Apple vs Facebook….. the winner is?

Facebook warns Apple’s iOS 14 could shave more than 50% from Audience Network revenue

AUG 27 2020  CNBC Salvador Rodriguez@SAL19

KEY POINTS

·       Facebook on Wednesday acknowledged that Apple’s upcoming iOS 14 could lead to a more than 50% drop in its Audience Network advertising business. 

·        Facebook said its apps on iOS 14 will not collect IDFA, which is a unique device ID number that allows advertisers to better target ads and estimate their effectiveness.

Facebook on Wednesday acknowledged that Apple’s upcoming iOS 14 could lead to a more than 50% drop in its Audience Network advertising business. 

Facebook had previously warned that iOS 14 could impact its advertising business, but the company’s blog post Wednesday outlined just how specific that impact could be. The Facebook Audience Network allows mobile software developers to provide in-app advertisements targeted to users based on Facebook’s data.

Today, advertisers can use a unique device ID number called the IDFA to better target ads and estimate their effectiveness. In iOS 14, each app that wants to use these identifiers will ask users to opt in to tracking when the app is first launched. Facebook said its apps will not collect IDFA information on iOS 14. 

Facebook says more than 1 billion people see at least one Audience Network ad every month, although many of those are probably using Android phones and will not be affected by the change. Facebook derives nearly all of its revenue from advertising, but it’s not known what percentage is attributable to the Audience Network versus ads on Facebook and other properties.

 Apple has not said when iOS 14 will launch, but it’s expected to roll out this year.

The social network published a blog outlining steps it will take to ensure its advertising business is in compliance with Apple’s requirements. These steps will limit how effectively Facebook and its advertisers can target ads to iPhone and iPad users. 

“We know this may severely impact publishers’ ability to monetize through Audience Network on iOS 14, and, despite our best efforts, may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS14 in the future,” Facebook said in a blog post. 

“While it’s difficult to quantify the impact to publishers and developers at this point with so many unknowns, in testing we’ve seen more than a 50% drop in Audience Network publisher revenue when personalization was removed from mobile ad install campaigns,” Facebook said. “In reality, the impact to Audience Network on iOS 14 may be much more, so we are working on short-and long-term strategies to support publishers through these changes.”

 Facebook Says Apple's iOS 14 Anti-Tracking Features Will Cut 50% of its Audience Network Ad Revenue

Facebook today warned advertisers that Apple's upcoming anti-tracking tools could cause a more than 50 percent drop in Audience Network publisher revenue due to the removal of personalization from ads within apps.

In a blog post, Facebook said that it does not collect the identifier from advertisers (IDFA) from Facebook-owned apps on iOS 14 devices, as Apple added a feature that requires users to agree to ad tracking to prevent cross-app and cross-site tracking used to provide targeted ads. Facebook says that it's not a change that it wants to make, but Apple has "forced this decision."

Apple devices offer an "Identifier for Advertisers" (IDFA) that Facebook and its advertising partners use for ad targeting purposes. In ?iOS 14?, the IDFA is an opt-in feature, providing more transparency for users who would prefer not to be tracked in apps and on websites.

This is not a change we want to make, but unfortunately Apple's updates to iOS14 have forced this decision. We know this may severely impact publishers' ability to monetize through Audience Network on ?iOS 14?, and, despite our best efforts, may render Audience Network so ineffective on ?iOS 14? that it may not make sense to offer it on ?iOS 14? in the future.

Facebook warns that ?iOS 14? could render Audience Network ineffective in ?iOS 14?, and so it might not be offered on the platform in the future. Facebook says that it will have limited ability to deliver targeted ads in ?iOS 14?. Some ?iOS 14? users will see no ads from Facebook's Audience Network program, while others will see less relevant ads. Publishers and developers who use Facebook's Audience Network program should count on lower CPMs.

While it's difficult to quantify the impact to publishers and developers at this point with so many unknowns, in testing we've seen more than a 50% drop in Audience Network publisher revenue when personalization was removed from mobile ad install campaigns. In reality, the impact to Audience Network on ?iOS 14? may be much more, so we are working on short-and long-term strategies to support publishers through these changes.

?iOS 14? has a prominent "Tracking" section in the Privacy portion of the Settings app, where users can disable the option for apps to track them all together. Even if this feature is toggled off, apps must still ask permission to track users across apps and websites owned by other companies, which is a blow to the silent ad-related tracking that has been going on behind the scenes.

Facebook says that many of its developers and publishers will be "hurt" by ?iOS 14? at an "already difficult time," and that it plans to invest time and resources into building monetization products for publishers and supporting platforms outside of ?iOS 14?.