Although Apple’s new privacy features were introduced in late April 2021, companies are now starting to see the effects it is having. From balance sheets to business models, the iOS update with Apple’s App Tracking Transparency (ATT) features are impacting tech companies like Meta (Facebook) and Snap (Snapchat), as well as companies in many other industries.
ATT’s impact on the ad industry
Now that months have passed after the adoption of the updated iOS software, most iPhone users have chosen to opt-out of being tracked on apps such as Facebook, Instagram, Snapchat, and many others. With only 38% of users opting-in as of November 2021, these tech companies are experiencing a steady decline in data loss. Facebook’s data loss includes data from IDFAs (Identifiers for Advertisers) as well as the Facebook pixel (unique tracking code that allows you is added measure, optimize, and build audiences for campaigns). Ultimately, the low opt-in rates among iOS users hinders Facebook’s ability to track web or app conversions reducing the accuracy of targeting and measuring campaigns. Due to the impact the privacy changes are having on ad measurement, ad spending on Facebook is predicted to decrease to 15.5% in 2022 compared to the 32.1% increase in 2021.
Facebook isn’t the only one that has been affected by the ATT feature. Snap along with other advertisers like Peloton and e-commerce companies in general have as well.
Snap is predicting their 4th quarter 2021 sales will be less than their original estimate due to the risks the privacy feature poses on their ad strategy.
Peloton and the e-commerce industry are experiencing poor user growth as they are no longer able to acquire customers in the same way.
As the ATT feature continues to alter the landscape of the ad industry and less iOS users are opting-in, those who do, have become a very valuable asset. With fewer opting-in comes less data, making each individual that much more important, but also leading to a possible increase in cost of media.
How Apple is benefiting
Many marketers are turning to Apple’s advertising business, which focuses on mobile ads for apps because of the privacy features. Similar to Google, Apple’s Search Ads allow businesses to purchase keywords on the App Store to appear at the top of searches.
The shift to search and Apple’s ad products in general has also benefitted the company since they are still able to access targeting data that others no longer can. Since ATT limits data transfer between third parties, it does not apply to the company’s first-party advertising.
Although not a large revenue source for Apple, the increase in usage of their search ads has directly impacted revenue of their advertising business in a positive way - leading many to believe Apple has plans to become a larger player in the digital advertising world.
Companies like Facebook, Snap and many others have witnessed the impact the privacy features have had on their businesses, but they continue to be optimistic by adjusting their strategies. Facebook has reacted by continuing to build its own systems within their apps which reduces the need for third-party tracking. The ability to purchase products directly within the Facebook and Instagram apps are just a few of the solutions Zuckerberg’s team has developed. Facebook has also decided to adjust how they measure ads by treating people who are both on Facebook and Instagram as two completely different people - if their accounts aren’t linked in the Accounts Center. In addition to Facebook, Snap has also reacted by making decisions to speed up the development of its own first-party technology.
Along with the technology adjustments, the privacy update has pushed marketers to increase their ad spending to reach Android users on apps like Facebook. Attracting more Android users can potentially restore some of the data loss from iPhone users. Furthermore, app developers and marketers are considering brand loyalty and trust as a crucial part of their strategy. Not only is it crucial for conversions, but it could potentially lead to a higher percentage of users opting-in to being tracked on a site or app.
Looking toward the future
As the Apple privacy controversy continues, it is clear the ATT feature is not only influencing companies like Facebook, but it is altering the landscape of other industries as well. Even with its impact, Facebook, Snap, and others continue to remain optimistic that the challenges they are facing will only be temporary as they develop alternative ways to target users and measure ad campaigns.
The adjustment to a more private era has many wondering if the future will consist of advertising as more of an art and less of a data driven science. For marketers, this is concerning since one of the benefits of digital is its measurability, but time will tell what the future of privacy and advertising looks like. To discuss your digital marketing needs, reach out to a ZAG Interactive marketing specialist.