Facebook Warns Apple's New iOS Could Cut Audience Network Ad Revenue In Half

Typically, it is media companies that cower in fear any time Facebook changes its new algorithm, terrified it could result in a catastrophic drop in ad revenues. Now, it's Facebook's turn to be at the mercy of its most popular platform, in this case Apple's iOS operating system, whose new upcoming version iOS 14 could lead to a more than 50% drop in Facebook's Audience Network advertising business, the company admitted in a blog post today.

While previously Facebook had warned that iOS 14 could impact its advertising business, only today did the company outline just how profound that impact could be. The Facebook Audience Network allows mobile software developers to provide in-app advertisements targeted to users based on Facebook’s data.

In today's post-cookie world, advertisers use a unique device ID number called the IDFA to better target ads and estimate their effectiveness CNBC explains. However, in iOS 14, each app that wants to use these identifiers will ask users to opt in to tracking when the app is first launched. Facebook said its apps will not collect IDFA information on iOS 14.

The impact of the revision could be tremendous: according to Facebook, more than 1 billion people see at least one Audience Network ad every month, although many of those are probably using Android phones and will not be affected by the change. While Facebook derives virtually all revenue from advertising, it’s not known what percentage is attributable to the Audience Network versus ads on Facebook and other properties.

As CNBC adds, in Facebook's blog post it outlined steps it will take to ensure its advertising business is in compliance with Apple’s requirements. These steps will limit how effectively Facebook and its advertisers can target ads to iPhone and iPad users.

“We know this may severely impact publishers’ ability to monetize through Audience Network on iOS 14, and, despite our best efforts, may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS14 in the future,” Facebook said in a blog post.

“While it’s difficult to quantify the impact to publishers and developers at this point with so many unknowns, in testing we’ve seen more than a 50% drop in Audience Network publisher revenue when personalization was removed from mobile ad install campaigns,” Facebook said. “In reality, the impact to Audience Network on iOS 14 may be much more, so we are working on short-and long-term strategies to support publishers through these changes.”

Apple has not said when iOS 14 will launch, but it’s expected to roll out this year.