It’s not just about the potential short-term loss of revenue.
On Wednesday Facebook made it clear that it isn’t a fan of Apple’s upcoming version of iOS, the software the powers the iPhone. For once, however, this isn’t a dispute over App Store commissions or Apple’s controversial guidelines for reviewing new apps. Instead, in iOS 14, developers who want to track a user’s activity across different apps or sites will have to ask permission.
One way that happens is by using Apple’s Identifier for Advertisers, or IDFA, which is a string of numbers that app services can use to associate activity with a particular device, and, as a result, person. In iOS 14, not only can users choose to turn off the IDFA, if they leave it on, apps will have to request permission to use it.
Beyond the IDFA, however, iOS 14 generally requires apps to request permission for any kind of tracking. That’s bad news for Facebook (and Google, for that matter) since a large part of its business model is based on tracking pretty much everything we do online. What’s more, Facebook would rather users not think about that reality very often. The last thing Facebook wants to do is have to ask users every time they open the app if they have permission to track them.
The irony is that Facebook’s biggest concern is that Apple is doing too good a job at protecting privacy–arguably a good thing for users. It’s true that, when given a chance, some consumers will tap the button that blocks the ability for Facebook to track their activity. Very likely most will–that wouldn’t be a surprise to me at all.
It’s also true that when that happens, it’s much harder (though not entirely impossible) to target those consumers with ads based on what they do online. Facebook argues that that makes it harder for businesses to reach the customers most likely to buy their products and services with relevant ads. While that’s true, the difference is that the argument Facebook is making is purely about business. Apple is making a moral case.
To that end, Facebook is saying that iOS could result in a 50 percent drop in revenue for what is known as Audience Network. That’s Facebook’s advertising product that serves up ads within apps based on a user’s activity elsewhere. Audience Network is only a small part of the $70 billion in advertising revenue the company rakes in, but it isn’t hard to see why Facebook would be concerned.
From the company’s blog post:
We expect these changes will disproportionately affect Audience Network given its heavy dependence on app advertising. Like all ad networks on iOS 14, advertiser ability to accurately target and measure their campaigns on Audience Network will be impacted, and as a result publishers should expect their ability to effectively monetize on Audience Network to decrease. Ultimately, despite our best efforts, Apple’s updates may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14.
The real issue isn’t the loss in revenue that might result from people opting out of tracking. The real issue is that Apple has made it clear that it intends to pull back the curtain on the extent to which companies like Facebook are collecting and monetizing everything we do online.
That isn’t new, Apple has made a series of changes to both iOS and macOS to highlight when websites and apps are trying to use your personal information. In iOS 13, Apple introduced “Sign in with Apple,” as an alternative to the single sign-on options from Facebook and Google. In fact, the company required developers to offer Sign in With Apple if they offered the other options.
The difference is that Apple’s version allows users to hide their information, creating a randomized email login. It also prevents the other tech giants from knowing which apps you sign in to on your iPhone.
Apple’s recent versions of Safari also prevent third-party cookies by default. Those are the little pieces of code that websites leave in your browser that allow them to track you across the internet, which are used by Facebook to build a profile on you.
Facebook’s extremely profitable business model is most vulnerable when people start to realize exactly how much information the company collects, and the ways it monetizes that information. That, ultimately, is what bothers Facebook about iOS 14–it makes it clear exactly what’s happening with your privacy, and gives you the ability to opt-out.
Make no mistake, this will have an impact on small businesses that advertise on Facebook. If that’s you, then you should certainly be considering what that impact will be, and how it fits into your overall digital marketing strategy. Also, to be candid, if your business is based on a strategy that most people will opt out of when given the chance, it might be time to reconsider whether that’s the best strategy.
Author: Jason Aten
Source: Inc: Why Facebook Is Very Worried About Apple’s iOS 14