$1 Billion in Local Ad Spending Up for Grabs

BIA forecasts that marketers will spend $85.2 billion on digital ads targeting local consumers. Over half of this was forecast to go Google (35.3 percent) and Facebook (17.4 percent). However, on last month’s earnings call, Meta announced that due to the impact of Apple’s new privacy policy effective with the release of iOS 14.5, it expects to generate $10 billion less in ad sales.

BIA estimates that this translates to more than $1 billion that would have gone to Facebook ads in 2022 that will now be spent somewhere else. This creates a sizeable opportunity for local media platforms.

What’s going on is that Apple changed its privacy policy with the release of iOS 14.5 almost a year ago. Its new Application Tracking Transparency (ATT) privacy rules require users to opt-in instead of opting-out of sharing their data that advertisers can use for targeting.

Estimates vary, but as many as 80 percent of iOS users (iPhones, iPads) have not opted-in and thus without being tracked they become much less targetable by advertisers used to granular audience segments defined in Meta’s ad platforms Facebook and Instagram. That makes advertising less efficient and more expensive to acquire new business.

A recent Wall Street Journal article (and podcast), Facebook’s $10 Billion Exodus, provided an insightful case study of a small business owner who used Facebook ads and paid in the range of $4 – $14 per customer acquired. This was very cost effective. However, the impact of Apple’s ATT policy meant essentially that 80 percent of Facebook impressions had less user data for targeting. Rather than delivering ads to a focused audience segment, ads were delivered with more waste to a broader Facebook user base. This drove the customer acquisition cost to well over $100.