Facebook, the social media conglomerate corporation, derives the majority of its revenue from advertising on its platforms. Apple’s upcoming iOS 14, which is currently in public beta version, can scupper Facebook’s revenue as the social media conglomerate will no longer be able to perform targeted advertising which will shave off more than 50% of Facebook’s Audience Network’s revenue.
Apple through its upcoming software update, iOS 14, is planning to explicitly ask its users whether they want to opt-in before sharing the IDFA identifier with app developers. IDFA is a unique device ID number which allows advertisers to target ads based on individual consumption patterns and estimate their effectiveness.
The move will severely dent the revenues of Facebook Audience Network which allows mobile software developers to provide in-app advertisements to the users, based on Facebook’s data. In iOS 14 which is expected to roll out later this year, each app which wants to undertake targeted advertising through IDFA will have to explicitly ask its users to opt into tracking.
Facebook, in a blog post has stated that its apps will not collect IDFA information on iOS 14 which will consequently shave off more than 50% of Audience Network revenue garnered by Facebook. According to the company, more than 1 billion people watch at least one Audience Network ad every month which includes both iOS and Android users with majority of the audience watching the ads from Android devices who will remain unaffected.
This move will severely affect Facebook as it derives nearly all of its revenue from advertising, however it remains unknown what percentage is attributable to the Audience Network.
In a blog post, Facebook wrote, “We know this may severely impact publishers’ ability to monetize through Audience Network on iOS 14, and, despite our best efforts, may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS14 in the future.”
It added, “While it’s difficult to quantify the impact to publishers and developers at this point with so many unknowns, in testing we’ve seen more than a 50% drop in Audience Network publisher revenue when personalization was removed from mobile ad install campaigns. In reality, the impact to Audience Network on iOS 14 may be much more, so we are working on short-and long-term strategies to support publishers through these changes.”
However, there’s a different set of thought which believes that privacy must be protected at all costs with Facebook indulging in broader data collection process under the banner of Audience Network.
James Currier of venture capital firm NFX suggested in his e-mail to reporters that it’s all about power play.
“In 2009 at the beginning of the Facebook platform, you could build an app on Facebook, go viral and gain millions of followers. But Facebook slowly shut down all the viral channels and put an ad server in the way, meaning, app creators had to pay to get traffic. Facebook extracted what money they could get from the app developers. Similarly, at the beginning of the iOS platform, Facebook could be an app on iOS and get millions of users. Now Apple is going to slowly shut off the oxygen to take the value for themselves. This is the law of the jungle and the network effect makes it pretty clear who has the power: iOS,” said Currier in his e-mail.
