With his Application Tracking Transparency Policy launched in April, Apple revised the privacy settings of its iPhone line to give users more control over their data. That decision cost Snap, Facebook, Twitter and YouTube an estimated $ 9.85 billion in lost revenue in the second half of this year, Financial Times reports.
That is according to the data of the research company for advertising technologies Lotame, which estimates the four technology giants lost an average of 12% of revenue in the third and fourth quarters of 2021. Among the companies hardest hit were Snap, which has a business model built entirely on smartphone use, and Facebook, which it depends on. targeted advertising for close to 98% of its revenue, according to Statistician.
However, some experts believe Lotame’s estimates are conservative. Adtech consultant Eric Seufert told the Financial Times that only Facebook could see that revenue of as much as $ 8.3 billion evaporated in the second half of 2021. In all likelihood, his problems will only get worse as advertisers transition to business models taken in consider these types of user privacy measures.
“Some of the platforms most affected – but especially Facebook – have to rebuild their machinery from scratch as a result of ATT,” he said in an interview with the house. “My belief is that it takes at least a year to build new infrastructure. New tools and frameworks need to be developed from scratch and extensively tested before being implemented by a large number of users. ”
As for Apple, in the last quarter, the technology giant surpassed the estimate of the income of its advertising business by 700 million dollars, exceeding about 18.3 billion dollars, writes the Financial Times.
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Under Apple’s iOS 14.5 transparency policy, apps must ask users for permission to track their activity for targeted advertising. (Although it is worth noting that some suspicious application developers they found workarounds to keep up with you anyway, a problem that Apple is procrastinating in solving).
So far, most users have had decided to deny permits. In the weeks immediately following the launch of the policy, only 4% of iPhone users in the US agreed to allow applications to track them after updating their devices. This lack of user data has left advertisers largely blind when it comes to targeting ads on iOS, which has led several to invest their money elsewhere and reduce spending on platforms such as Snap, Facebook, Twitter and YouTube. writes the Financial Times.
In short, when comparing 2021 with previous years, the total amount spent on advertising remains relatively unchanged, but social media companies see that their share of the pie is shrinking at an alarming rate.
“Consumption is not declining, it’s just moving,” said Charles Manning, CEO of mobile marketing company Kochava, in an interview with the Financial Times. “Where traders spend money they see results.”
Social media companies are still feeling the sting. On Facebook earnings report for the third quarter earlier this week, Facebook’s chief operating officer, Sheryl Sandberg, outlined in detail several challenges caused by Apple’s new policy.
“We started noticing that impact in Q2, but adoption on the part of consumers increased by the end of June, so it reached a critical mass in Q3,” she said. “As a result, we have faced two challenges. One is that the accuracy of targeting our ads has decreased, which has increased the cost of driving results for our advertisers. And the other is that measuring those outcomes has become more difficult. ”
But even though these losses could hurt Facebook (now called Meta), in the long run, they are unlikely to be particularly destructive given the company’s range of platforms and diverse investments. Snap, on the other hand, may not be that lucky. Following an unimpressive third-quarter earnings report attributed in part to Apple’s privacy changes, the company’s shares fell about 25%.
“Snap has faced industry changes in the way advertising is targeted, optimized and measured on iOS, which has created a more significant impact on our business than we expected,” CEO Jeremi Gorman said in a prepared statement via CNN. Sleepp also cited global supply chain problems that were inconsistent with revenue estimates, a problem that technology companies around the world continue to struggle with – especially holiday season it gets closer.
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