Apple Privacy Rules to Blame for Facebook's Lower Than Expected Quarterly Growth
macrumors.com
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Mobile app advertising on iOS has long relied on Apple's IDFA - Identifier for Advertisers - a random, device-unique, resettable identifier that was available to all apps.
An app like Candy Crush would tell ad networks like FB that "IDFA 123456 just installed the app" or "IDFA 654321 just made a $5 in-app purchase." FB could then recognize that IDFA as a user who installed the FB app, and they could use that data to target, optimize via ML, and measure the audience and results of Candy Crush's marketing campaign.
Apple's recent iOS update made IDFA an app-level opt-in, so in order for this existing advertising mechanism to work, you needed to opt-in to tracking on FB (so they could associate your IDFA to a FB user) AND to opt-in to tracking on the other apps (so they could send ad networks data with your IDFA). This double opt-in obviously has a super low rate.
FB wasn't impacted nearly as much as other advertising businesses because they already have identifiers for their users (email, phone number, etc), have a ton of first-party interest/behavioral data, and they mostly run ads on their own properties. Apps who used third-party ad networks to sell and place ads in their apps had their business completely destroyed.
I think this is all fair in terms of user choice and to give Apple control of their own platform, but it opens Apple up for a lot of regulatory scrutiny given that they were able to flip a switch that annihilated a $50b mobile advertising industry, while making their own equivalent data collection opt-out (vs their competitors' opt-in). Even then, Apple frames their data collection option as "Personalize your experience" while forcing other apps to use the phrase "Allow this app to track you." Apple's own ads product has tripled its market share since this launched. [0]
[0] https://www.ft.com/content/074b881f-a931-4986-888e-2ac53e286...
I think your significantly overestimating their impact as Android is obviously not impacted. At most they reduced but not eliminate the revenue from iOS advertising.
These numbers are slightly outdated, but in terms of app review iOS is 155B vs 80B for android which clearly favors iOS but Android is still very relevant. Assuming that ratio stays the same and thus dropping iOS advertising revenue in half it’s roughly a drop from 50b to 36b. Which is significant sure but hardly destroyed the industry.
Fuck them. Seriously. Bunch of parasites.
I've seen a few honest apps that have an ad-supported free version and have a ads-removed paid-for version. Facebook and co would never offer that as their entire business model is based on exploiting uninformed users.
Do people opt out? Or, do they pay a few dollars (about the value of a facebook user)?
Turns out there is a group of affluent folks willing to pay for quality journalism- as it has been the case for 400 years.
Unfortunately some newspapers also are heavily biased in favor of those who pay their bills. See The Washington Post on any Amazon/Bezos related news after he became the owner of Democracy's death in Darkness.
It's only when the internet came along that advertisers started considering non-targeted advertising as unviable.
It's a well studied problem that applies to a long list of markets.
Of course not. An open platform would decrease Apple's ability to enforce measures like this, and would be detrimental to my experience as a user.
If that is true, Apple is an exterminator, who wants to exterminate the current residents so they can take up residence themselves.
I create something that allows 3rd parties to build up an entire business model around it. One day, I decide to no longer offer/maintain/make viable that something. I'm supposed not be able to do that because a $50bn market built up around my work? No, I can do whatever I want because it's mine.
This is my key point. Someone created a business that in order for it to be relevant requires a 3rd party to do something in their favor. There's never a guarantee that will remain in effect. Not building a contigency plan because you've never done a proper what-if session is just absolutely bonkers. I get the forest through the trees aspect of the people building the thing, but this is exactly the type of thing the C suite and board members are supposed to be thinking about. All eggs in one basket has been a corporate no-no for a long long time (at least for the smart ones). Don't put your entire C suite on the same flight type of stuff.
They do this to some extent already, but it would be interesting to know if it is always legal.
However, seeing someone abusing something you thought might be a good idea that can only be stopped by lifting off and nuking it from orbit is a viable thing.
Serious question: what exactly is "Apple's own ads product?" Where would I (as an Apple ecosystem user) encounter it?
[0] https://9to5mac.com/wp-content/uploads/sites/6/2019/11/IMG_0...
[1] https://www.reddit.com/r/Android/comments/poegzl/i_was_just_...
For Apple it's a win-win. Public gets more privacy and Apple nets a few billion dollars more in revenue in addition to anything additional generated by goodwill.
Facebook business was damaged when Apple introduced explicit opt-in request for third-party advertisement data collection.
AFAIK, targeted advertising is different than tracking ad to install information, and since it's all Apple there's no third-party sharing required.
No, the phrase is “Allow AppName to track your activity across other companies’ apps and websites?”
Apple’s text says: “The Apple advertising platform does not track you. It is designed to protect your privacy and does not follow you across apps and websites owned by other companies.”
These are not equivalent, they are the opposite of one another; one is about tracking you across third-party apps and websites, whilst the other is about not tracking you across third-party apps and websites. Of course they need different descriptions.
> Apple’s advertising platform does not track you, meaning that it does not link user or device data collected from our apps with user or device data collected from third parties for targeted advertising or advertising measurement purposes, and does not share user or device data with data brokers.
What Apple's advertising platform does do is personalize ads based on your keyboard language settings, device type, OS version, mobile carrier, connection type, device location if you've enabled Location Services and you've given permission to the App Store or Apple News apps, App Store search queries, and the type of news story you read.
In addition, Apple uses information "such as" the following specific features to assign you to an audience segment at least 5000 people in size:
- name, address, age, gender if you've disclosed it, and devices registered to your Apple ID account. If you didn't disclose your gender, "information such as your first name in your Apple ID registration page or salutation in your Apple ID account may be used to derive your gender."
- Music, movies, books, TV shows, and apps you download, as well as any in-app purchases and subscriptions. They don't allow targeting based on downloads of a specific app or purchases within a specific app (including subscriptions) from the App Store, unless the targeting is done by that app's developer, so that's nice, I guess.
- publications you follow, subscribe to, or enable notifications from
- How you actually interact with Apple ads (unclear if "interact" here is limited to view and click, or if they attribute downstream actions to their ads)
Notably, "No Apple Pay transactions or Health app data is accessible to Apple's advertising platform, or is used for advertising purposes."
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Granted, Apple doesn't use third-party data for "targeted advertising or advertising measurement purposes," and they do not share your user or device data with "data brokers." I imagine not all users would agree that their ad personalization activity doesn't count as "tracking" in the practical sense.
Yes.
Quoting GP (emphases added):
> Apple’s advertising platform does not track you, meaning that it does not link user or device data collected from our apps with user or device data collected from third parties for targeted advertising or advertising measurement purposes, and does not share user or device data with data brokers.
This is fine and expected, I’m using an Apple app, I expect it to use my behavior to influence other Apple apps.
Candy Crush is blabbing all about my behavior to Facebook, which then uses that data to inform my ads on different and wholly unrelated applications.
This is creepy and intrusive.
Another way to put it, if I don’t want Apple to know anything about me it’s clear what I need to do: don’t use Apple devices, services or websites.
If I don’t want Facebook to know anything about me, it’s not at all clear what products or services I need to avoid. I need to setup a pihole or something similar, and even then I’m not confident I’m blocking enough stuff, or not otherwise leaking my identity.
Tracking is so much more than people seem realise. From a simple facebook like/share button existing on a website or Google analytics script operating invisibly in the background, the user is followed around the web to identify their interests - that data is also combined with offline sources. Facebook/Google apps and services each also provide a wealth of complementary data. Advertisers then can bid directly on very specific groups of people, with that ad campaign being able to be metricised through to the individual sale.
Furthermore the privacy policies for Facebook and Google were both rewritten under the guise of simplicity - stating a laundry list services and metrics. This disguises which apps are gathering which metrics. The new privacy labelling requirements under the apple’s app store provide some surprising insights. (Like how gmail gathers your purchase history and collects this as part of your profile.)
You’ll see apologists on here downplay the seriousness of this, or try to build a false equivalence to regular marketing activities.
However take a moment to recognise that companies like Google privately hold more information on you than you’d be comfortable with even your elected officials having access to - all without a hint of regulation to your personal privacy.
There is an implicit but unsupported assumption in this statement that the advertising industry has a right to this data, and that taking it away from them is somehow wrong.
Cry me a river. This industry should maybe ask itself how it pays back an additional 50b to the users it spied on, which was allowed by Apple in the first place. Apple just corrected a mistake that shouldn't have happened in the first place. This is like being sued by your tumor for nutrient deficiency.
I understand that people dislike Apple basically abusing their market position to run their own data collection. Still not okay.
If 90%+ of users opt-out, perhaps the ad industry needs some introspection beyond our ability to opt-out.
These are still insane revenue growth figures, although it does appear that 70% of facebook posts just seem to be ads now, so I suspect a lot of this growth is just based on feeding more ads as a % of content which will clearly lower the user experience in the long run.
Online metrics aren't subject to the same level of scrutiny as standard financial statements. It's pretty common to see startups distort their metrics, but far fewer get away with falsifying their accounts.
I can imagine a future though when these metrics come under more legal scrutiny, just as accounting does now.
It is disingenuous to say this is working well, assuming "well" means "prevent lying because 'audit'". It is working well for generating profits with minimal consequences for anyone.
Just that financial statements have a legal framework and auditing system, whereas metrics don't even have that.
Whether you like or hate Facebook, it's hard to see Zuckerberg as anything but a failing CEO at this point. He continues to create problems which harms the Facebook brand. He has allowed the companys core product to be partly dependent on the actions of an unrelated company (Apple) who have a completely different business case and agenda. Either through action or inaction he is now forcing countries to start legislation to control companies like Facebook, well Facebook and Facebook companies. Despite all of that, I hear no critic of Zuckerberg as a CEO.
I am a consistent Facebook hawk. But to claim shareholders have done anything other than exceptionally well under Zuckerberg is to ignore the evidence. The stock is up. Buybacks are at a record. A $10bn capital spending programme was just announced.
Can I think Zuckerberg is a terrible CEO and not understand how his companys stock price isn't tanking due to mismanagement?
Confusing the brand value with the product value in a marketplace with no competition led you to think that he does harm as a face of Facebook. He is a CEO. He is a good CEO by metrics that matter for CEOs.
Disclaimer: I do not like him. I do not use Facebook.
Reminds me of the dot-com days when ordinary Joe boasted about the gains of their portfolio when, as it turned out, a monkey throwing darts at the financial page could pick as many winners.
Over the 1 year mark, the S&P is up 31%, vs less than 13% for FB. It has underperformed over 6 months as well: less than 7% for FB compared to 9% for the market.
It's only until you look back two years and more that FB has outperformed.
Most of this is because of a roughly 15% decline in FB stock since mid-September.
All the assets which are not cash seems to be going up.
Is this something Facebook-specific, or are you suggesting that _every_ company currently making money on iOS is stupid (And presumably Android too, since you’re almost-equally screwed if Google decide they don’t like you)? If that’s the case, what do you suggest doing instead?
Apple has long been moving towards more privacy, so Facebook shouldn't have been upset that Apple is limiting tracking abilities. It should have been something Facebook saw coming and planned for years ago.
Someone did a very nice clone a few years ago of a Facebook UI done entirely in the browser and it was snappy even in lower tier androids.
It might be harder for other companies, eg games where you need native code to perform well but facebook really has no excuses. They were never going to benefit from walled gardens on mobile.
It could be that they lacked skills to optimise a web page, judging from how terrible and heavy their frontend apps are, but I think it was mostly a strategic decision to go native.
Not doing that would leave money (lots of money, I would think) on the table, and would give the competition an opportunity.
They tried to sell their own phones to not depend on Apple and Google. That did not work out because it turns out it's super hard. Now they are betting that the next platform is going to be VR/AR, a space where they are currently #1.
What else are you suggesting they do?
> it's hard to see Zuckerberg as anything but a failing CEO at this point
I think he's been doing a really great job. For instance everybody thought their acquisition of Instagram (led by Zuckerberg) was a waste of money at the time. In 2020 Instagram represented 37% of the group's total revenues (which includes Oculus, Whatsapp... and Facebook!).
Al Franken was on CNN this morning and he was saying it's time for Zuckerberg to go. He blames a lot of Facebook's problem on Zuckerberg.
That's why they are building their own VR/AR platform.
> Despite all of that, I hear no critic of Zuckerberg as a CEO.
Your perception on both of these points is wildly out of whack from reality.
We are able to attribute something like half of the sales we used to. The main consequence of this is the FB models can't learn who our customers are as well, resulting in an increase in our cost of customer acquisition.
It makes selling niche products much harder.
The whole house of cards stood upon attribution.
I don't think Coca Cola needed attribution to know their ads were effective in 1900, maybe we should ask them?
> Second, if you can’t measure effectiveness how to A/B test your approach?
You can still use either time, geographical or UA-based AB testing without requiring attribution
> Finally, without labeled data how you train ML models?
Are you saying the final objective of tracking is actually to feed AGI as most data about our world as possible? That's an interesting point of view, I never thought about ML modeling as an end-goal.
The individual you are replying to is giving you good indications that all the things you are worrying about _are not necessary_ for you to do your job. They're a crutch. Go back to the fundamentals.
Re: "go back to fundamentals" and "not necessary", I wish it were so simple. In my comment I mention that it makes selling niche products much harder, which is absolutely the case. Some businesses just can't exist without good targeting. Maybe we as a society don't want those businesses to exist, and that's fine, but it's not as simple of a matter of these businesses needing to be better at advertising. With good targeting a business can exist that only has a small subset of customers in the world. A business like this likely can't afford to acquire customers via traditional advertising.
This makes many D2C businesses much harder and a subset of those businesses won't be able to succeed at all in this climate. Again, I'm not passing any judgement on whether that's a good thing or a bad thing for society, just that it is the case. Good targeting is absolutely necessary for some businesses.
Also don't forget that ads are being minimised as a phenomenon by users, not just by Apple. In Europe tech sites are already seeing more than 50% of visitors blocking ads. Most quote pervasive tracking as the reason.
In many ways Apple is following the trend, not leading it, and trying to take away the reason for user objections to ads.
Sure, but targeting ads enabled a massive increase in volume of niche brands.
In particular, brands whose target customer is fairly specific (so totally untargeted ads, like TV commercials, magazine ads, etc, wouldn't have positive ROI) and whose product isn't already known to the customer (if it were known, then content marketing/SEO could work).
> Couldn't you advertise or sponsor user groups, forums, clubs, etc
Yes, just like before. However targeting ads dramatically expanded the audience and effectiveness of marketing spend. Finding the right clubs/groups and figuring out how to advertise to what are probably unique groups is hard. Flipping a switch on a FB campaign is easy. And not everyone is in a club, but just about everyone has a FB account.
> Also don't forget..
I'm not saying anything about who is leading or whether it is good or bad, just that the iOS14 change was like taking a sledgehammer to many businesses like mine.
Prior to the change we had tried a handful of sales channels and only found positive ROI in FB ads. And those FB ads experienced a step change w/ the iOS14 release. Judging from the D2C/PPC communities I'm a part of, my experience was not unique.
Like it or not, FB targeting enabled a certain category of businesses to exist, and now that category is reduced. As I said in another comment, this isn't a judgement about whether we as a society are better or worse off, just that this is the cost of that decision.
However, I do think your points are moot, and my real understanding of targetted advertisement is that attribution is required only to steal the attention of the people paying for the ads, because unique attributions means you can send new numbers every single day, or even make a new mail at every conversion.
So in my understanding, losing attribution only reduces ad buyer's attention, but it doesn't actually decrease effectiveness.
Edit: But I totally agree that I have a very poor understanding of advertisement, so I'm genuinely interested in hearing more
- Creative: also known as "brand awareness". Keep the given brand top-of-mind for as many prospects as possible. The hope is that they will then choose products under the given brand at some future opportunity. This is the type of advertising that Coke ads are. They aren't attempting to get you to buy a Coke right now; they are trying to brand "buy coke, it makes you happy" on your brain.
- Directional. These ads are trying to get you to do something as soon as possible. One obvious example is the annoying "you just looked at this thing, still want to buy it?" ads that follow us all around online. Presumably these ads are somewhat effective, otherwise they wouldn't exist.
From this perspective, removing attribution barely effects creative advertising. On the other hand, it is obviously quite destructive for directional ads. Whether this is a good thing is arguable; I personally find the desired objective of "creative" advertising to be more disturbing.
Facebook is going to have to do something drastic to improve this situation, I suspect they are going to push advertisers to fold their store/checkout into Facebook so a customer never leaves the app. It will be the only way to track all conversion events.
Interesting feedback loops here that might not have been predicted.
If you go further you can probably find hundreds more interesting data points like constant location tracking or full access to any media file mixed with face recognition software.
In short: Your phone is a goldmine of information not only on yourself but anyone you know.
1. You're on a website about pets, which has FB code on it: Facebook can't link that activity to your account anymore, which means they'll have less accurate info about you that might be relevant to advertisers.
2. You see an ad on Facebook and then go to that website to make a purchase -> FB can't link that purchase to your profile and as such a) can't tell the advertiser whether their ads are effective b) can't use that data to optimize the campaign for users like you who might also be likely to buy.
https://www.nytimes.com/interactive/2019/12/20/opinion/locat...
2. Within the Facebook app if you click a link and make a purchase they can absolutely still track you. If you click a link and open it in Safari, they can still track you.
If however you see an ad on Facebook and search for it in your browser without clicking any links then Facebook can't track you, do to third party cookies being disabled.
Cross-app activity can't be tracked without this permission. So if you see an ad for a product on facebook, then you pop over to Safari, search for the product, and purchase it, facebook can't attribute that sale to that ad.
The consequence of this is that goal attribution (like sales) for ads is harder, so FBs models can't learn as well who would be interested in the products. You'll see less relevant ads and companies' cost of customer acquisition will go up.
It's easy to imagine a world with less effective ad targeting since most media doesn't have effective targeting. Think pharmaceutical commercials on TV.
My own bias: I run a niche D2C brand whose business model got wrecked by this change!
Apple disallowed third party cookies (like all other browsers) so now your website with Facebook embedded can only tell Facebook "I got a visitor" and Facebook has no data on who that user is (since they look to be logged out). Before third-party cookie blocking was a thing, Facebook could track users if they were logged in on the web, and thus could potentially attribute the sale to an ad that was shown in Facebook itself.
If the user clicked the link in Facebook for your ad, then popped over to Safari by clicking the "open in Safari" button then Facebook can continue to track that because they saw the final click and can add query parameters on the other end that you can send to Facebook upon checkout completion.
What Facebook can't track now is when a user installs Candy Crush, Quit Smoking app, and Instagram... thereby limiting what ads it can show a user in Instagram to just the behavioral data they get from Instagram, instead of knowing the user also has Candy Crush and a Quick Smoking app (and thus would likely be interested in quick games and cessation of smoking stuff).
If that's the case though, I'm a bit confused as to why attribution got so much worse. I'm seeing 50% attribution dropoff.