Dive Brief:

• Facebook will stop allowing advertisers to target users under 18 based on their interests or activity on other sites, the company announced, among other changes aimed at protecting younger users on its suite of apps.
• Once the update goes into effect across Instagram, Facebook and Messenger in the coming weeks, advertisers will only be able to target ads to young people based on age, gender and location.
• The move will not impact user data the company collects for its own use, a Facebook spokesman told Reuters. These changes arrive just as the social media behemoth faces pushback over its plan to develop a version of Instagram for users under age 13, the platform's current age requirement.

Dive Insight:

Facebook is limiting what data it shares with brand advertisers to enhance privacy for its youngest users. The move will restrict brands to targeting ads based on only general information about users, such as age and location, likely resulting in less personalized content.

The new controls were influenced by recommendations from youth advocates who said young consumers may not be as equipped to make decisions about targeting via Facebook's settings, prompting the precautionary approach. Meanwhile, Facebook is developing an "Instagram experience for tweens" that gives parents greater transparency and controls on what young users are doing.

Several other social media giants have debuted versions of their apps for younger audiences, including Facebook's Messenger Kids and YouTube Kids. Messenger Kids doesn't show ads, and the company says it never uses children's data for advertising. YouTube Kids is ad-supported, though Facebook hasn't detailed whether its recently announced tween Instagram will show ads.

The company's interest-based ad network has been criticized by regulators for years, pushing it to diversify revenue beyond ads to include e-commerce, payment technology and mixed reality. Fresh shopping capabilities like Live Breaks for mid-roll ads and Live Shopping are expected to drive this additional revenue and make Facebook's ad inventory more valuable.

Facebook reported second-quarter earnings on Wednesday, with the industry recovery helping to raise the social media company's results past expectations. Second-quarter ad revenue grew 56% year-over-year to $28.6 billion. Despite the company's continued growth throughout the pandemic — and even as many businesses trimmed their marketing budgets — Facebook said it expects a slowdown in revenue growth for Q3 following Apple's iOS update that will limit ad targeting abilities.

Facebook's quarterly results and changes to what information it shares about younger users come after the recent, surprise exit of a key leader on the global ad sales team. Since joining the company in 2011, Carolyn Everson helped to develop Facebook's ad business into a behemoth that generated $84 billion in 2020 and made up more than a quarter of the total digital ad market.