Summary.
The rollout of Apple’s new privacy settings is upending the rules of digital advertising on the iOS platform. By limiting advertisers’ ability to track user behavior, Apple is forcing them to adapt to a new paradigm — and fast. As other tech companies may soon follow suit, this disruption is an opportunity for advertisers to prepare for the coming era. They should embrace new privacy preserving approaches; know that privacy workarounds are a short-term strategy at best; transition away from user-centric models; invest in better understanding their audience; and use ad creativity as a way of differentiating themselves from rivals.
Apple is turning the privacy settings of its mobile ecosystem upside down. When it releases its app tracking transparency (ATT) framework with iOS 14.5 on April 26, it will shut off a stream of data that app developers, measurement companies, and advertisers have used to link users’ behavior across apps and mobile websites — a move that could reshape the digital advertising industry. With the update, the “identifier for advertisers” (IDFA), which has been activated by default on Apple devices and provides access to user-level data to app publishers, will be switched off and users will need to grant apps explicit permission to access it. With in-app prompts asking users, “Allow [app name] to track your activity across other companies’ apps and websites?” opt-in rates will likely be low.
We anticipate that Apple’s ATT initiative will deliver a major blow to targeted advertising, which is crucial to the business models of publishers of online content such as Facebook, Google, and many news outlets. But while large digital content providers will feel the effects of ATT, the large proprietary datasets they’ve amassed may protect them in the long term. Smaller companies, such as e-commerce operations that rely on targeted advertising to reach customers, and mobile measurement providers, which collect and organize app data, will likely find it harder going — a point Facebook has tried to bring home in a campaign responding to Apple’s policy changes.
Through the rollout of ATT, Apple is re-imagining the role that advertising plays within its ecosystem. The move will allow the company to more tightly control users’ app experiences and content curation. It will also allow Apple to push adoption of its own target advertising solution — its in-house ad tracking services use friendlier language than what is required of third-party apps and it recently introduced new ad spots on the App Store. Establishing itself as a leader in privacy can serve to strengthen its brand and have lasting positive effects on its hardware sales to boot.
While ATT might be the most impactful change to the digital advertising ecosystem to date, more restrictions around user privacy are in the offing. Developments such as private click measurement (PCM), Google’s Federated Learning of Cohorts (FLoC), the end of third-party cookies in Chrome, and governmental privacy regulations such as GDPR and CCPA all point to a new privacy-centric era on the horizon. That means that advertisers and advertising firms need to learn how to play by a new set of rules — and fast. Here’s a primer on how you can be prepared to navigate the changes.
What ATT Changes
Apple’s new approach to privacy presents a clear problem for advertisers who rely on targeted advertising — in other words, most digital advertisers — in that it will make it much harder to meaningfully link user behavior across apps and mobile websites in the iOS ecosystem. Depending on opt-in rates (which, again, are expected to be low), this presents a major challenge for advertising targeting algorithms that achieve their current good performance by observing not only what ads users view and click on, but also who then proceeds to take relevant actions on the website or in the app of the advertiser.
Overall, ATT can be expected to make ads substantially less relevant for consumers and to make them perform substantially less well for advertisers — except for ads delivered by Apple’s own personalized ads system. It also reduces the precision of advertising measurement across iOS apps and mobile websites. Many industry insiders expect Google to make a similar change in the Android ecosystem at some point in the future, effectively rendering digital advertising less relevant across the board and its measurement much less granular and precise.* These changes in the digital measurement landscape roll back some of the innovations that became possible through digitization, namely precise measurement through user-level attribution and advertising experiments.
To aid advertisers in navigating the limitation in data availability introduced by ATT, Apple is offering a measurement solution called SKAdNetwork (SKAN) that makes performance data available at the campaign level. However, not only is there a limit on the number of available campaign slots per advertiser, SKAN also adds a random time delay on the observation of performance events such as purchases or cart-adds and restricts how and how many of such events can be observed per campaign.
SKAN falls within the sphere of differential privacy, an approach to marketing measurement that uses statistical methods to make it impossible to infer any individual user’s behavior while still allowing linking of behavior across different digital properties. Differential privacy is likely to become more prevalent. Other tech companies, such as Google, are investing significantly into such technologies as well but there may be a long way to go before wide acceptance and adoption as a new privacy-safe measurement approach.
In the meantime, more traditional measurement solutions that are privacy-safe by default will likely stand to gain in relevance. For example, marketing mix models (MMMs) were developed on and for aggregate advertising and sales data observed over time and do not require any linking of lower-level tracking data. They make use of natural variation in a firm’s marketing mix or, where possible, of explicitly induced randomization over time and/or geographies to measure advertising effects. Bearing testament to the likely renaissance of MMMs in marketing measurement, Facebook published an open-source computational package that allows advertisers to implement MMMs in a guided manner.
How You Can Adapt
So what should advertisers and advertising firms do? We believe that internalizing the following strategic viewpoints can help businesses navigate this changing privacy landscape.
1) Embrace privacy preservation methodologies like differential privacy (Apple) and federated learning (Google). These are the primary means by which large platforms are ushering in new privacy protections for consumers — firms that are planning ahead should build advertising technology that aligns with them.
When privacy policy changes, the biggest pain point for advertisers is infrastructure upgrades. This sea change should be seen as an opportunity to invest in new and innovative technologies that not only comply with platform regulations but do so in a way that is forward looking. New restraints on the data that can be used for measurement and analysis can create competitive advantage in moments of dramatic change, when competitors are reticent to invest or adapt.
2) Understand that workarounds to new privacy regulations are not a viable, long-term solution. It may seem relatively cheap or straightforward to build solutions that preserve advertising workflows and measurement schemas by sneakily contravening platform policies — using device fingerprinting or server-to-server conversion management — but taking this approach merely delays the inevitable pain of adaptation. A firm should make investments into real solutions, not gimmicks that exploit loopholes or are predicated on rules not being fully enforced, especially since the privacy landscape is currently mostly dictated by large platforms that mostly operate according to their own rules.
3) Transition advertising measurement away from deterministic, user-centric models. Instead, use more holistic, macro-level models that look at variations in ad spend and revenue over time to attribute efficiency to channel-specific ad campaigns. This approach requires sophisticated data-science expertise, and these types of models can be difficult to tune properly, but a measurement solution that relies on statistical sophistication is more robust and durable than one that relies on the precision of user identity. Tools like MMMs not only provide insight from data that is readily available and affirmable such as revenue and ad spend, but they also allow for traditional advertising channels such as television and out-of-home to be included in the advertising media mix and accommodated for in measurement.
4) Deepen your understanding of your audience and rely less on niche products. The products that suffer most in the loss of the identifier-based advertising targeting are those that target niche audiences and depend on very high rates of monetization participation, or very extreme levels of monetization from a small segment of the customer base. Building a more broadly appealing product is a strategy for overcoming the degradation of advertising effectiveness: The more people that are receptive to your product, the less targeted your ads must be in order to reach customers.
5) Get more creative and use it as a means of differentiation. Absent the targeting capabilities that are unlocked with device identifiers and behavioral histories, advertisers can focus on ad creative as a way to increase the reception their ads receive with potential customers. Novel, creative, and attractive ads can’t fully replace the efficiency lost in digital advertising from the deprecation of advertising identifiers, but it can help to reach the most relevant segment of an audience by penetrating through generic, nondescript advertising from competitors. With precision targeting largely removed from the advertiser’s toolbox, ad creative can be used as a way to stand out to the most appropriate portions of the broader audiences to which ads will be exposed.
Apple’s ATT framework may be the most economically impactful and brazen change to privacy policy in years. It won’t be the only one, however. As this step is likely the start of a new era rather than an outlier event, we recommend using the opportunity to brush up on privacy technologies such as differential privacy and federated learning and to sustainably revamp your marketing measurement toolkit.
*Correction: An earlier version of this article stated that Google had announced a similar move in the Android ecosystem. Google has not publicly announced this change.
Curated Content Written by
It’s official. It’s happening. And it will affect how we use Facebook ads.
Content by Madis Birk
Apple’s three new app policies are expected to take full effect soon. Well, nothing to be surprised about here. The digital ads ecosystem is very dynamic and keeps changing. Whether it’s new government regulations or tech company policies, changes have occurred in the past, and will most likely happen again in the future.
But for now, let’s discuss the current changes that are going to occur due to the iOS 14.5 update. Apple announced that most likely from March 2021, it will provide users with an opt-in prompt on each app which will allow them to choose whether they consent to third-party sites like Facebook to track their user data.
In this article, we are going to discuss how Apple’s new policies will affect Facebook advertisers. And if you scroll all the way to the end, you will also find several expert strategies to ensure that you survive this latest update.
Here are some changes you should expect soon:
1. Changes in App Advertising
In May 2018, Apple introduced a concept called the ‘SKAdNetwork’ API. One of the main reasons behind coming up with this concept was to increase the privacy of users who installed mobile apps.
Well, now that it’s 2021, and the SKAdNetwork API is no longer just a concept. It’s a reality that will affect the way you use Facebook Ads.
Going forward, the SKAdNetwork API will be used by Facebook for app advertising on all iOS 14 devices, and this will either restrict, aggregate, or delay all app event data.
For example, when it comes to campaign management, event data will be restricted to a maximum of nine campaigns and five ad sets per campaign for every Facebook Ads account.
Furthermore, lift measurement will be unavailable for iOS 14 App Install and App Events campaigns.
And last but not least, reporting of events will be delayed for up to three days after an app is installed.
2. Changes in Mobile Web Advertising
The SKAdNetwork API is not the only new creation of Apple that will affect advertisers. Apple has also created the PCM (Private Click Measurement) protocol for web attribution. This protocol will strongly contribute to restricting data that businesses and platforms can access.
Let’s understand PCM with an example.
Suppose an iOS 14 user is served an ad on Instagram and is taken to a web browser to complete a purchase. Now, because of PCM, this event would be lost and not properly attributed.
Tracking users in a different geographical location will also be a challenge. For example, if a user in Spain is served an ad for a US-based company, but is then redirected to the local version of the website based on their location, the purchase would not be properly tracked.
Rest assured, Facebook will release the Aggregated Event Management tool to counter this problem. This tool will help in proper attribution of sales if an event similar to the ones mentioned above occurs.
3. Optimization and Targeting
With iOS 14.5, there will be an eight-pixel event cap per domain for optimization. This means that an advertiser will only be able to use a maximum of eight conversion events per domain for optimization.
So, if you’re an advertiser, you will need to prioritize the eight events that are of most importance to you. One thing to note here is that the eight-event cap is only capping the number of events you can optimize towards. However, you may still track more events for reporting and audience creation.
In short, the new iOS update may hinder optimization, especially if there are not enough data points. This is probably not very good news for small-scale advertisers who do not have many data points as compared to the big players. Also, as more and more people update their operating system to iOS 14.5, the size of retargeting audiences will also shrink over time.
4. Measurement
The new default attribution window will make measurement a bit complicated as it will contribute to under-reporting on organic as well as paid channels. You should also expect an increase in dark social traffic. (If you cannot recall what ‘dark social’ is, it’s when people privately share content on social media which makes it harder to track. Dark traffic has always been there, but the new iOS update might contribute to its increment.)
When it comes to ad reporting data, there will be a three-day delay on data display for the data that comes from iOS 14.5 users. This is because of Apple’s PCM (Private Click Measurement) protocol. As explained above, PCM can restrict and delay data access.
Limited data could make running ads a little inconvenient to advertisers. For example, clients will only be able to see a few reported conversions, and sadly, the conversion event breakdowns would not even exist.
5. Business Manager Tool Setup
This section is short and simple, yet very important. The Facebook Business Manager interface will have a change in design. This needs to be done because Facebook cannot have a separate interface for Android and iOS.
It’s likely not going to be rocket science and advertisers will get used to the new changes in the Facebook Business Manager interface easily. For instance, things might move from Ads Manager settings to campaign level, or maybe, from Ads Manager to Event Manager.
How to Prepare for the iOS 14.5 Update in a Proactive Way
Actions to take now
Action 1: Verify your domains with Facebook
When you verify your domains with Facebook, this means that you’re officially set up on the platform.
There are several ways of verifying domains with Facebook. You could add a DNS TXT entry to your DNS record and confirm that you are the owner of a particular domain. You could also upload a Facebook-provided HTML file to your web directory to do this.
Adding a meta tag to the <head> section of your domain home page is also an easy way to verify domains.
Action 2: Decide which eight events for conversions you’ll track
Because of the new limit, you will have to choose the eight events you want to use to track conversions, then rank them in the Events Manager. Remember, just like domain verification, this needs to be done by the pixel owner, not the partner.
Check out Facebook’s official overview of “events” and this guide on how to decide which events to track.
Action 3: Compare the relationship between 28-day to 7-day attribution
You should calculate the impact that the attribution window change will have on your business before Facebook removes 28-day attribution. Since the reporting will change to 7-day post click and 1-day post view, you will need to keep an account of the sales that occur from days 8 to 28.
Source: Facebook
Here are some more detailed instructions on adding comparing windows to show view and click attribution.
Miscellaneous actions
You should proactively evaluate the impact of targeting and optimization changes on your campaigns. Also, make sure that the Auto-Advanced Matching is turned on in Events Manager.
Finally, to understand the true impact of Facebook and Instagram ads on your sales funnel, you should install a post-purchase attribution survey tool, like Prove It Post-Purchase Surveys. This will help you collect data and feedback from customers voluntarily—without relying on cookies.
Actions to take later
Action 1: Focus on strategic alliances with innovative data products
You should use products like ‘clean rooms’, which provide advertisers with privacy and safe access to data with events tied to various user IDs for ID management. Some examples of these products include, but are not limited to, Google Ads Data Hub, Facebook Advanced Analytics, Adobe Experience Platform, and Amazon Marketing Cloud.
Action 2: Find alternatives to cookie tracking
If you’re a marketing partner, you can still facilitate retargeting by using any number of user-specific identifiers to target individuals, such as email addresses, phone numbers, etc.
In order to increase the volume of persistent IDs, you should encourage site login through improved authenticated experiences or by offering incentives to consumers for logging in.
Action 3: Develop “value exchange” strategies
As explained briefly in the previous point, you could offer incentives to customers for sharing their data through “value exchange” strategies. This is a great way to increase a brand’s first-party data.
An Accenture survey from 2019 found that 71% of the 8,000 surveyees believed that the brand had communicated in a way that was too personal. However, a whopping 93% said that it’s important that every interaction they have with the brand should be excellent.
To offer excellent experiences, brands need to dig deep into their consumers’ psyche—and a lot of data is required to truly understand your customers. So, use value exchange strategies to collect data and use it to your advantage.
Miscellaneous actions
To survive the new changes, you should make data governance a top priority.
In order to do this, you must ensure that the data collected and stored has proper user consent, and can be appropriately leveraged for media execution purposes.
You should also implement Conversions API to ensure that the events are passed back to Facebook directly from the server—not just from the pixel.
If you use Shopify, you should set up the Facebook Sales Channel App. It is very easy to set up. Simply connect your Facebook account and watch all your products sync automatically. This will make it convenient for you to promote them on Facebook or Instagram.
What Industry Experts Have to Say
“This will have the biggest negative impact on one particular type of movie release, that being the cinema release. A conversion for a movie ticket is in most cases a cross-device conversion as an effect of the complex value chain of the movie industry. This, combined with the ticket being accessible to purchase in a limited timeframe will ultimately result in fewer conversions for theatrical releases whilst continuing on a trend the industry has seen in the last couple of years; more and more movies will be watched online.”
– Nikolaj Mathies, CEO at Gruvi US
Effect on the promotion of SaaS via FB Ads
“Facebook ads is one of the best channels to drive new customers for SaaS companies and the iOS14.5 update isn’t going to change that. What will change however is the ease at which you can expect to report back on the direct impact of your ads. Continue to focus on your fundamentals like improving your creatives, messaging, and overall marketing funnel. Accept that you’ll have a little less precision with your in-platform reporting and make sure you’re always using UTM tagging so that you can still track everything easily in Google Analytics.”
– Dylan Hey, CEO at Hey Digital
Effect on the promotion of real estate via FB Ads
“The changes push the real estate industry to adapt and find new strategies once again. It will be difficult to rely less on the Facebook Pixel for retargeting and ad measurement but there will still be many ways to use the platform efficiently.”
– Zachary Dulla, CEO at Indoor Drone Tours
Effect on the promotion of e-commerce products via FB Ads
“Since the CTA is rather cold of the prompt Apple is sending to IOS14 devices, we’re expecting a rather high opt-out ratio. In conclusion, side-server tracking will become the most important third source for facebook to gather their aggregated data events. Social media channels, such as Facebook, will therefore need to work towards eROAS, which are an estimated ROAS, instead of actual data proven ROAS. Facebook Ads will temporarily have lower ROAS for eCommerce until their algorithm is up to speed with eROAS.”
– Ricardo Ghekiere, Head of Paid Social at Upthrust
Take Stock of how iOS 14.5 affects your brand and be proactive
Ultimately, the iOS 14.5 updates are going to change a lot about how you track the performance of your Facebook ads—but not all is lost. Brands who adapt to different ways of collecting feedback—and stop relying on cookies to tell them everything—will be ahead of the curve.
Madis Birk is an independent Facebook Ads Consultant. A lean, mean, growth-focused Facebook advertising plug-in to your existing A-team. A digital marketing expert integrable into your winning strategy. If you want to get in touch with Madis, you can find him by going to www.madisbirk.com.
Content written by: Madis Birk
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