Facebook warns of 'severe' impact from Apple's iOS 14 privacy push

Facebook has warned publishers and advertisers who use its Audience Network tool to expect a significant impact on their ability to monetise and target advertising as a result of privacy changes in Apple's upcoming iOS 14 operating system.

Apple announced new privacy features coming to iOS 14 at its annual developer conference in June, including a requirement for app developers to notify users and obtain consent if their app collects a unique device code, known as an IDFA (ID for Advertisers). The IDFA is a randomly generated code that Apple assigns to a device. App developers use this code in audience targeting and to track the performance of ads across different apps and devices.

Facebook's Audience Network—an ad network that allows its advertisers to place ads in third-party apps which have installed Facebook’s software development kit (SDK)—uses the IDFA to match device data with its own user data. Audience Network has a pool of more than 19,000 developers and app publishers that have adopted Facebook's SDK in exchange for ad revenue.

Facebook announced today (August 27) that rather than asking users for permission to collect the IDFA, its apps will stop collecting the code on iOS 14 devices. It has also released an updated SDK that limits the data available to businesses for running and measuring campaigns.

"We believe this approach provides as much certainty and stability that we can provide our partners at this time," the tech company said in a blog post. "We may revisit this decision as Apple offers more guidance."

Facebook did not provide a reason as to why it has chosen to abolish the use of IDFA in Audience Network rather than ask users for consent. We can only speculate that it expects very few users to opt-in when provided with an option, and would therefore make more sense to skirt on the side of caution and have one consistent approach to targeting.

Advertisers should expect a reduced ability to accurately target and measure their campaigns, Facebook said. This will lead to lower CPMs for publishers, and as a result, is expected to "severely impact publishers’ ability to monetise through Audience Network", it said.

Facebook tested removing personalisation from mobile app ad install campaigns to quantify the impact to publisher revenue, and witnessed a drop of more than 50%. But the real impact "may be much more", it said.

"We are working on short-and long-term strategies to support publishers through these changes," the social network said.

These changes could render Audience Network "so ineffective on iOS 14 that it may not make sense to offer it", Facebook said. It expects “less impact” on its own advertising business, as it can provide targeting on its own user data.

In a separate blog on its Audience Network site, it wrote: "This is not a change we want to make, but unfortunately Apple’s updates to iOS 14 have forced this decision."

Facebook did not hold back in its criticism of Apple. It said iOS 14 will hurt "many of our developers and publishers at an already difficult time for businesses", adding that industry consultation is "critical" for changes to platform policies, as these updates have a far-reaching impact on the developer ecosystem. 

Apple has made several changes to its operating system over the past year that increase user privacy but in the process significantly reduce advertisers' ability to target users, including an anonymised sign-in ID, restrictions on location tracking and on cookie workarounds.

Laura Quigley, the SVP of APAC at Integral Ad Science, told Campaign Asia-Pacific that the nullification of identifiers and the increased demand for permissions requires advertisers to review their current approach to ad targeting.

"Whether or not identifier for advertisers (IDFA) is eventually eliminated, mobile advertising will need to adapt, and this will require a fundamental change in the way iOS targets are addressed in mobile marketing. With the deprecation of cookies as well as the weakening of identifier for advertisers (IDFA), behavioral targeting will become more difficult for marketers," she said.

"Marketers will have to get innovative about their marketing, which will lead to a better connection, personalised, contextual offerings, and overall engaged consumers."

These changes could trigger a large proportion of publishers who currently offer free content in exchange for displaying ads to turn to paywalls, Quigley suggested, reducing the inventory available to advertisers. But giving users more control over their data and increasing the transparency of the ad ecosystem is ultimately a "move in the right direction", Quigley noted. 

Alice Isola, the APAC head of social at Essence, said Facebook’s categorical IDFA approach will trigger robust first-party data to become "even more valuable". 

Fortunately for local marketers, since Android is the dominant operating system in many markets across APAC, the impact of this change is likely to be less aggressive compared to North America or EMEA, Isola pointed out.

"That said, the market share of operating systems varies significantly by market, hence advertisers will need to look at market-specific strategies to address the change," Isola added.