- In 2022, US advertisers will spend $58.11 billion on Facebook ads, up 15.5% YoY.
- Facebook’s net ad revenues are still growing, but iOS-related headwinds have lowered our growth estimates for the coming years.
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Facebook is the #2 digital ad seller in the US, after Google. Its net advertising revenues will grow strongly this year amid rising ad prices, with Instagram steadily growing its majority share of those revenues.
However, Apple’s rollout of its iOS 14.5 update has created significant challenges for many Facebook advertisers in recent months. Marketers are adapting to changes in how they target audiences, measure and attribute performance, and optimize their campaigns on Facebook in response.
Apple’s iOS privacy changes will dampen Facebook ad spending growth
Since late 2020, Facebook and Apple have been locked in a battle over two paradoxical values: consumers’ desire for privacy and personalized experiences.
On April 26, 2021, Apple’s AppTracking Transparency (ATT) framework went into effect with the rollout of its iOS 14.5 update. Under ATT, all apps distributed through the App Store must show a prompt to users requesting them to opt in to allow advertisers to track them across other sites or apps. Users must opt in for their Identifier for Advertisers (IDFA), Apple’s mobile device identifier, to be shared.
As a result, Facebook no longer receives information about off-platform actions taken by Facebook and Instagram app users if they’ve opted out of tracking on devices that use iOS 14.5 or higher. For Facebook, data loss includes user-level data posted back from IDFAs as well as the Facebook pixel, the piece of tracking code placed on websites users access on mobile web browsers.
Facebook advertising revenue growth in 2022
Despite Apple’s iOS privacy changes, we estimate that US advertisers will spend $58.11 billion on Facebook advertising in 2022, up 15.5% from last year. Insider Intelligence’s growth estimate is driven primarily by rising ad prices. Facebook CPMs—the cost per thousand impressions—have increased significantly over the past year as digital ad spending has resurged and advertisers have flocked to the platform, driving more competition into programmatic auctions.
Ad spending growth on Facebook will slow to 12.2% next year due to headwinds related to Apple’s privacy changes and their impacts on the efficiency and measurement of Facebook ads. We expect that some advertisers most affected by these changes, particularly mobile app developers or ecommerce retailers, will pull back slightly as they test alternative digital channels.
Facebook advertising trends 2022
Several advertisers described interest in diversifying their channel mix in a concerted effort to find advertising efficiencies and reduce their reliance on Facebook. But we expect this activity is largely experimental, and even additive, so diversification is unlikely to significantly alter advertisers’ commitment to Facebook.
Facebook still benefits from its dominance during a period of intense marketplace change. These changes are concurrent and include the gradual adoption of iOS 14.5 since late April, the pandemic recovery, seasonal spending increases, and recent supply chain disruptions that have affected some categories more than others. That’s made it harder for advertisers to pin ads performance declines on a sole factor this year. Some advertisers—especially major brands—may be reluctant to make large budget shifts until they can isolate variables and have a clearer view of their impact on advertising.
Instagram advertising revenue growth in 2022
Instagram continues to grow faster than core Facebook. Last year, Instagram overtook Facebook for its share of total net ad revenue in the US, 52.6%. Its share will increase to 60.9% by 2023.
In-feed ads on Instagram make up the bulk of advertiser spend, with only 26.4% of Instagram spend going to Stories this year. But Instagram Stories ad spending is growing faster than Feed and will gain a couple percentage points in share over the next two years, reaching 26.7% by 2023. We estimate that Stories will contribute $11.43 billion to Instagram net worldwide ad revenues in 2021, up 65.6% YoY.
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Facebook advertising forecast 2022
Several advertisers described interest in diversifying their channel mix in a concerted effort to find advertising efficiencies and reduce their reliance on Facebook. But we expect this activity is largely experimental, and even additive, so diversification is unlikely to significantly alter advertisers’ commitment to Facebook.
Advertisers are pursuing strategies that depend on first-party data, including bringing their own customer data into Facebook and relying more on Facebook’s own user engagement data. Aligning creative messaging to specific audiences will also become more powerful as a lever for ad personalization.
Still, Facebook benefits from its dominance during a period of intense marketplace change. These changes are concurrent and include pandemic recovery, seasonal spending increases, and recent supply chain disruptions that have affected some categories more than others. That’s made it harder for advertisers to pin ads performance declines on a sole factor this year. Some advertisers—especially major brands—may be reluctant to make large budget shifts until they can isolate variables and have a clearer view of their impact on advertising.
