Facebook set a new ad revenue record, despite Apple’s iOS privacy change
For months, Apple and Facebook waged a PR war (with threats of a legal one) over App Tracking Transparency, a change in recent versions of the iPhone’s iOS software that will often limit how advertising-focused apps and companies can monetize iPhone users.
Facebook’s original public predictions about App Tracking Transparency’s effect were apocalyptic. But even though App Tracking Transparency took effect during Facebook’s most recent quarter (Q2 of 2021) the company still posted huge ad revenue growth.
Facebook’s revenue, which is largely driven by the kinds of advertising that Apple’s iOS change undermines, grew 56 percent year-over-year in Q2, beating investor expectations. The company had 1.9 billion daily active users and 2.9 billion monthly active users. It earned $10.12 of revenue per user, on average.
This was the first earnings report Facebook has delivered on a quarter that should show any effects of App Tracking Transparency on the company’s bottom line. Fifty-six percent YOY growth certainly doesn’t look apocalyptic, but CFO David Wehner told investors to expect a less rosy story in the next quarter:
We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates, which we expect to have a greater impact in the third quarter compared to the second quarter.
Data on user opt-in rates for tracking has varied quite a bit. Some firms put the figure at just 4 percent, but others place opt-in rates as high as around 30 percent. And it likely depends on the app in question. In any case, users who opt in are definitely not the majority; most users are declining to be tracked when prompted. And each user who does is worth a lot less money to Facebook, which makes much of its money leveraging each user’s data to charge advertisers money to microtarget them and other users with similar attributes.
While Facebook’s initial messaging around App Tracking Transparency was combative and dire, Zuckerberg began changing his tune recently. He began to argue that the change could even be good for Facebook in some ways.
As for today, Zuckerberg is dedicating much of his time to describing his vision for the “metaverse,” which he has identified as the new direction for the company. He has described this vision as a mixed reality layer on our lives whereby people can interact with and socialize with one another virtually in new ways, crossing geographic barriers as if they were simply walking from room to room.
But Apple executives have also outlined a somewhat similar longterm vision, albeit with a very different approach in mind. By forcing Facebook to play by different ad-targeting rules, Apple has strengthened its position against the social media company in any coming battle over a future mixed reality computing landscape.
But at least for this quarter, Facebook doesn’t look like it is suffering too badly from the wound.
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