Social media giant Facebook is warning every one of darker days ahead as it prepares to confront significant difficulties in 2021, particularly as regards its ad-targeting methods and revenue.
The fourth-quarter earnings report of Facebook is enough to elicit a wide grin on the faces of investors but the social media giant is warning everyone of difficult times ahead. In the "CFO outlook" section of its quarterly earnings release, Facebook took on a more somber note as it reveals it is preparing to face "significant advertising headwinds" in 2021, particularly as regards the social media giant's ad targeting practices and revenue in general.
Facebook predicts 'significant' obstacles to ad targeting and revenue in 2021 https://t.co/ODaO4gQnZj by @anthonyha — TechCrunch (@TechCrunch) January 27, 2021
In what many see as a gloomy forecast for 2021, Facebook explained how Apple's iOS 14 privacy changes can affect the future of the social media giant. "This includes the impact of platform changes, notably iOS 14, as well as the evolving regulatory landscape. While the timing of the iOS 14 changes remains uncertain, we would expect to see an impact beginning late in the first quarter," Facebook said in its CFO outlook section. The social media giant revealed the iOS changes adversely impacts its ad-targeting methods and could affect their revenues.
A Desperate Campaign
When Apple announced its upcoming privacy changes, Facebook immediately went up in arms to wage a desperate campaign against the decision of the Cupertino tech giant. The social media network relies heavily on targeted advertising for revenues and having apps to ask first for the consent of users to track them for ad purposes would negatively affect Facebook in a huge way. In the end, the social media giant cannot do anything except to accept Apple's new policies and prepare itself for a gloomy period marked by difficulties in ad targeting and a potentially huge decrease in revenues.
Facebook, though, saw opportunities brought about by two broad economic trends that the social media network may benefit from, namely, the continuing shift towards the online marketplace and the "the shift in consumer demand towards products and away from services." While these two trends might give the social media a thin ray of hope amid the ad targeting and revenue difficulties that could result from iOS 14 changes, Facebook cautioned investors that "a moderation or reversal in one or both of these trends could serve as a headwind to our advertising revenue growth."
A Strong Finish
In its fourth-quarter earnings report, Facebook earned $28.1 billion in revenue, $27.2 billion of which came from ads, with earnings of $3.88 per share. The social media giant also revealed its daily active users as of the fourth quarter reached 1.84 billion with monthly active users hitting 2.80 billion. With these positive results, industry observers find it hard to see how small iOS 14 could change elicit such a gloomy prediction for 2021, particularly as regards Facebook's perceived difficulties with its ad targeting and revenues.
