Jul 16, 2021 06:00:00

Facebook and advertisers panicked by Apple's privacy enhancement, how much was the actual impact?

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iOS 14.5 '' released by Apple on April 26, 2021 enabled `` App Tracking Transparency (ATT) '' that allows users to choose whether to allow user tracking for advertising purposes. Bloomberg reports that Facebook and its advertisers are panicking as a result of many users refusing to be tracked due to the introduction of ATT.

Facebook (FB) Advertisers Impacted By Apple (AAPL) Privacy iOS 14 Changes - Bloomberg
https://www.bloomberg.com/news/articles/2021-07-14/facebook-fb-advertisers-impacted-by-apple-aapl-privacy-ios-14-changes

Apple assigns an advertising identifier called `` IDFA '' to terminals such as iPhone and iPad, and app developers and advertisers can use IDFA to track user behavior and use it for advertising display. However, in recent years, the practice of tracking users for advertising has been questioned due to privacy concerns.

Therefore, Apple introduced ATT from iOS 14.5 to display a ``pop-up notification asking for permission to track for advertising purposes'' to users who use the app. According to a survey conducted by branch , a mobile business analytics company, only 25% of the users who saw pop-ups allowed ad tracking. As a result, it seems that the data supply necessary for targeted advertising adjusted for each user is cut off.

“For the majority of advertisers, this has been devastating,” said mobile industry analyst Eric Seufert. The question is whether it is the 'new normal'.' Seufert estimates that if 20% of users who saw the pop-up allowed to be tracked, Facebook's quarterly revenue could drop by 7%. If 10% allowed tracking, Seufert predicted a 13.6% drop in quarterly revenue.

Facebook's user tracking extends beyond its platform to external retail sites that embed Facebook software. As a result, Facebook was able to collect customer data and behavior on the website when users purchased products, and grasp the customer group (similar audience) who is likely to buy the same product. By creating lookalike audiences, it was possible to display ads to potential targets for specific products and achieve high cost-effectiveness.

But as people refuse to let Facebook and other apps track their behavior, they are beginning to lose access to critical data. Gil David, a media buyer for advertising agency Run DMG, said the company spends $1 million a month on Facebook ads for its clients, and he can also get a large part of the client's sales. He said that he was However, the introduction of ATT has impaired data consistency, and at the time of writing the article, only 64% of sales for large clients and 42% for small clients could be grasped.

Zach Stuck, a media buyer at advertising agency Homestead Studio, also said that the gap between sales reported by Facebook and sales actually recorded on Shopify used to be 5%, but with the introduction of ATT, 40%. It is reported to have spread further. “What Facebook was good at was seeing who made a purchase, how they behaved on other websites, and what they did besides making purchases,” Stuck said. He said the limited ability to collect the data has reduced its accuracy.

Lack of data not only reduces the criteria for displaying targeted advertisements, but also makes it difficult to measure 'how effective the displayed advertisement was.' Facebook used to share information with advertisers such as ``age group, gender, and area of residence of people who purchased products from advertisements'', but at the time of writing the article, detailed information sharing was canceled. About. Meanwhile, a Facebook spokesperson confirmed to Bloomberg that the performance of targeted advertising fluctuates due to iOS, but insists that it won't be significantly impacted in the long run.

Another important part of Facebook advertising is '

retargeting, ' which shows ads to customers who have previously visited a merchant's website, app, store, Facebook page, etc. Retargeting, which repeatedly displays ads to interested users, is important for companies that sell expensive products that are difficult to buy on impulse, but it will be difficult if the user refuses to be tracked by Facebook.

According to a Facebook spokesperson, the company is working on developing new advertising features that require less data to measure effectiveness, and is also considering technology to display targeted ads based on data stored on the device. It is said that there is. On the other hand, Apple's introduction of ATT is impeding the ability of companies to spend their advertising budgets efficiently and effectively, saying, 'We believe that personalized advertising and privacy can coexist.' said.

Apple has long been committed to protecting user privacy and is at odds with Facebook, which utilizes user data. Facebook argues that targeted advertising is important for small businesses with limited advertising budgets, and that ATTwill have a devastating effect on small businesses .

Dave Herrmann, who ran an advertising agency called Herrmann Digital and spent $ 2.5 million (about 275 million yen) a month on Facebook advertising, said that he would spend less on Facebook until the impact of ATT became clear. It is said that it is decreasing. Instead, it seems that it has begun to move small client advertising elsewhere, such as allocating it to the cost of introducing products to influencers. 'Nobody knows how many companies in the world are 100% dependent on Facebook.' It will cause panic,' Herrmann said.

Run DMG's David also said, 'Small businesses are the victims. I don't know if Apple has thought it through enough, or knowing the impact on small businesses, but 'We don't care. I don't know if you thought, 'This is what we do,'' he said.