How ATT impacted Meta ads

If you wanted to reach the world for cheap, you spent your marketing dollars on Facebook. However, recently some marketers are making statements like “Facebook is dead” or “Facebook ads don’t work”. What happened?

App Tracking Transparency (ATT)

In April 2021, Apple updated its platform that required developers to ask users for permission to track data. The update was called App Transparency Tracking (ATT). Apple built a brand for protecting their users’ privacy and ATT is an extension of that reputation.

In the pre-ATT world, a company like Meta could install trackers in millions of third-party apps and websites. The company can then link device usage in one app with usage in all the other apps the company’s trackers are installed with. Based on this data, a user profile is pieced together for accurate ad targeting.

The data, or signals, were cut off. Like a brain after a lobotomy. As you can imagine this had detrimental effects on companies reliant on these signals like Meta, Snap, and Twitter. Meta even launched public campaigns against this update in protest.

To be clear ATT only impacted iOS devices. Not Android. Although Android makes up more than 70% of the mobile OS market globally iOS users are more valuable to advertisers. They spend more.

It would be remiss not to point out that while Apple is making this update to better protect their users’ privacy, they are also building their own advertising platform…

Impact of ATT

In the months following ATT, iOS users increasingly denied permission to share data (chart attached).

Meta estimated that ATT cost it $10 billion in 2022, or 9% of its total revenue. Advertisers, large and small, noticed a drop in return on ad spend (ROAS). Analysts even coined the term “App Tracking Transparency Recession” to describe technology companies that have been faring poorly in the current downturn. The ones doing the worst are those that are most impacted by ATT like Snap and Twitter. Although the latter has a lot of other issues too nowadays

Both advertisers and advertising platforms have been forced to react and change. Advertisers are testing new marketing solutions. Previously the marketing budget earmarked for Facebook ads would now be diversified onto other platforms like Amazon or even Uber.

Meanwhile, advertising platforms are building up their pool of first-party data since ATT only impacts third-party data. For Meta, this means on-platform conversions like Shops and lead forms. Companies will create larger walled gardens of data, which become a strong advantage if they are able to manage the pivot.

The Response

Now 3 years later, Meta is looking to rebound from Apple’s "ad signal loss" changes. Users and revenue have grown. Meta’s ad performance is recovering thanks to AI-enhanced ad targeting. Fewer signals are required for the same results.

Improvements in Reels have led to incremental user engagement on Facebook and Instagram. More engagement has increased ad impressions. As the number of impressions, or supply, grows then the cost of ads, or demand, shrinks thereby improving advertiser ROAS.

The company has made changes to mitigate the ATT impact. As mentioned earlier, there is much more investment in capturing first-party data and signals like the click-to-messaging ads format. Conversions happen on the platform and help businesses build a community and brand.