The positive impact of Meta’s latest announcement to introduce ad-free subscription services in the EU
Facebook and Instagram are set to offer a paid-for, ad-free subscription and it could be a good thing, here’s why.
The update came yesterday 30th October, Meta said they “will offer people in the EU, EEA and Switzerland the choice to pay a monthly subscription to use Facebook and Instagram without any ads. They can alternatively continue to use these services for free while seeing ads that are relevant to them.”
This update has come due to “ever evolving changes in European regulations” in order to not see any ads, a user must pay “€9.99/month on the web or €12.99/month on iOS and Android”.
This could be seen as another source of income for the platform; however, we see this has Meta giving the consumer the choice, receive relevant ads or pay to not receive any.
The phrase “relevant” is important, because users are targeted because they are likely to engage and take action on the ads they see, which is why they see them. In fact, the subscription element ensures consent to be targeted which we think will be a huge benefit to navigating EU regulations and ensuring more “in market” users are in the targeting pot. If someone wants to pay to not see an advert, they’re likely not “in market” or going to convert anyway.
In reality, we believe the uptake will be quite low: ads have been a part of our experience since 2007 and have become apart of our experience. We learn about new products and services and our results show MoM that the audiences do in fact have high intent.
For most advertisers it is the size of the budget they are willing to spend which limits the reach of their activity; the removal of a small proportion of users from this pot will likely have a negligible impact on ad performance.
This change is the latest in a series of freemium models announced by the larger global tech businesses, including Netflix and more recently Disney+. For Meta it comes at a surprising time: following famous lawsuits brought by Austrian privacy activist Max Schrems, previous concerns around data privacy and the status of the US (where Meta’s servers are located) as an “inadequate” territory for the purposes of the GDPR are seemingly well on their way to being resolved after the agreement of a new EU-US data bridge this summer. Which begs the question: why now? It may be that Meta are anticipating further challenges around US data privacy legislation; that they had already started down this road before the new privacy framework was agreed; or perhaps just that this new model offers greater certainty for them and a commercial alternative that they may well roll out in other territories in future.
The long-term impact will be consistently monitored, and any further updates shared with our clients. If you do have any questions, you can contact Helena Taylor our Paid Social Lead.