Tthe management team of Facebook (NASDAQ: FB) – soon known as the Meta – was right to predict a major headwind of changes Apple (NASDAQ: AAPL) recently made to its mobile operating system. The social media giant’s advertising revenue declined in the fiscal third quarter, as millions of users opted out of tracking services, making the platform less effective for marketers.
But Facebook is doing a good job bypassing these issues and finding other areas that are raised by the changes. Let’s take a look at some of the main reasons why Apple’s new focus on privacy won’t derail Facebook’s growth targets in 2021 or beyond.
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Declining ad effectiveness doesn’t hurt as much when growth is strong, and Facebook excels here. Daily active users jumped to 1.93 billion in the third quarter, from 1.82 billion a year earlier. The company now has 2.8 billion people using at least one of its services (Facebook, Instagram, Messenger and WhatsApp) in a day, up from 2.5 billion last year.
This incredible commitment has helped protect ad revenue even as Facebook experienced lower ad effectiveness and greater difficulty with ad tracking, thanks to Apple’s platform changes. Average revenue per user remained stable around the world at around $ 10 and declined only slightly in the US market, to $ 52.34 from $ 53.01 in the previous quarter.
Making the most of a bad situation
Apple iOS changes are also helping Facebook push its own e-commerce solutions further. The Marketplace service is a small step in that direction, but CEO Mark Zuckerberg and his team believe they will have a much bigger platform over time – with a big step forward coming this holiday season.
“Building a full-fledged trading platform is a multi-year journey,” Zuckerberg said on a conference call with Wall Street analysts. The Shops platform, which allows direct payment on Facebook or Instagram, is getting new features and extended promotions in Q4, which should help advertisers offset some of Apple’s tracking changes.
Without a doubt, Facebook shareholders would prefer the company not to endure the challenges of Apple’s new posture on privacy. His initiatives will not solve them entirely, companies could continue to look to other platforms and advertising. growth could be slower in the next few quarters.
But so far, the company isn’t seeing much profit. Facebook’s efforts have kept the financial impact at a modest level during the past quarter. And the business is tackling the weakness. “As we and our advertisers continue to feel the effects of these [iOS] changes, ”said COO Sheryl Sandberg,“ we will continue to work hard to mitigate them. ”
Meanwhile, as people spend more time on Instagram and the News Feed, it’s getting easier for Facebook to argue that most advertisers need to be on its apps. And so, despite recent negative headlines in the news, Facebook still has a long expansion track ahead in 2022 and beyond. This means the digital advertising industry is more attractive than ever to the social media leader, even after Apple has shaken it up.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of its CEO, Mark Zuckerberg, is a member of the board of directors of The Motley Fool. Demitri Kalogeropoulos owns shares of Apple and Facebook. The Motley Fool owns shares and recommends Apple and Facebook. The Motley Fool recommends the following options: March 2023 long calls at $ 120 on Apple and March 2023 short calls at $ 130 on Apple. The Motley Fool has a disclosure policy.
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