Tech platforms' losses from IDFA to hit $16 billion in the coming year

A year after Apple allowed users to take greater control of the Identifiers for Advertisers (IDFA) feature on their phones, tech platforms are beginning to feel the pinch from this push for greater privacy from the iPhone maker. While Lotame initially estimated a $10 billion shortfall from this move, a new post from the data solutions provider estimates these tech platforms, led by Facebook, could lose as much as $16 billion in revenues from this shift in the coming year. 

IDFA tracking was enabled by default on Apple's devices, but a year ago users were given the ability to opt out by enabling the Limit Ad Tracking (LAT) feature. LAT replaces the IDFA number with a string of zeroes, so the user’s IDFA appears blank when tracked, making it much harder for tech platforms and advertisers.

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The coming hit to their business is compounded not just by changes to IDFA, but also the looming sunset of third-party cookies and changes being made by Google to its own tracking solution GAID. In addition, both Apple and Google are going to make it harder for advertisers to locate consumers' IP numbers, making tracking even more challenging. 

App blocking and the impact of Apple’s App Tracking Transparency (ATT) measure will play a key role in determining the impact for these tech platforms, this research notes. While Lotame initially estimated as many as 80% would block access across the board, this figure seems more likely to settle at a 65% opt-out rate, according to the firm. 

However, the impact on business for these tech platforms isn't entirely unexpected. In a Q4 results announcement, Facebook CFO David Wehner acknowledged the impact from these changes. "We believe the impact of iOS overall as a headwind on our business in 2022 is on the order of $10 billion, so it’s a pretty significant headwind for our business," he told analysts in a post-results call. "And we’re seeing that impact in a number of verticals. Ecommerce was an area where we saw a meaningful slowdown in growth in Q4.”

Lotame also believes tech platforms have reacted differently to this shift. Facebook is building out its own walled garden of offerings within its network for advertisers, whereas other platforms such as Snap and Twitter have morphed their businesses to cope with these changes.

"Facebook is making a major push to drive ecommerce, retail and storefronts to operate entirely in the Facebook system with new tools, capabilities and support," the report notes. The platform has realised it needs to "own the marketer" to deliver advertising, execution, attribution and measurement.