Apple’s new privacy protections could cost Facebook billions more than even experts’ worst-case scenarios had predicted, after just 4 per cent of upgrading iOS users chose to allow Facebook to track their activities online.
That choice was offered to users upgrading to the new version 14.5 of Apple’s iOS, iPadOS and tvOS, which implemented a new App Tracking Transparency (ATT) privacy layer that requires app developers to get explicit user permission before tracking their activities across websites using IDFA (Identifier for Advertisers) features.
IDFA – a unique 32-character string that is widely used to build user profiles that are sold to advertisers for targeted marketing – is used by a reported 70 per cent of iOS users, but industry figures had long expected that most users would opt to not allow tracking if given the choice.
Just how many would opt out was anybody’s guess – but the repercussions of even a small drop for advertising-dependent companies like Facebook were always going to be significant.
One scenario, outlined by mobile advertising expert Eric Seufert, had Facebook losing 13.59 per cent of its approximately $26.3b ($US20b) in quarterly revenues – $3.6b ($US2.7b) this quarter alone – if only 10 per cent of its users opted to let it track their activities online.
The best-case scenario would have stemmed losses to just $551m ($US420m) – but doing so would have required fully 30 per cent of users to opt in to the tracking.
Days after the new operating-system version debuted, it was clear that even those figures were optimistic: Verizon Media-owned Flurry Analytics, which has been closely watching the fate of IDFA in light of the opt-in changes, noted that just 2 per cent of users opted in on the 26 April launch and the number had stabilised around 4 per cent ever since.
The full financial losses from such a low opt-in rate remain to be seen, but the figure “is expected to create challenges for personalised advertising and attribution,” Flurry noted, “impacting the $248b ($US189b) mobile advertising industry worldwide.”
Fighting for omniscience
Facebook, unsurprisingly, has been no fan of Apple’s privacy crackdown, warning that the change would affect its core Audience Network business, through which it markets access to its users’ profiles to advertisers.
Testing of non-personalised advertising, the company has previously reported, has slashed publisher revenue by 50 per cent in previous tests.
That sort of change is likely to affect any business that advertises mobile apps, Facebook has warned in a blog about the Apple changes, as well as companies that “optimise, target and report on web conversion events from any of our business tools”.
Facebook hasn’t been sitting still, however, with its Aggregated Event Measurement technique – which uses tracking pixels embedded in Web pages to trace eight types of user interaction per domain – allowing businesses to continue generating detailed information about what users are doing online.
Facebook may be mobile advertising’s biggest proponent, but it’s not the only company that will be affected by Apple’s new policies: Google is also set to lose billions, and indeed any business that relies on mobile app revenue will feel the pain as users rein in their privacy settings.
Google, for its part, has also been working to overhaul the way advertising personalisation occurs – but the initial cool reaction to its proposed Federated Learning of Cohorts (FLoC) technology, which parses users’ Chrome browsing history to place them in aggregated ‘buckets’ where they cannot be individually identified, means the future state of online advertising is likely to be in flux for some time.
Amidst reports that ATT isn’t working as expected – many users reported very few ‘Ask to Track’ prompts and others reporting prompts whose language skirts around the question of tracking users – Apple has already released a point update for the new iOS version, and it’s likely that the tweaking will continue as the full repercussions of the move ripple through the advertising ecosystem.