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iOS Impact on Social Media Advertising

By: Elisabeth Butler

In the past, social media applications such as Facebook, Instagram, Twitter, etc. have been able to collect data from users through use of targeted advertisements based on one’s interests, shown either through their app or other sources, like Safari. However, recently, there has been a change in this effective means of revenue.

Facebook parent company, Meta Platforms Inc., has reported their first major decline in company quarterly revenue, showing that it has gone down almost 1% from a year earlier. For essentially its whole existence, Meta has been on a steady increase of revenue, making this the company’s first quarterly sales drop from the year previous. Not only Meta, but other platforms have lost their usual, stable quarterly revenue. For instance, Google parent company, Alphabet Inc., announced that it experienced the slowest rate of growth since the second quarter of 2020 and Twitter also reported a decline in revenue.

What is causing this significant social media economic downturn? The answer to this directly relates to the idea of targeted advertisements. Without social media apps access to a user’s browsing history amongst the applications of one’s device, these companies are unable to track an individual’s interests, therefore fail to target ads towards the user. This is exactly what is happening, which is mainly due to Apple’s new iOS update that eliminates cookies from being acquired for privacy reasons. Furthermore, the iPhone now gives its users the opportunity to choose whether advertisers could track them; the vast majority of these users choose to opt out of being tracked, with only 24% of the worldwide iPhone population allowing such cookie collecting.

Nonetheless, Meta is a platform that relies heavily on targeted advertising by means of cookie tracking, but now that this has been taken away from them, they are suffering. As Apple is eating into their profit, Chief Operating Officer Sheryl Sandberg of Meta has stated that they plan to continue business by doing more with less data. The company will use more products such as click-to-message ads, which opens a chat to a business that a user may be interested in, and also will be focusing more on the metaverse, what they call “the next generation of the internet.” Additionally, this will allow for a lower budget on Meta’s end, as they are using fewer resources and executing more work within the company itself, thereby refraining from long-term investments for the next year.

Given the circumstances, Meta’s attempt in bouncing back from iOS’s cookie removal is missing one factor that can turn their company around for the better, as well as for all other social media platforms. This component refers to the high level of involvement of content creators on social media.

With influencers and athletes at the media’s fingertips, the businesses that these platforms are striving to communicate to their users can be conveyed simply through means of content creators. Such media inspirers are habitually more than happy to partner with brands, even multiple at once. Amidst a major rise in influencers as the generation perpetuates in social media, any brand can be recognized and surface through a limitless amount of users’ pages. This would allow the platform to reach the correct audience for a given influencer’s brand deal, leading to more engagement and, therefore, provide the platform with more user data. Though such partnerships already take place, perhaps social media apps will begin taking advantage of the constantly emerging content creators and could motivate such deals, which is exactly where Distinction comes into play. In fact, recently, companies are lowering social media advertising budgets and becoming more focused on increasing influencer marketing budgets.

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