Technology

Apple’s iOS adjustments are hurting Fb’s promoting enterprise

apples-ios-adjustments-are-hurting-fbs-promoting-enterprise

Tim Cook introduces iPhone 13. before

Source: Apple Inc.

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Facebook sent its senior executives this week to ask customers to calm down there. They were not, of course, over to discuss the Wall Street Journal’s recent exposure of the company’s unsavory practices. Instead, Facebook vice presidents including Simon Whitcombe and Graham Mudd spoke to advertisers about Apple’s anti-tracking initiative, which is directly damaging the company’s advertising effectiveness and bottom line.

“This is where they meet and move when something affects their business,” said a Facebook advertiser who attended the meeting.

“Everything has been on deck for many weeks,” Mudd said in an interview.

Apple is actually doing more damage to Facebook than any of its previous scandals. The changes Apple made in iOS 14.5 – asking people to opt out of apps that are tracking them on the web – is causing turmoil for advertisers who rely on Facebook to keep their business going. Performance marketers, i.e. those who want to buy immediately after the click, have a particularly difficult time. The masses, they believe, have chosen against having Facebook tracked by Facebook so they can’t be sure that people will buy their products after seeing their ads. Facebook expects them to spend less money as a result.

“Just run completely blind,” said Aaron Paul, a performance Facebook marketer. Paul said his company, Carousel, moved from millions of dollars a day on Facebook to a few hundred thousand dollars. Before the iOS changes, Facebook generated 80% of the traffic that Carousel sent to its product pages. Now it is 20%.

Apple’s iOS changes can cause irreparable damage to Facebook’s advertising business. That moment showed Paul and his fellow performance buyers that relying on one channel (albeit a very effective one) is risky. Therefore, they want to diversify their advertising spending. Paul said he’s shifted his advertising budget to elsewhere, including “Snapchat and TikTok, but also silent killers like email”. On Twitter, Facebook marketers discussing Apple’s changes almost unanimously agreed that they had to follow suit.

Concerns about Facebook’s ability to weather the Apple attack are already translating into quick ramifications on the stock market. The company’s stock fell nearly 4% on Wednesday, and some loyal investors are saving themselves. “I’ve probably sold almost half that position in the past two days,” trader Jon Najarian told CNBC on Wednesday. Facebook, he added, was once his second largest holding.

People disapprove of Facebook tracking for a reason: they no longer trust the company with their data after years of evidence they shouldn’t. But the context of Apple’s power movement is also important. The company competes with Facebook’s messaging apps and is working hard to build its own robust advertising platform.

“I don’t think Tim Cook is that benevolent privacy officer,” said Kelcey Lehrich, CEO of 365 Holdings, a company that owns e-commerce brands and advertises extensively online. “They make strategic decisions that affect market capitalization, not practical decisions that serve their customers or their users,” he said on the whole of the big tech companies. Apple did not respond to a request for comment.

“I think we shared our views on iOS 14 and at this point I have nothing more to add,” said Mudd of Facebook, expressing his company’s anger as diplomatically as possible.

Apple’s power play is already causing these marketers to look for alternatives to Facebook, more than any scandal. And unfortunately for Facebook, Apple is one of the alternatives.

“Apple is super powerful and they are doing all of this to build their own advertising platform,” says Paul, the Facebook performance marketer. “My goal is to get our team to learn the ad platform when it comes down to it and be good at it. See if that works.”

This post was previously published in Alex Kantrowitz’s Big Technology newsletter.

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