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Facebook’s ability to follow users and show them certain ads appears to be crumbling thanks to Apple’s “ask not to follow” feature, according to to certain advertisers.
Apple rolled out privacy prompt in late April with iOS 14.5. Since then, nearly half of all iOS devices worldwide have at least version 14.5 installed, according to Statcounter, and a large majority of users of these devices have chosen to deny Facebook and other apps the ability to to follow them. Almost three months after the feature launched, only 17% of users worldwide have chosen it, according to analytics company Flurry.
The changes could have a significant effect on Facebook’s bottom line. Eric Seufert, an analyst who writes Mobile Dev Memo, predicts that if only 20% of users consent to tracking, Facebook’s revenue could drop 7% in the first full quarter when the enrollment prompt is active (the third quarter to come). The company warned in February that changes to iOS would reduce its ability to track users across the internet.
“It’s been pretty devastating for, I would say, the majority of advertisers,” Seufert told Bloomberg. “The big question is, are we just seeing short-term volatility where we can expect a mean reversion, or is this a new normal? “
Samuel Axon
It may be some time before advertisers have an answer to this question. Facebook initially appeared to accept the low membership rate as media buyers failed to notice any significant changes. But that has apparently changed in recent weeks, with some buyers reporting that the effectiveness of ads has started to decline this month.
Some advertisers, such as e-commerce sites, appear to be particularly affected. Many retailers use software like Shopify, which shares customer data, including details about the purchases customers make on the site, with Facebook. This allows Facebook to refine its “lookalike” audiences, which advertisers buy access to in order to target others who may be interested in purchasing the same.
Before the rollout of the new iOS feature, media buyers reported that Facebook could capture up to 95% of sales made on their customers’ sites. Today, many media buyers report that Facebook captures only 50% of sales. A buyer reports that with a customer, only 3 percent of sales appear in Facebook’s Ads Manager.
Other people visit e-commerce sites without buying anything, and to close the deal, retailers will “retarget” these users, showing them ads on Facebook for an item they saw but didn’t buy. These announcements are not possible when “ask not to track” is enabled.
“We believe that personalized advertising and user privacy can coexist, without the collateral damage caused by transparency in app tracking,” a Facebook spokesperson told Ars. “We’re also working on our own solutions to help businesses and investing in privacy technologies designed to minimize the data we process, while allowing us to serve relevant ads and measure ad effectiveness. “
As users asked Facebook not to follow them, the company’s feedback loop broke for part of its audience, costing it a key data source. While iOS doesn’t work on the majority of mobile devices, it has a significant footprint in some of the world’s biggest ad markets, including the United States. The US market is so important to advertisers that Flurry separately allocates the country’s iOS tracking activation rate. Only 10% of US users opt for tracking, compared to 17% globally.
By opting out at such high rates, US iOS users could have a particularly big impact on Facebook’s revenue. In the United States and Canada last year, the company made five times more ad revenue per user than its global average. What happens to that number in the third quarter will reveal to what extent the opt-out of tracking threatens the company’s earnings.
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