Facebook warns of a 50% hit to advertisers' revenue from iOS 14

As part of new privacy features in its upcoming iOS update, Apple has introduced a transparency feature that will explicitly require users to opt in or out of allowing ad tracking within apps. An August report

indicated that Facebook was concerned about the feature, and the fact that many users will refuse ad personalization.

Going forward, Facebook said that it will not collect the identifier from advertisers (IDFA) from its own apps on devices running iOS 14. In a blog post Wednesday, Facebook said that Apple's introduction of the feature has forced its hand.

"This is not a change we want to make, but unfortunately Apple's updates to iOS 14 have forced this decision," Facebook wrote.

The social media giant said that the change may "severely impact" the ability for publishers to monetize through its Audience Network advertising platform. Facebook added that Apple's anti-tracking features may "render Audience Network so ineffective on iOS 14 that it may not make sense to offer it" on the platform in the future.

In its testing, Facebook said that some users running iOS 14 either see no ads delivered through the Audience Network program, or see ads that are less relevant. It said that publishers who use Audience Network should expect lower cost-per-mile (CPM).

"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. 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."

In the iOS 14 Settings app, there's a new Privacy section toggle that allows users to decide whether they want apps to ask permission to track them across other apps and websites. But even if the feature is toggled off, apps must still acquire consent before tracking users.

The Apple anti-tracking feature has already seen criticism from marketing associations in Europe. Many of those advertising companies, a good percentage of which are backed by Facebook or Google, complained about an uptick in "user refusal."

Facebook contends that the feature will hurt many developers and publishers "at an already difficult time," including small businesses that depend on ads. It added that it stands in support of the community that does rely on advertising revenue. Earlier in August, a report indicated that Facebook was meeting with gaming firms — a key source of ad income — to hear their concerns about the anti-tracking feature.

"We remain committed to helping the thousands of developers and publishers that rely on ads from Audience Network, and we're investing time and resources into building monetization products for publishers as well as supporting other platforms outside of iOS 14," Facebook said.

Apple is expected to release iOS 14 sometime in the fall, alongside other major operating system updates like macOS Big Sur and watchOS 7.