Apple’s ATT privacy feature has cost social media companies approximately $10 billion in ads revenue this year. Financial Times reports that App Tracking Transparency (ATT) feature impacted Meta (former Facebook), Snapchat Inc, YouTube, and Twitter heavily in the second half of 2021.
Apple launched the ATT privacy feature in iOS 14.5 update which allows users to opt-in tracking that means apps have to ask for users’ permission every time they want to track their activity across third-party apps and websites. Although the feature gives control and a sense of privacy to users, it prevents digital advertisers like Facebook and Snapchat Inc. from collecting data to show target ads. At its Q4 2021 earnings call, Appl CEO Tim Cook shared that customers’ feedback to the feature is “overwhelmingly positive”.
Snapchat and Facebook were most impacted by Apple’s ATT privacy feature because of their data collection systems
Based on data for Lotame, an advertising technology company whose clients include The Weather Company and McClatchy, the report states that out of four major social media companies, Meta and Snapchat were the most impacted by ATT privacy features because most users opted-out of app tracking.
Lotame estimated that the four tech platforms lost 12 percent of revenue in the third and fourth quarters, or $9.85bn. Snap fared the worst as a percentage of its business because of its focus on smartphones, while Facebook lost the most in absolute terms because of its size.
Meta’s revenue was impacted by 13.1% percent due to ATT, while Twitter was only impacted by 7.4%. Twitter told the Financial Times that it was less impacted because its “ads rely more on context and branding than on tracking consumers’ mobile habits.”
Another report by Wall Street Journal explained that Google gained the business lost by Meta (Facebook) because of its search ad algorithm which shows results based on customer intent, unlike Facebook and Snapchat which rely on data collected via the app and web tracking to show targeted ads. And e-commerce companies are sending less on targeted-ad platforms.
A dozen e-commerce companies interviewed by The Wall Street Journal said they now have to spend a lot more money on these ads to get the same number of sales from them that they could expect before the new feature was rolled out. They also can’t get enough data to know how effective these ads are at driving purchases. Many have reduced their ad spending on targeted-ad platforms. In a July poll of 118 e-commerce store owners by eCommerceFuel, 62% said they had decreased their Facebook ad spending since the iOS upgrade.
WSJ also explained that Twitter was saved from suffering a bigger loss because of its brand advertising model which focuses on improving a brand’s image instead of pushing for direct sales.