Apple’s “Do Not Track” tool for hitting Facebook

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The impact of the privacy change on iPhone operating systems, launched by Apple in April, is beginning to manifest itself on other companies’ balance sheets, showing the enormous power Apple wields over non-consumer electronics industries.

The update, which sparked controversy between Apple and many companies like Facebook, included the appearance of a new pop-up asking users if they want to allow apps on their phones to track them to help customize ads for them. which allows iPhone owners to easily disable it by clicking the “Don’t Do” button. The privacy feature has changed the mechanics behind the scenes of many telephone ads.

Meta, the parent company of Facebook, warned last month that the adoption of the features has reached a “tipping point” and has made its ads less effective at targeting potentially profitable customers. Facebook said its revenue would have grown sequentially in the third quarter if it weren’t for Apple’s advertising changes.

While Snapchat blamed the privacy change on iPhone operating systems, impacting its sales, they did not see significant growth during the third quarter. Whereas Snapchat CEO Evan Spiegel said the new feature on the iPhone posed risks to the company’s fourth quarter profits and the company expected its fourth quarter sales of the year to be around. $ 1.18 billion, compared to Wall Street analysts’ expectations of $ 1.36 billion. Peloton said last month that Apple’s privacy feature was hurting user growth.

Apple CEO Tim Cook declined to comment on the feature’s impact on other companies, but said, “We don’t make the decision, we allow users an easy way to make their decision.”

While the changes have been marketed as a win for users, they also benefit Apple’s advertising product, known as Apple Search Ads, which marketers are turning to for mobile ads that increase app installs. “We have seen a huge increase in Apple’s search advertising market share,” said Shani Rosenfelder, head of content at AppsFlyer, an ad measurement company. “They have become the new number one player, surpassing Facebook, which has dominated iOS in the past,” he added. An AppsFlyer report indicated that 86% of Apple iOS devices are running a modern enough version to qualify for the ad blocking feature and while 38% of users chose to allow apps to track advertising, 62% has decided not to be monitored.

Meta has declared war on the iOS update right from the start. “As Apple’s changes make e-commerce and customer acquisition less effective on the web, solutions that enable large companies to build a store within their apps will become increasingly attractive and important to them.” said Facebook CEO Mark Zuckerberg.

While Snapchat CEO Evan Spiegel has already praised Apple’s approach, the company has updated its advertising products to work with an alternative to Apple’s “App Tracking Transparency” service known as ATT. But last month, Snapchat officials said the replacement for Apple’s ad measurement service, SKAdNetwork, was unreliable. Snapchat said it is directly developing its advertising service.

While Apple does not post revenue from its advertising services in its financial results, it does make up a small portion of its services business, which posted revenues of $ 68.43 billion in the company’s fiscal year 2021, up 27%. Bernstein analyst Tony Sakunagi estimated that Apple’s search ads generate $ 4 billion annually and have 60% of the market share of “app search ads” on iPhones. In a note to customers last week, he wrote that search-associated advertising is only a fraction of the entire mobile advertising market. It estimates that the mobile advertising market as a whole is worth $ 300 billion a year, and 20% of those ads are for mobile apps, or around $ 60 billion, with iOS accounting for half that pie.

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