Social Media

Snap Blames Revenue Hit on iOS Ad Tracking Changes

Snap crossed $1 billion in revenue for the first time, added 13 million daily users, and doubled submissions to Spotlight, its relatively new TikTok rival. But it has also run into a serious problem: Apple’s ad tracking changes, which have already led to millions in lost ad dollars.

Jeremi Gorman, Snap’s chief business officer, said in remarks, “We grappled with industry changes to the way advertising is targeted, optimized, and measured on iOS that created a more significant impact on our business than we had expected.”

The company missed its revenue target by $3 million in the third quarter, largely because of Apple’s changes, Snap announced this afternoon. That’s not a huge miss on its own, but Snap expects the impact to continue next quarter and says its revenue growth will slow meaningfully as a result.

In April, Apple released an update to iOS that required all users to proactively opt in to ad tracking across apps and websites which, no surprise, a lot of people didn’t want to do. That’s made it harder for apps and advertisers to tell when their ads are working, from exactly how they’re being seen to whether they’re actually resulting in purchases.

Snap had been hopeful that it wouldn’t be hit by the changes too badly. “I think we prepared it the best that we can,” Gorman said last quarter. But today’s remarks are filled with references to the changes and their impact. CEO Evan Spiegel said Snap’s ad business was “disrupted” by the changes and that Apple’s alternative ad tools “did not scale as we had expected.”

These earnings may be a preview of the week to come. Twitter and Facebook report earnings next week, and they’re likely to get hit by the changes, too. In Facebook’s case, the impact will likely be much worse given its historical reliance on the kind of tracking that Apple’s prompt cuts off.

Across the board, ad-driven companies will have to figure out a solution to what’s proving to be a seismic shift: the old way of measuring ads is no longer effective on one of the biggest platforms in the world. They’ll either have to figure out new ways of making money or new ways of proving that their ads actually work.

Snap, for its part, is trying to move past the iOS changes by developing its own alternative tools for advertisers. But its own tool, called Advanced Conversations, “will take time to be fully adopted,” the company warned.

LEAVE A RESPONSE

Your email address will not be published. Required fields are marked *