Facebook và google

     

Updated Jan 28 with Facebook CEO Mark Zuckerberg’s comments from the company’s earnings report analyst Gọi.

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Google could thua thảm $17 billion in revenue over the next 12 months. Facebook has perhaps $8 billion at risk. The cause, according to lớn Mobile sale professionals?


Apple’s new privacy changes.

Last year Apple announced that the Identifier For Advertisers (IDFA) would become explicitly opt-in in its next Mobile operating system update, iOS 14. The IDFA helps advertisers measure ad effectiveness as well as track devices và people. In September, Apple delayed execution of that change until early 2021. But the change is coming, and most in the industry think it’s coming soon.


The new user permission dialog in iOS 14 from Apple that allows or denies advertiser access khổng lồ the ... <+> IDFA (identifier for advertisers).

Apple

What that means is greater user privacy.

And what that means for Facebook & Google is impaired advertising efficiency. Unless huge numbers of consumers opt in lớn tracking, ads will no longer be as personalizable khổng lồ our chất lượng history, interests, & activity as they could in the past.

In fact, Facebook itself estimated personalization accounts for 50% of the value of its advertising.


Now Smartphone advertising expert Eric Seufert, who formerly led user acquisition for Angry Birds and other apps, has estimated the privacy cost of Apple’s change. He estimates some people will opt in to tracking: likely around 20%. (Facebook has stated it will ask for permission to lớn track; Google has not yet revealed how it will proceed.) For the other 80% of people, however, advertising will thất bại some of the efficiency that personalization has delivered. Facebook và Google can recover some efficiency by better contextual targeting, he says, but not all of it.


(Personalized targeting picks ads to show you based on your history & activity; contextual targeting selects ads based on on the nội dung and focus of the phầm mềm or website which you are using.)

“I believe that Apple’s upcoming iOS privacy changes will significantly harm Facebook’s revenue, causing a roughly 7% revenue impairment in quận 2 2021 in the base case scenario,” Seufert writes. “Subsequent quarters will also face revenue losses.”


Screenshot of modeling Facebook"s exposure lớn Apple"s new privacy changes with the IDFA in iOS 14.

Eric Seufert

While modeling out a best case scenario results in only a 2% revenue impairment và a worst case shows almost 14% impairment, it’s entirely possible that Google và Facebook won’t be able lớn recover a significant amount of efficiency in ad targeting.

At 10% impairment, the numbers don’t look pretty:

Annualized, that’s $169 billion At 10%, Google loses almost $17 billion in revenue

For Facebook, the numbers are similar but just a bit smaller:

Annualized, that’s $80 billion At 10%, Facebook loses about $8 billion in revenue over the next 12 months

Of course, both companies are growing, and Covid-19 has actually accelerated some of the businesses that buy ads on their platforms, so those revenue numbers could be low, and the impact could be greater.

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Clearly, Facebook CEO Mark Zuckerberg is not happy.

“Apple has every incentive sầu khổng lồ use their dominant platform position khổng lồ interfere with how our apps & other apps work, which they regularly vị khổng lồ preference their own,” Zuckerberg said in the company’s earnings gọi with analysts. “This impacts the growth of millions of businesses around the world, including with the upcoming iOS 14 changes.”

It’s also important to note that on-platkhung ads (Facebook-delivered ads in the Facebook app; Google ads on the Google website) can still use all the data Facebook or Google have, respectively. It’s primarily ads on third-buổi tiệc nhỏ apps and websites that are impacted, although Apple’s tracking changes also affect how much data from those third-các buổi party properties makes it baông xã khổng lồ the ad networks.

Ultimately, however, it’s clear that Apple’s privacy changes have sầu the potential to lớn significantly harm major ad network revenues for years khổng lồ come.

What could mitigate these losses?

More people could opt in lớn tracking by Facebook và Google. Google and Facebook (& other ad networks) could get much better at contextual targeting that does not require tracking people and devices around the mạng internet. Ad prices could drop due lớn lower efficiency, but advertisers could use the opportunity to simply advertise more, making up the difference.

Seufert thinks that #4 is unlikely, because some of the highest-spending industries absolutely rely on tight targeting & delivery of ad messages. Facebook’s largest verticals are e-commerce, retail, và CPG, và Facebook COO Sheryl Sandberg said in an earnings điện thoại tư vấn recently that “these businesses rely on personalized advertising to lớn reach potential customers và grow.”

Others seem lớn agree.

“It"s fair to expect a significant laông chồng of efficiency in all ad network auctions as Apple push out their proposed privacy changes,” says Paul Bowen, general manager of AlgoLift, which automates Smartphone user acquisition and was recently acquired by Vungle, a mobile-focused ad network, adding that he expects innovative solutions from his company & others to lớn improve sầu the situation.

Others think that while Facebook & other big players will have sầu revenue risk in the short term, they’ll figure it out in the long term.

Even if it’s not easy.

“I believe it is highly likely that Facebook will recover short term revenue losses over the next several years, as they have the reach to adapt khổng lồ the new paradigm,” says Brett Bauer, CEO & co-founder of Appfluencer, an ad campaign management tool. “The trust that Facebook has following the election may be negatively impacted from all parties, và as a result the opt in rate will be lower than expected, which would have a more negative impact on revenue.”

Ultimately, of course, time will tell.

I’ve sầu reached out to lớn both Facebook và Google for bình luận, và will update if they respond.

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I forecast and analyze trends affecting the mobile ecosystem. I"ve been a journadanh mục, analyst, & corporate executive, and have chronicled the rise of the điện thoại economy. I built the VB Insight research team at VentureBeat & managed teams creating software for partners lượt thích Hãng Intel & Disney. In addition, I"ve led technical teams, built social sites & Mobile apps, and consulted on điện thoại, social, and IoT. In năm trước, I was named lớn Folio"s top 100 of the media industry"s "most innovative entrepreneurs & market shaker-uppers.” I live sầu in Vancouver, Canadomain authority with my family, where I coach baseball and hockey, though not at the same time.


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