Facebook’s measurement problems could affect advertisers' media plans—and its bottom line

The news: Apple’s new privacy rules are making it difficult to tie Facebook data to actions that consumers take after viewing ads on the platform, which could have long-term effects on ad revenues.

  • Some advertisers reported sales on their website that ostensibly came from Facebook—but the social platform’s Ad Manager reported few to no conversions.

How we got here: In April, Apple’s AppTrackingTransparency (ATT) update came into effect, where users were asked if they wanted their activity in certain apps to be tracked.

The results: Approximately 23% of worldwide iOS users have opted in to being tracked, according to app analytics provider Flurry.

  • But consumers who declined to be tracked by Facebook, which attracts the most ad spend of any platform, leave it hard-pressed to track conversions.
  • Last week, it was reported that app-install campaigns underreported conversions from ads that ran on iPhone 12s.

Rewind: Facebook executives knew this was coming.

  • In the company’s Q2 2021 earnings call, Facebook CFO Dave Wehner acknowledged that “ad targeting headwinds” would affect future ad revenues.

The problem: To get around the issue, Facebook is leaning on statistical modeling instead of Apple data—and for some advertisers, that may not be good enough.

  • Sophisticated advertisers rely on granular, accurate measurement data to decide which campaigns are working and which aren’t.
  • Advertisers still know their Facebook ads are working on a macro-level, but may not be able to evaluate at a campaign level.

Why it’s worth watching: If a portion of Facebook’s ad spend goes elsewhere, retail media networks such as Amazon and Instacart could be the beneficiaries, as advertisers wouldn't have to depend on off-platform conversion data.

  • If these measurement challenges are a reason to jump ship for even some advertisers, it could affect Facebook’s bottom line.
  • “The verticals most impacted by the iOS changes could be gaming and app developers,” said Nazmul Islam, forecasting analyst at Insider Intelligence. “With less targetable information about users, ad targeting could impact downloads, tighten profit margins, and create a scenario where the industry faces significant layoffs.”
  • This could be an additional impetus for Facebook to continue pushing social commerce, as brands will receive better reporting data from within the Facebook ecosystem.