Facebook warns advertisers on Apple privacy changes

Facebook is warning advertisers that they can expect weaker ad performance from iPhone users once iOS 14 comes out next month and is telling them to create second advertiser accounts to contain the disruption.

Why it matters: Many of Facebook's advertising partners rely on Apple's "Identifier for Advertisers" (IDFA) user tracking feature to, for instance, target would-be users by interest and see if they actually clicked on a mobile ad directing them to install a particular app. Changes to IDFA coming with iOS 14 will have a big impact on the marketing strategies for many businesses, and on Facebook's bottom line.

Driving the news: In a blog post Wednesday, Facebook says it expects Apple's IDFA changes "will disproportionately affect [Facebook's] Audience Network [of publishers] given its heavy dependence on app advertising."

• It warns its advertising partners that they should expect their ability to effectively monetize on Audience Network to decrease.

Catch up quick: Apple said earlier this year that, in the interest of better protecting user privacy, it plans to make IDFA an opt-in service for its customers.

• Many apps, especially mobile gaming companies, rely on the data collected via the IDFA to be able to target app install ads to new users on other big platforms like Facebook and Instagram.

Details: Facebook said Wednesday that it plans to release an updated version of the Facebook software developer kit to support Apple's changes.

• It will ask its advertising partners that run app install ad campaigns on Facebook and Instagram to create a new ad account dedicated to iOS 14 users.
• Facebook says advertisers can continue using their original account to target users of older versions of iOS, as well as Android, which supports a user-tracking feature similar to IDFA.

Facebook also says it will no longer collect IDFA data on its own apps on iOS 14 devices.

• "Ultimately, despite our best efforts, Apple’s updates may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14," it said.
• It says it may revisit this decision as Apple offers more guidance on the changes.

Be smart: Facebook is framing this saga as Apple moving too quickly to implement changes that will have far-reaching impacts on the app developer community, which Facebook has sought to support and is tied to from a business perspective.

• "We believe that industry consultation is critical for changes to platform policies, as these updates have a far-reaching impact on the developer ecosystem," the company writes in the blog post.

The bottom line: While Facebook acknowledged that Apple's changes could have a material impact on its business in its second-quarter earnings report in late July, this is its first step toward addressing the issue in a way that involves its business partners.