Small businesses count cost of Apple’s privacy changes

Billions of dollars in lost revenues for platforms like Facebook have been caused by small businesses cutting back marketing spending due to Apple's sweeping privacy changes that make it harder to target new customers online.

In changes that have changed the online advertising sector, Apple last year began requiring app developers to get permission to track users and serve them personalized adverts on their phones and tablets.

Many small companies which are reliant on online ads to attract new customers told the Financial Times they did not initially notice the full impact of Apple's restrictions until recently.

Companies have been forced to shrink their marketing spend to conserve cash and find it hard to target likely consumers as they used to.

There are problems with small businesses that are affecting online advertising giants. According to Lotame, the advertising technology company, Apple's change will cause a loss of $18 billion in revenues for the social networking sites. Meta said earlier this year that Apple's changes had cost it $10 billion.

I didn't feel the impact of the changes in 2021. The founder of a California-based handcrafted shoes company said this year is brutal.

The tracking confirmation was included in the company's website. She founded an agency to teach other women how to be online entrepreneurs because she was so successful on Facebook. Some of those businesses are closing their doors. She said that ads have become more expensive and that they aren't as effective as they used to be.

Advertisement

The worst revenue decline of the year was recorded in June by Varos, which analyzed data from 1,300 small businesses. The cost to acquire new customers through online advertising is more expensive this year than last, and overall ad-spend on Facebook is less this year.

Shelly Cove, an apparel company in North Carolina, laid off its four-person marketing team last month when its cash reserves dried up and it realized spending more money on Facebook ads wouldn’t ramp up sales like it used to.

In the past, you could give money to Facebook and it would come back to you. That no longer exists.

Smaller brands said they were not necessarily hit by Apple's policy changes later than the major platforms, but supply chain issues made it difficult to understand why last year's holiday sales period had disappointed.

Andrew Goble, co-CEO at Jamby's, said it was hard to know what was causing the change in percentage.

Many smaller brands didn't change their marketing strategies until recently because they didn't like online advertising. Last month, Meta had its first-ever annual contraction in revenues, Meta laid off 10 percent of its workforce, and Snap reported its weakest-ever quarterly sales growth.

In the second quarter, the business of advertising that does not rely on third-party tracking boomed as a result of Apple's policy. Search Ads, Apple's own ads business, has taken market share and is now expanding into additional areas in the App Store.

Advertisement

A user's data belongs to them, and they should be able to decide whether to share their data with whom, according to Apple.

Obvi, an online shop for women's health, was one of the companies that was hit by the sudden downturn last November.

When everything crashed on us, we were about to hit Black Friday and make a huge splash.

Obvi spent an average of $30 to get a new customer on Facebook, and the customer spent about $60. A profitable business was turned into a cash-burning one because of that cost.

90 percent of Melwani's marketing budget went to Facebook. Obvi has cut its budget, shifted spending to TikTok, and reoriented the company towards repeat customers in the last few months.

He said that the loss of 50 per cent of its data was the reason for the market share decline in the US. The whole thing is ruined due to the fact that half of the data is missing. Imagine losing 50% of your brain.

The vice president of marketing at Kencko, a Portugal-based maker of powdered smoothie mix, said the biggest impact from Apple's privacy policy has been the last four to six months.

There have been a lot of platform-wide anomalies and spikes where we don't know why. It's reassuring that it isn't just us.

The budget for digital ads has been slashed by one-third in order to keep the business afloat. He said it was wrong to say Apple killed his business. I realized I was too dependent on Facebook.

He said that any small business is at the discretion of the big tech giants. There isn't a way to avoid it. If they screw you, you're screwed.