Don’t buy into the pressure of Facebook ad tracking on iOS 14.5

Apple last week published iOS 14.5, and with it a new feature that has caused online advertisers to fall out: for the first time, users can tell apps not to track their activity across different sites and services. In an attempt to deter them from doing so, the Facebook and Instagram iOS apps are warning users that tracking keeps these platforms “free”.

This is technically true; Facebook is an advertising company that profits from serving ads that its users are more likely to click. But the iOS 14.5 advisory also frames the issue in a way that implies Facebook can’t make any money if it forgoes this type of tracking, or worse, than updating the transparency of app tracking. Apple can force the social network to start charging its users. So it’s worth being absolutely clear: neither is the case.

It’s not that Apple’s anti-tracking measures won’t reduce Facebook’s profits. The proof is in the repression; The platform launched a sustained campaign against the measures, including a series of full-page ads in major newspapers in December. (Facebook isn’t alone here; advertising agencies and their deputies have widely decried the update, and a marketing coalition in Germany has filed an antitrust complaint against Apple.)

“There are certain types of ads, mostly retargeting, that will be more difficult to display, since Facebook no longer knows who visited an app, put an item in the cart, etc.,” says Ron Berman, professor of marketing at Wharton School at the University of Pennsylvania. He notes that Facebook will also have a harder time demonstrating that product sales were tied to specific ads, given the limits on the information that can now flow between sites and apps.

But you don’t have to look much further than Facebook’s latest quarterly earnings report, released last week, to see that iOS 14.5 looks unlikely to push the company over any precipice. The company took in more than $ 26 billion in revenue in the first three months of 2021, and its $ 9.5 billion net profit nearly doubled that of the same period a year ago. It has over $ 64 billion in cash and cash equivalents. I’m very good. Even if every iOS 14.5 user chooses not to track the tracking, Facebook will still have plenty of Android devices to benefit from.

It’s also not as if tracking prevention makes ads go away completely. This probably makes them less relevant. People may not click on it as often, making them less valuable, and outside analysts have predicted that Apple’s new policy will show up in Facebook’s financial results. “We’ve seen estimates ranging from around 2% to 7% of Facebook ad revenue this year and that range seems plausible to us, especially at the low end,” says Nicole Perrin, senior analyst at eMarketer. She adds, the company is expected to increase its advertising revenue overall despite the transparency of application tracking. Noted before, when third-party data disappears, companies that hold more proprietary data have an advantage. This is Google, and that’s Facebook.

Facebook has launched a sustained campaign against Apple’s new privacy measures, including its in-app messages.

Courtesy of Facebook

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