The only two sectors that benefitted from Apple’s iOS14 update

Update: 03/02/22 — Meta stock lost $200bn of value pre-market this morning after poor quarterly earnings. Want to find the root of this? Take a look at Apple.

Early in 2021, Apple released the iOS14 update. It plagued almost every business that advertises on the internet. I’ve spoken to dozens of founders over the last six months, and almost all have flagged this update as one of the significant impacters on their business last year.

I wanted something with a little more flesh on it than anecdote, and so created a survey.

Here are the results — and as a newsletter subscriber, you’re getting them first.

How has iOS 14 affected digital advertising?

Background

Apple’s privacy-focused change in 2021 has stopped the vast majority of users sharing data with third parties. “Privacy” as Apple angled it is one of those great political wedges. “Do you want more privacy?” Find me someone who will say no.

The question is unfair. It doesn’t take into account context, or value, or exchange. And it ignores second-order effects.

But in essence, that’s how Apple worded it. And interestingly, its own privacy measures didn’t apply to its own advertising — which critics have already pointed out.

The second-order effect I’m concerned with is what that means to businesses who rely on the Meta network to advertise their products — and importantly, who are affected the most.

My survey

I asked 35 companies for views in a survey. As well as asking what sector the brands worked in, I asked how spend had been affected on Meta since the changes, and where that budget had gone.

The results reinforce what I learnt through the founder conversations.

The 35 companies accounted for £13.8m of monthly spend on the Meta platform (majority all in UK), which as far as I can tell is about 1% of all UK Meta revenue.

So while there are only 35 companies surveyed here, this represents a reasonable amount of spend.

The results of the survey

~1% of all UK Meta spend was accounted for in this survey.

78% decreased their budgets after iOS 14.

If you were lucky enough not to, the average budget increase was 58%.

This means that spend has been concentrated to a smaller group of advertisers with more ability to deploy budgets.

But are these changes evenly distributed? And what is the biggest indicator of how iOS 14 impacted you?

How your spend bracket affected your ability to respond to iOS 14

This for me is the biggest second-order effect of Apple’s privacy changes. The smaller brands, with smaller advertising budgets were disproportionately hit.

If you were spending between £50–100k per month before the changes, your budgets have on average dropped 48% since.

Meanwhile, those spending between £100–250k per month have been able to push 9% growth out of their budgets.

The bigger spenders haven’t suffered in the way that smaller players have done.

How does sector impact growth?

Note here that these are a mixture of self-reported and grouped where possible by myself. Some anonymous results simply said DTC.

More so than spend bracket, the sector seems to have substantial difference.

There were three agencies surveyed, and each reported big budget increases.

Outside of agency land, fashion was the clear sector winner.

There are losses everywhere, broadly speaking DTC products took a battering.

This has implications for go-to-market strategy amongst DTC brands, as well for investors when choosing where to aim their bets.

Where did the budget go?

78% of companies pulled budget out of the Meta network. There’s no single replacement of where that spend went.

Almost every advertiser has split their budget across multiple other channels instead of just one core channel.

The years of a brand starting from 0 and getting big just from Facebook seem to be over.

One thing is for certain, Meta, and smaller advertisers have lost out.

What people said

Finally, we asked for any additional comments. The trend is clear.

Almost everyone mentioned a variation of attribution causing harm.

How did people deal with this? Those with bigger budgets built their own tools. Those with smaller ones have switched to less visibility, a blended model, and ultimately less spend overall.

Final thoughts

I’ve long loved the Meta platform. It’s where I discover most of the new brands I buy from. The targeting has always meant highly relevant products for me. And I’ve been able to buy from smaller, newer, more innovative, and artisanal producers.

Meta has long allowed advertisers to reach audiences that they previously wouldn’t have been able to.

One of the greatest joys of technology is its democratising nature. It puts into the hands of the many that which was previously in the hands of the few.

Meta was part of that. It created entrepreneurs out of and for the many.

Entrepreneurs are scrappy, optimistic, problem-solving people. They will find a way to start businesses in a post-iOS14 world but if you ask me Apple has made it that big bit harder for them.

For those still focusing on Meta advertising, utilising creative as well as possible is still the best way to succeed — and the reason I’ve started adreview.club.

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