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Comment by fairity | Hacker News Reader

The actual quote: Facebook has also launched a website and taken out full-page advertisements in newspapers, in addition to a recent TV and radio ad push, to put a spotlight on how many small business owners depend on targeted ads.

This is definitely a true statement. The vast majority of small businesses who advertise on FB will be hurt by this change. The best estimate to date is a 20-30% drop in marketing efficiency due to worse targeting capabilities. Some of these small businesses will inevitably go out of business due to this change (for better or worse).

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The assumption that small businesses would see a drop in marketing efficiency might assume that advertising costs on Facebook remain constant. In a perfect world, I would think that a reduction in ROAS on Facebook would precipitate a decrease in ad costs, as businesses would be less willing to pay a premium for Facebook ads.

In the long term, I think Facebook is the biggest loser in this scenario, not the small businesses.

I think you're definitely right that Facebook stands to lose the most.

And, I also agree that most businesses will be willing to pay less of a premium for FB ads after this change. But, even for the businesses that adapt their spend accordingly, their final marketing budget will be smaller, and therefore, their net income/profit from ads.

I'm just biased. I hate advertising and I hate tracking even more. I'm sure some companies will be slightly hurt, but I believe it will be a net gain for society.

I worked at a small hardware store as a kid and we got all our business from word of mouth. IDK what the best argument here is, so I suppose I'm just admitting my feelings with this comment.

I don't see why we need to compromise our privacy to support advertising for small business. If I want to opt-in in order to get ads for services that would likely be relevant to me then sure, let me do that. But to be forced to opt-in and then create a moral hazard claiming I "don't support small business" - yeah, screw that! I don't see why Zuckerberg et. al.'s failed business model should be my problem.

Oh the irony that one of the most profitable and largest companies (facebook) is making the claim that small businesses will be impacted.

I think the honest answer is, yes if facebook protects their profit margins then it will impact small business as they pay more to get the same results. OR Facebook could reduce their margins since Apple's change will reduce their product effectiveness.

Once we frame it that way it is clear what the battle is about. Facebook is fighting apple to protect their own profitability and is using a sympathetic actor (small business) as a shield.

> This is definitely a true statement. The vast majority of small businesses who advertise on FB will be hurt by this change.

I don't think I've ever seen a source for this. Could you post one, ideally one which is not subject to conflicts of interest (e.g. funded by the advertising industry)?

Imo, the conclusion around "worse marketing efficiency" is a logical extension from how Facebook's ad ecosystem works.

That is, Facebook is a behemoth in advertising because of its capabilities to predict which users will convert from an ad unit. By predicting conversion rate accurately, FB empower small businesses to get more conversions out of fewer ad impressions and spend.

FB's ability to predict conversion rate is driven by a ML algorithm that takes as inputs: all the user data it tracks via the Facebook Pixel, all the user data it collects through its own domains, and data sent via server API's from advertisers.

Apple's tracking change reduces the amount of available user data to its ML algo by a large percentage.

As a result, prediction power will decrease. And therefore, marketing efficiency.

The actual 20-30% estimate is just that, an estimate. But, directionally, there's no question efficiency will decrease.

You’re making some assumptions along the way though. There’s been multiple articles published about how the data that FB shows to advertisers is not accurate:

[0] https://news.ycombinator.com/item?id=26193544

[1] https://news.ycombinator.com/item?id=26179162

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