new system would rely on aggregated or anonymized data, but it would almost certainly necessitate web browsers cooperating on a new type of cryptographic protocol in order for data to be shared securely. Meta believes that this strategy will result in a more secure way of running targeted advertising.
Apple has benefited directly as well since implementing its new privacy rules: Ads that appear in App Store search have increased by 33%, according to Singular, a marketing analytics company.
“Facebook and Google have simply built the largest communities of people around their services virtually anywhere on the planet,” Singular said in a report published on Tuesday. However, “nothing about the future is certain, and past success does not guarantee future success.”
Add Comment