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After Snap Inc. failed to reach its revenue targets last week, investors are now fearing that Facebook’s ad revenue could also be severely impacted due to Apple’s privacy changes.
For those unaware, Apple’s privacy updates, which were released back in April, prevent advertisers from tracking iPhone users without their permission. This has compelled investors from digital ad agencies to fear the fact that these updates have led to reduced access to the USD 100 billion worth mobile ad market.
Earlier, Snap also showed concerns when it reported that Apple’s privacy changes had hindered its ability to measure whether its advertisements led to website visits or sales, and the performance metrics tool that was provided by the iPhone maker was also not up to expectations.
Snap's shares have dropped by 25% while simultaneously bringing down shares of Facebook, Alphabet Inc, and Twitter Inc., which all usually obtain revenue by selling digital ads.
It is worth noting here that Facebook is currently the world’s second-largest digital ad after Alphabet Inc's Google. However, the social media giant’s ad revenue is likely to be more affected as compared to Google, experts claimed.
Most of Facebook’s ad business comes from direct response advertising, which relates to ad sellers and buyers who make use of information to post ads for the interested audiences to quickly generate sales or website visits.
Analysts are targeting revenues worth USD 29.5 billion for the third quarter, approximately a 37% increase from the same time last year.
Facebook notified that Apple’s privacy updates have led to under-reporting of results of its ad business on iOS devices. The company also mentioned that the changes have made it more difficult and expensive for brands to advertise on Facebook.
On the other hand, Twitter is expected to be spared from this since it is mostly used for brand advertising. Google is also likely to remain unharmed from the privacy changes as much of its usage is from desktops.
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