It has been hard to miss the news: Apple’s new iOS 14.5 security features now include more transparency by surfacing a tracking permission modal each time a user first opens an app. Companies that are reliant on advertiser revenue—like Facebook—are concerned that these changes will affect their ability to make money. The social media tech giant went so far as to launch a full-page ad in WSJ selling owners on the potential negative impact to small businesses running ads online.
The perceived threats to small business digital marketing are nothing new. Companies with markets in California and the European Union have already been navigating similar tracking difficulties related to the CCPA and GDPR privacy laws for some time. This is the first major impact to ad tracking by device since early ITP policies, however; neither the advertising platforms or advertisers are sure of what this means to their ad efficacy and bottom line. We know that remarketing and conversion tracking will be affected.
Remarketing—or showing ads as consumers navigate cross-platform—is a desirable tactic for advertisers because consumers rely primarily on search and social proof before considering a brand.1 However, a preliminary study suggests remarketing efforts using third-party cookie tracking only improves advertiser revenue by about 4%, corresponding to a fraction of a cent in ROAS per ad unit.2 Small businesses don’t typically don’t need or depend on campaigns that require complicated ad attribution models.
The real, major impact involves advertisers’ ability to track users cross-platform as they navigate down the sales funnel toward a conversion event (such as an ecommerce transaction). Facebook has said they would perform statistical modeling for iOS users in some cases, but campaigns running conversion-optimized modeling may cost more and might still be woefully inaccurate.
Facebook has tried to remain optimistic about user opt-in rates, often touting expectations in the 40th and 50th percentiles. The reality is, unsurprisingly, much different. Data shows that opt-in rates in the U.S. actually range between four to six percent of the total user pool.3
Suffice to say: no one wants Facebook to track them, and the only one surprised by this is Facebook.
Advertisers, on the other hand, have been preparing for these changes. Here are six approaches to consider as you refine your digital strategy and navigate the ever-changing landscape of digital media:
1. Focus on quality brand messaging
Now is the time to sharpen your brand messaging. Tighten up your market positioning by delivering on deep emotional benefits instead of perfunctory rational benefits. Craft a compelling story around your bedrock aspirational vision and purpose-driven mission; execute a messaging strategy that always ties back to your grand plan.
2. Maximize the potential of UGC
As always, user-generated content (UGC) can be your best friend when it is paired with a strong brand messaging strategy. People enjoy being a part of something they believe in. Curating UGC can increase brand awareness and keep the message alive while also reducing the burden of creating visual assets for smaller businesses that may have limited creative design options in place.
3. Segment customer lists based on seasonality and lifecycle
Make your ads more impactful by understanding the way your customer uses your product or service. Do some light market research to better understand the ebbs and flows of your post-pandemic industry. Build customer use cases and interview existing clientele to understand how to deliver the right messaging at the right time in the right place.
4. Segment your audiences by device and split your ad objectives
It is possible to split your campaigns based on operating device on Facebook and other advertiser platforms and networks. Make strong use of these features to segment your audience. For iOS users, focus more on ad objective performance such as impressions and clicks. For Android users, you can continue to optimize bidding toward business objectives such as cart conversions and lead submissions.
5. Hone in on one or two major site conversions
Pixels will be completely incapable of tracking iOS users that opt out of tracking, and pixels will only track up to eight events on a single domain*. These latest iOS updates, in conjunction with privacy laws such as the CCPA and GDPR, are making site tracking increasingly more difficult. Take an inventory of your current event tracking and pare those conversions down to the ones that truly result in a business outcome.
* The exception to this rule is if your business hosts independent sites on subdomains. The business will need to register with the Public Suffix List as an eTLD (i.e. franchisee.franchisor.com or clientname.webhost.com).
6. Expand your media mix
Try not to place all the eggs in one basket. Make sure you are distributing your advertising budget across channels appropriately. The best way to start considering your mix is to conduct a consumer survey that will help uncover the pre-sale behaviors your market segment will perform. The goal is to always strike while the iron is hot and get in front of your audience before they’ve already made up their minds.
So while Facebook flops and writhes like a fish out of water, don’t buy into the doom. You are going to be okay. Your business will survive. You will find new best practices and new opportunities. Breathe and be amazing.
“Will Facebook go paid if no one opts in?” Probably not. Facebook has projected a 2% - 7% impairment in ad revenue from the iOS 14.5 tracking prevention which correlates to about 6 billion USD (assuming Facebook meets or exceeds the 86 billion USD in revenue it made in 2020). I informally polled people if they would pay for their access to Facebook and unanimously people said ‘no.’ Facebook hates losing out on potential ad revenue, but it hates shooting itself in the foot even more.
“Should I stop buying Facebook Ads?” I still think ad-buying is an effective way for businesses to reach customer segments on Facebook, so I wouldn’t pull ads on the expectation that iOS changes will crush performance. Strategic segmentation and testing may help you navigate around some of the performance challenges, but you’ll only know whether it makes sense to pull ads after a few passes. Ads may actually become cheaper for small businesses as larger ones scale back on spending due to reduced attribution modeling, but only time will tell.
“Is there a way to circumvent the iOS 14.5 AppTrackingTransparency framework?” Probably, but don’t go searching for it and don’t try it. That’s a great way to land yourself in “Facebook jail” and “Apple jail” too.
DataReportal. (2021). Primary channels for brand research. April 2021 Snapshot, 170. https://datareportal.com/
Marotta, V., Abhishek, V., & Acquisti, A. (2019). Online tracking and publishers’ revenues: an empirical analysis. The 2019 Workshop on the Economics of Information Security. https://weis2019.econinfosec.org/wp-content/uploads/sites/6/2019/05/WEIS_2019_paper_38.pdf
Laziuk, E. (2021, Apr. 29). Daily iOS 14.5 Opt-in Rate. Flurry Analytics. https://www.flurry.com/blog/ios-14-5-opt-in-rate-att-restricted-app-tracking-transparency-worldwide-us-daily-latest-update/