The latest in the tug-of-war between consumer privacy and effective digital advertising pits Apple against Facebook, Google, and others. At stake for ad tech: significant revenue for ad publishers and app developers, effective ad results for advertisers, and more relevant ads for consumers. At stake for users: consumer privacy protection, the use of their behavioral data for marketing, and possibly – the future of “free” software. Apple’s pending release of iOS 14 is a strong consumer-privacy-first stance and a potential disruption to digital marketing as we know it. But what is the real impact for targeted digital advertising?
What is Changing?
In a nutshell, Apple devices running iOS 14 will now require explicit user opt-in to allow apps to track behaviors across sites using the Identifier for Advertising, or IDFA. The IDFA ties a unique, random number to a user’s device, allowing advertisers and data companies to evaluate ad interactions on an aggregated basis. Blocking user tracking by third parties has already been a staple for privacy-first browsers for some time (Apple’s own Safari, Chromium-based Brave, the Tor browser, and others), and has been offered as an opt-out model within mobile operating systems, as well. However, the shift to a more aggressive opt-in model is expected to be disruptive to app ad targeting and attribution.
Impacts on the the Facebook Ad Platform
Consumer Behavior Data
By losing access to information that links consumer behavior across experiences (apps, websites, etc.), Facebook and other ad networks will have less visibility into user actions outside of their own properties. This downturn in insights may decrease targeting effectiveness in aggregate over time.
Without distinct information about potential consumers, networks like Facebook must rely on non-personalized information when determining to whom to serve an ad. On iOS 14 apps and devices, consumers can expect their ads to be less personalized, and advertisers can expect the impact to be far lower as a result.
Attribution & Optimization
Not only is it difficult to determine who an ad is served to, Facebook algorithms will be blind to the impact of the ad, diminishing the ability to understand how many clicks resulted in installs or other conversions. Losing visibility into specific consumers who viewed the ad makes it far more difficult to determine which converted users saw the ad.
Specific Impacts for Facebook Advertisers
This may seem obvious, but this is (currently) only expected to impact consumers on iOS 14. While Apple is a dominant player in mobile devices in the U.S. (58.78% in the US versus Android’s 41.03%), they are less dominant worldwide (24.82% versus Android’s 74.6%). Is this a precedent that could expand, with broader adoption of Apple’s opt-in approach, or will we see networks maintain status quo with the opt-out standards already implemented by companies like Google and Microsoft? Only time will tell.
Third-party Placements (via Facebook’s Audience Network)
Facebook uses its Audience Network (FAN) to provide advertising placement into non-Facebook properties. These ads are commonly served in apps and games, and are particularly effective because Facebook knows far more about a consumer than the app developer does, giving them an opportunity to target ads and attribute from where positive results originate. Some of the biggest changes to iOS 14 target app access to consumers’ IDFA, requiring an opt-in to use. Advertisers expect this to negatively impact Facebook’s ad effectiveness and behavior tracking in third-party platforms. Based on their tests, Facebook expects a 50% decrease in ad revenue due to a reduced ability to personalize and target ads. This seems to be the leading Facebook risk, and may become so ineffective as to be discontinued.
App Install Objectives
App installs, a type of conversion objective optimization, are reliant on a signal from a consumer device that the desired app has been installed (and possibly opened). This is expected to be significantly hindered for iOS app installs, driving attribution and targeting effectiveness downward. Facebook is asking developers to use a new version of the Facebook SDK to support the new Apple SKAdNetwork API, and also to create a dedicated iOS 14 ad account for these ad campaigns.
Lower Immediate Impact (or None)
Advertisers using Facebook’s First-party Placements
The bulk of Facebook’s advertisers today use Facebook’s first-party placements, which include Facebook, Instagram, Messenger, Marketplace. These placements reach consumers wherever they spend time on the Facebook platform: in-app or in-browser, mobile or desktop, and benefit from full targeting, attribution, and optimization as before. The only exception is for app install objectives.
Facebook continues to invest in methods to improve advertising and conversion signal resiliency. Some of these, including the ability for businesses to provide external conversion data (such as business transaction matching), or server-side (rather than client-side) signals for consumer behavior, are unaffected by these changes. These require businesses to share first-party business data (activity, conversions) directly with Facebook for attribution and optimization. Using these within campaigns and to create custom and lookalike audiences remain very powerful tools for effective marketing.
At the same time, there is a looming specter of broader governmental regulations, following in the steps of GDPR and CCPA, which look to take a stance on consumer privacy and the use or sale of this data for advertising (or other means). Legislation is being considered or implemented in many U.S. states (Maine, Massachusetts, New Hampshire, New York, and many more) and in other countries like India.
iOS 14 changes the game for monetizing in-app ad placements with their opt-in-required updates for tracking. App-centric campaigns (by objective or placement) are hardest hit, with tests showing a 50% revenue hit as targeting, attribution, and optimization become severely limited. Other first-party campaigns on Facebook’s platform should expect no immediate impact. The trend toward more consumer privacy is clear in products and legislation; what remains to be seen is whether the industry will embrace a new opt-in standard or stand by the current opt-out model
As a preferred Facebook Marketing Partner, Tiger Pistol is committed to helping our clients and their stakeholders navigate changes like these. Contact us today.
Bob Govia is Director of Product Management at Tiger Pistol.