Facebook has warned Audience Network advertisers that coming updates to user privacy settings as part of iOS 14, which is set to be rolled out by Apple next month, will severely impact the effectiveness of their ads, and may render the option completely ineffective in some instances.

As explained by Facebook:

"For developers and publishers using Audience Network, our ability to deliver targeted ads on iOS 14 will be limited. As a result, some iOS 14 users may not see any ads from Audience Network, while others may still see ads from us, but they'll be less relevant. Because of advertisers’ reduced ability to accurately target and measure their campaigns, app developers and publishers should expect lower CPMs on Audience Network and likely other ad networks on iOS."

The specific change that Facebook's referring to is the update to Apple's Identifier for Advertisers (IDFA). IDFA enables app owners to track individual user data within apps - the tracker cloaks a users' personal information, but still provides data on in-app activity, like actions taken in the app, acquisition chains, etc.

Users have always been able to opt-out of IDFA tracking, but the settings for such are not readily accessible, and require some digging to find. The update to iOS 14 will make IDFA opt-in instead, which will see many users switching off the tracking option.

Here's a sample screenshot of the new IDFA warning pop-up:

That, as Facebook notes, will have significant impacts for all app developers and companies that gather usage data, which, in the case of Audience Network, could be a devastating blow, especially for effective targeting.

And Facebook is certainly anticipating major effects:

"While it’s difficult to quantify the impact to publishers and developers at this point with so many unknowns, in testing we’ve seen more than a 50% drop in Audience Network publisher revenue when personalization was removed from mobile ad install campaigns. In reality, the impact to Audience Network on iOS 14 may be much more, so we are working on short-and long-term strategies to support publishers through these changes."

How much Facebook will feel that impact, in a revenue sense, is also hard to quantify - back in 2017, Facebook reported that over one billion people were being served Audience Network ads every month. That said, according to a report from Digiday earlier this year, Audience Network "likely represents only a very small slice of Facebook’s overall $70.7 billion in revenue for the fiscal year that ended on Dec. 31 2019."

That report examined Facebook's decision to shut down the mobile web arm of Audience Network due to changes in data tracking being implemented within web browsers.

The iOS 14 update could force further limitations within the Audience Network offering, as Facebook notes:

"We know this may severely impact publishers’ ability to monetize through Audience Network on iOS 14, and, despite our best efforts, may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14 in the future."

Overall, the revenue impacts for Facebook may not be significant, but the data tracking implications, and impacts for Audience Network advertisers, will be big. If you're using Facebook's Audience Network, you need to be aware of these changes, and you may need to re-evaluate your approach. 

The change also raises more questions about the power that Apple wields over the global mobile marketplace.

The most recent public battle on this front is being lead by Epic Games, which is taking on Apple over its 30% cut on in-app purchases made within its massively popular Fortnite game. Epic has defied Apple's rules on this, which has seen Fortnite banned from the App Store. Epic is now planning to challenge Apple's rule in court, which could eventually lead to a new approach from the tech giant.

But that won't change the ruling on IDFA within iOS 14, which is related to Apple's ongoing push for increased transparency and control over personal data tracking. 

Facebook says that it will release an updated version of its Audience Network SDK to support iOS 14, while it will continue to seek new ways to assist advertisers impacted by the change.

"We understand that iOS 14 will hurt many of our developers and publishers at an already difficult time for businesses. We work with more than 19,000 developers and publishers from around the globe and in 2019 we paid out billions of dollars. Many of these are small businesses that depend on ads to support their livelihood."

In short, Audience Network ads are about to get a lot less effective. And right now, there's not much Facebook can do to stop it.