Apple’s data restrictions on iPhones have stumped Snapchat, leading the camera app company to acknowledge that it is having a harder time serving advertisers, which is a trend popping up across the digital ad industry.
On Thursday, Snapchat CEO Evan Spiegel offered some perspective on what Apple’s privacy changes have meant for the company as it reported its third-quarter results.
“Our advertising business was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple in June and July,” Spiegel said in prepared remarks following the financial report. “While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS.”
Snapchat's Apple outlook spooked investors and advertisers, as the camera app company's stock dropped almost 25% in after-hours trading on the financial report.
Snapchat still reported rising revenue and audiences. Snapchat generated $1 billion in revenue in the third quarter, which was up 57% from the same period a year prior. But the revenue fell short of Wall Street analyst expectations. Its 306 million daily users in the third quarter represented a year-over-year increase of 23%.
All year, advertisers have been worried about Apple since the iPhone-maker updated iOS software, limiting the collection of data on consumers. Apple implemented an App Tracking Transparency framework, which allowed people to opt out of sharing data across apps and websites. It’s unclear what the exact opt-out rate is for every app, but the assumption is most consumers decline tracking. When they do, it makes it more difficult for apps like Snapchat to follow a consumer from an ad on their app to a marketer’s website. Without that line of sight, Snapchat and others can’t track when an ad led to a conversion like a download or a sale.
The digital ad industry has been warning about how Apple’s changes would negatively affect the normal flow of business. Facebook has been making a series of changes to its apps to account for Apple’s war on targeted advertising — which some people call “surveillance” advertising.
On Wednesday, Facebook told advertisers more details about its roadmap to move to more “privacy-enhanced” versions of ad targeting and measurement.