Apple launched its App Tracking Transparency policy in April. It changed the privacy settings on its iPhone lines to give users greater control over their data. According to the Financial Times, Snap, Facebook and Twitter lost an estimated $9.85 trillion in revenue during the second half this year.
According to Lotame data, the tech giants suffered a loss of an average of 12 percent in revenue between the third and fourth quarters 2021. Snap, which is a company whose business model is entirely based on smartphone use, was the worst hit, as well as Facebook, which relies on targeted ads to generate close to 98%. Statista also revealed that Facebook was among the most affected.
Some experts believe Lotames' estimates to be conservative. Eric Seufert, an Adtech consultant, told the Financial Times that Facebook alone could have lost as much as $8.3Billion in revenue in the second half 2021. It is likely that its problems will only get worse as advertisers shift to models that account for these types of privacy measures.
In an interview with the outlet, he stated that some platforms were hardest hit but Facebook was the most affected and had to rebuild their infrastructure from scratch because of ATT. It takes at most one year to create new infrastructure. Before new tools and frameworks can be deployed to large numbers of users, they must first be created from scratch.
Apple's advertising revenue increased by $700 million in the last quarter, bringing it to $18.3 Billion, according to the Financial Times.
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Apple's transparency policy for iOS 14.5, requires that apps ask users permission to track their activities to target advertising. Apple is slow to address this issue, even though some app developers are shady and have created workarounds for tracking you.
The majority of iPhone users have refused permissions so far. Only 4% of U.S. iPhone owners agreed to allow apps to track them in the weeks following the policy's launch. Advertisers are left largely blind to iOS ad targeting, which has prompted many to spend less on platforms such as Snap, Facebook and Twitter to reduce their spending.
Comparing 2021 to previous year, the total amount spent on advertising remains relatively constant, but social media companies are experiencing a dramatic decline in their share of the pie.
In an interview with The Financial Times, Charles Manning, CEO at Kochava mobile marketing company, stated that spending is not decreasing. Marketers spend their money where they see the best results.
The sting is still felt by social media companies. Sheryl Sandberg, Facebook's chief operating officer, described several problems caused by Apples new policy in its third quarter earnings report.
We began to see this impact in Q2, but the adoption on the consumer side accelerated by June, so it reached critical mass in Q3, she stated. We have faced two problems as a result. The first is that our ads targeted accuracy decreased which in turn increased the cost to drive outcomes for advertisers. The other is that it was more difficult to measure these outcomes.
These losses will hurt Facebook (now Meta), but in the long-term, they won't be that significant given the company's many platforms and divers investments. Snap might not have the same luck. Snap's stock dropped by 25% after a disappointing third quarter earnings report, which was partly due to Apple's privacy changes.
Snap was challenged by industry changes in the way advertising is measured, targeted and optimized for iOS. This had a greater impact on our business than expected, Jeremi Gorman chief business officer stated in a prepared statement via CNN. Sna p also cited issues in global supply chains as a reason it didn't meet revenue estimates. This is an issue that tech companies all over the globe continue to struggle with, especially as the holiday season approaches.