The topic of privacy remains top-of-mind in 2021. We have previously seen major privacy updates with GDPR and CCPA to name a few, and are now seeing the likes of Apple follow suit as the brand makes impactful changes to its data tracking consent on iOS14 which is likely to happen in the next month or so. Undoubtedly, this shift will leave a dent for social advertisers—specifically ones advertising on Facebook and Instagram—as the platform users will have the opportunity to ‘opt out’ of personalized ads.
So what does this mean for social advertisers navigating iOS14 and what can brands and agencies be doing to avoid the negative impact of yet another privacy update within the industry? Despite it being too soon to understand the full impact, we believe it’s vital for advertisers to prepare themselves how they can.
LinkedIn Live: Navigating the impact of iOS14
On March 9th, Skai hosted a LinkedIn Live event on this topic called Navigating the Impact of iOS14. Hosted by John Dobrowolski (General Manager Social & Apps @ Skai) and Vic Drabicky (Founder & CEO @ January Digital), the duo spoke about the upcoming—and widely publicized—impact of Apple’s move to requiring users to opt-in to advertising tracking in its IOS14 operating system.
John (JD) Dobrowolski and Vic Drabicky discussing iOS14’s upcoming tracking changes
It was a lively event as John (JD) and Vic shared their points-of-view on everything about navigating iOS14—from ad targeting, measurement, and who might be the winners and losers in the short term after Apple flips their switch.
The following are some of the snippets of this chat, but we invite you to watch the entire event to hear the full discussion for yourself.
What will be the bottom line impact of Apple’s iOS14 user tracking change to Facebook advertising?
Vic: “I’m not sure yet if this is the biggest thing to happen to our industry in a long time or just another thing that the industry says is big but isn’t material true. The more we think about it, the more we think it’s going to be a big deal. The three things we think marketers should be prepared for are:
- Expect ROI to go down
- Expect more ambiguity in results
- Expect less ability to control your spend on Facebook”
John: “We agree. There’s a lot of loss in fidelity with iOS14 users—probably about 50% of US mobile commerce. So it’s a pretty sizable impact. We are estimating that 50-70% of users are going to opt-out of Apple tracking and could result in budget shifts away from Facebook”
How might Facebook’s advertising business be impacted?
Vic: “We’re seeing the shift of really precise targeting which we’ve had over the last decade to cohort targeting and which will likely be the norm for the next decade of digital advertising. Today, Google and Facebook garner around 70% of digital ad dollars, and this change may drop that to 50%. So, in the short term there is bound to be some uncomfortableness—but this is where growth comes from. We’re excited about the change and growth this shift may bring.”
John: “This could have a leveling of the playing field impact. Even if the Facebook/Instagram’s 90% of the social spend drops down to 85%, that’s a pretty significant change.”
Vic: “The more realistic side of me says we will see change. Gradual change over the course of the year where we might see a 5% or 10% drop.”
Which aspect of Facebook’s core offering might suffer most?
John: “Facebook’s ability to do deterministic optimization is under threat. Other players like Pinterest and Snap have already been developing more probabilistic optimization measures given their data disadvantage. So, what we might see over the next several quarters is those competitors reaping some of the benefits until Facebook catches up.”
Vic: “I agree with you. No matter what, Facebook will catch up and eventually surpass the rest of the field. If you look at their history and their ability to adapt, develop, and create superior products, there is an opportunity in the short term for those competitors, but it’s only a matter of time until Facebook figures things out. I’m rooting for diversification because it generally is a really good thing for an industry. ”
John: “Diversification is healthy and often leads to innovation.”
Vic: “We advise our clients that they should be diverse—even before this iOS14 change—to mitigate the risks of having all of your eggs in one basket.”
What’s the likely impact on measurement of the iOS14 change?
Vic: “Measurement within digital has been one of the flawed areas of digital advertising. We preach precise measurement but there are so many examples where things are flawed. I hope that this change makes us rethink old constructs and how we measure. In terms of alternative solutions, our agency is leaning very heavily into incrementality measurement.”
John: “I’m really big on the growth of independent incrementality measurement. We know that big brands with armies of data scientists have been using incrementality measurement to double check their results for some time. Over the last few years, incrementality tools have come out to help brands that don’t have those data science resources to help them measure their media mix and tactics better.”
Vic: “It’s going to be interesting to see who succeeds and who doesn’t after this change. The organizations that are truly agile and can adapt their processes to measurement will have a chance to outpace their competitors very quickly. It will be a great opportunity to gain market share. Others will take months to retool their approach.”
How ready are marketers for this shift?
John: “I have to admit, I’ve been shocked at the number of marketers who are taking a wait-and-see-approach to navigating iOS14.”
Vic: “We have heard quite a few people saying they’re going to take that approach. There has been a lot of ambiguity in what’s going to happen, so they’re going to wait to see the impact and then decide what to. We don’t recommend that, but this ambiguity is definitely making some people freeze. There are many things that brands can do now from putting in new processes to educating their teams. Do we know exactly how ad performance is going to change? No. But you can start doing some things now to be more prepared. The biggest thing we’re telling folks is to begin testing and diversifying now. Don’t wait until it happens while your business is losing revenue. That’s a more stressful outcome.”
John: “Agreed. There are a few options for marketers right now to help mitigate the risks. Setting up incrementality testing as an always-on practice…connecting and augmenting first-party data to send great signals to publishers through APIs. These are things that can help to future-proof your business. Even some of the largest brands are building their own identity graphs so they aren’t so reliant on publisher data.”
Vic: “I love that some brands are willing to take that risk.”
Who could be the big winners and losers from this industry transition?
Vic: “Okay, let’s start with winners. Second-tier publishers—like Pinterest, Snapchat, and TikTok. Almost anyone outside of Google and Facebook could have an opportunity to gain market share. Another group of winners….marketers. Any time you get a chance to rethink what you’re doing in a rather “safe” environment—while the entire industry is going through the same thing—is a great opportunity for marketers and the industry to grow.”
John: “Losers? Remarketing/retargeting. Advertisers that are really dependent on retargeting individuals will find that those audiences are about to get a lot smaller and the optimization is going to get a lot more probabilistic. What do you think will happen to Facebook?”
Vic: “Marketers follow consumers where they are. Will this change make regular people use Facebook less? Not at all. So, advertisers will have less data on what those users are doing, but the audience will still be there, so marketers will still be there.”
John: “Ultimately, I think people are vastly underestimating the impact on publisher optimization. Facebook’s deterministic optimization capabilities—to show the right ad to the right person at the right time—has been their differentiation fact as an advertising channel. It’s why they have the business they do. And that is taking a significant hit, especially on Day 1 after this change.”
Social Media Technology Built for Safe Data-Driven Digital
John:GDPR, ITP, CCPA, CPRA, and iOS14/IFDA… Digital media is in the midst of a transformative shift towards protecting consumer privacy. Marketers are faced with reduced access to the kinds of data many brands have become reliant on for ad personalization and targeting on Facebook.
John:Skai Social is the only platform purpose-built to help social marketers maximize data intelligence, connect with audiences and come out on top in a privacy-safe era.
John:Contact us today to schedule a brief demo to see everything Skai Social has to offer.