Apple’s power move to kneecap Facebook advertising is working

PublishedPosted on
apple

Facebook’s top executives sent out a message to customers this week asking them to be patient. Of course, they weren’t there to discuss the Wall Street Journal’s recent exposé of the company’s shady dealings. Instead, Facebook VPs Simon Whitcombe and Graham Mudd spoke to advertisers about Apple’s anti-tracking strategy, which is already wreaking havoc on the company’s ad effectiveness and profitability.

“This is where they get their sh-t together and move when something genuinely affects their business,” said one Facebook advertiser who attended the sessions.

In an interview, Mudd remarked, “It’s been all hands on deck for several weeks.”

Apple is causing more damage to Facebook than any of its previous controversies combined. Apple’s changes in iOS 14.5 — asking users if they want to opt-out of apps following them across the web — are causing havoc for marketers who rely on Facebook to make a living. Performance marketers, or those who want you to buy right after you click, are having a hard time. They think that the majority of consumers have chosen not to allow Facebook to monitor them off of Facebook, therefore they can’t tell if people are buying their items after seeing their advertising. As a result, Facebook expects them to spend less money.

Aaron Paul, a performance Facebook marketer, described it as “just utterly blind.” Paul claims that his company, Carousel, has reduced its Facebook spending from millions to a few hundred thousand dollars per day. Carousel routed 80 percent of the traffic to their product pages to Facebook before the iOS upgrades. It now accounts for 20% of the total.

Apple’s iOS updates might do irreversible damage to Facebook’s ad business. This experience has shown Paul and his fellow performance buyers that reliance on a single (if highly effective) channel is dangerous. As a result, they’re aiming to diversify their advertising budget. Paul claimed he’s shifted his ad spending to places like “Snapchat and TikTok, but even quiet killers like email,” according to him. Facebook marketers who were discussing Apple’s moves on Twitter virtually universally agreed that they needed to follow suit.

Concerns about Facebook’s ability to withstand Apple’s attack are already having an impact on the stock market. On Wednesday, the company’s shares fell roughly 4%, and some long-term investors are pulling out. On Wednesday, trader Jon Najarian stated, “I probably sold approximately half of that position over the last two days.” He went on to say that Facebook was formerly his second-largest holding.

People are opting out of Facebook tracking for a reason: they no longer trust the business with their personal information after years of evidence that they shouldn’t. However, the backdrop of Apple’s power grab is crucial. The startup competes with Facebook’s chat apps and is hard at work developing its own ad network.

Kelcey Lehrich, CEO of 365 Holdings, a business that owns e-commerce brands and advertises heavily online, stated, “I don’t think Tim Cook is this nice privacy person.” He stated of Big Tech businesses in general, “They’re making strategic decisions that affect the market cap, not practical decisions that help their customers or serve their consumers.” A request for comment from Apple was not returned.

“I think we communicated our opinions on iOS 14 and, at this point, I don’t have anything more to say,” Mudd stated, delicately voicing his company’s displeasure.

More than any controversy, Apple’s power play is prompting these advertisers to look for alternatives to Facebook. And, unfortunately for Facebook, one of the options happens to be Apple.

“Apple is extremely powerful, and they’re doing everything they can to establish their own ad platform,” Paul, a Facebook performance marketer, explained. “My goal is for our team to be able to quickly learn and master the ad platform when it becomes available. Check to see if that works.”

Leave a Reply

Your email address will not be published. Required fields are marked *