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When asked if users on iPhone devices want to be tracked, the vast majority say no. This worries advertisers at Facebook Inc., who are losing access to some of their most valuable targeting data and have already seen a decrease in the effectiveness of their ads.
The new prompt from Apple Inc., which arrived in an iOS software update for iPhones in early June, explicitly asks users of each app if they are ready to be tracked throughout their internet activity. Most say no, according to Branch, who analyzes the growth of mobile apps. People only allow apps to track their behavior 25 percent of the time, Branch found, interrupting a data pipeline that has fueled the targeted advertising industry for years.
Apple’s New Application Tracking Transparency Feature
Source: Apple Inc.
“It’s been pretty devastating for the majority of advertisers, I would say,” said Eric Seufert, mobile analyst who writes the business blog Mobile Dev Memo. “The big question is, are we just seeing short-term volatility where we can expect a mean reversion, or is this a new normal? “
Facebook advertisers, in particular, noticed an impact last month. Media buyers who run Facebook ad campaigns on behalf of customers said that Facebook was no longer able to reliably see the number of sales made by its customers, so it is more difficult to determine which Facebook ads are working. . The loss of this data also impacts Facebook’s ability to show a company’s products to potential new customers. It also makes it harder to “re-target” people with ads that show users items they’ve viewed online, but may not have purchased.
A Facebook spokesperson declined to share what percentage of its users have accepted the company’s follow-up prompt, but around 75% of iPhone users worldwide have downloaded the most recent operating system, according to Branch. Seufert estimated that in the first full quarter, users see the prompt, iOS changes could reduce Facebook’s revenue by 7% if around 20% of users agree to be followed. If just 10% of users grant Facebook follow permission, revenue could drop as much as 13.6%, according to its models. The first trimester complete with the prompt is the third trimester. Facebook reports its second quarter results at the end of July.
Most retail websites include Facebook software that sends detailed customer data back to the social network, including when a Facebook user makes a purchase. Facebook can then use this data to better understand what a retailer’s target customer looks like and show that retailer’s ads to other people on Facebook who match that profile, known as a “lookalike” audience.
But as people told Facebook and other apps not to track their behavior, the social networking company began to lose access to that data. Gil David, a media buyer at Run DMG who spends around $ 1 million per month on Facebook ads for its clients, said the company knows the vast majority of its clients’ sales. Now that the data is inconsistent. With a larger customer, Facebook only captured 64% of sales. With a smaller client, only 42%.
Zach Stuck, another media marketer who runs Homestead Studio and spends millions on Facebook ads per month, has seen the same changes. Facebook captured around 95% of its customers’ sales data. In one case now, there is a 57% gap between the sales he can see on Shopify and what Facebook is reporting, he said.
Because Facebook has a smaller sample of data, an advertiser may pay to reach someone who doesn’t quite match their target audience, making ads less effective for the amount of money spent by. advertisers.
“What Facebook did right was it was able to see who bought and find that user’s buying behavior – what other websites are they visiting, what other things are they doing,” said Stuck. When it cannot see this data, Facebook cannot accurately find “other people who might be able to purchase a product similar to this.”
The absence of this sales data also makes it more difficult for Facebook to properly measure the impact of its ads, as media buyers don’t know how many sales are being generated by their marketing campaigns. Facebook was telling advertisers how many sales it had made among certain demographic cohorts – women in Texas or men 18 to 25, for example. The company has stopped sharing that level of detail, according to advertisers.
“There is no longer any source of truth at all,” said Dave Herrmann, who runs his own agency called Herrmann Digital and manages more than $ 2.5 million in monthly ad spend on Facebook. “Each platform gives you different numbers.”
A Facebook spokesperson said that ad performance for “lookalike” targeting will experience some fluctuation with the changes to iOS, but is not expected to be significantly affected in the long term.
Another key part of advertising on Facebook is “retargeting” or displaying an advertisement for a product that they may have viewed online or placed in a digital shopping cart, but didn’t. ‘never bought. When users ask Facebook to stop tracking their behavior, this form of retargeting is not possible.
Losing the ability to re-target products to customers after viewing them online but not purchasing hurts businesses trying to sell more expensive products, advertisers say, because it’s rarer for someone to make a loss. impulse buying on something expensive. Customers are more likely to make a big purchase when this expensive item appears in their Facebook News Feed for weeks after initially viewing it.
Apple has made privacy a staple of the company’s latest marketing effort around the iPhone, pushing back the digital advertising industry that has collected immense amounts of user data for years in a way that few people understood. The tagline for the company’s new iPhone TV ad is, “Choose who follows your information … and who doesn’t.” The privacy changes apply to all iPhone app developers, not just Facebook.
But the social network was protesting the loudest, arguing for months that Apple’s new privacy features would hurt small businesses that depend on targeted advertising – and make up the bulk of the company’s sales. Facebook said these businesses rely on precise targeting to find customers and may not have the advertising budget for a larger marketing campaign.
“Those primed advertisers or those who are trying to start from scratch to enter the market are going to have a lot more trouble than a venture funded company or someone who is more established,” said Maurice Rahmey, co- founder of performance marketing. company called Disruptive Digital.
A Facebook spokesperson said the company is doing a number of things to try to compensate for the changes, including working on new ad features that require less data to measure the success of an ad. The company is also investigating technology that would allow Facebook to serve personalized ads based on targeting data stored on the user’s device, meaning Facebook wouldn’t need to access it.
“Apple’s policy harms companies’ ability to use their advertising budgets effectively and efficiently, and the limitations created are due to Apple’s restrictions to their own benefit,” the spokesperson added, noting that Facebook tried to prepare advertisers with reviews, blogs and webinars. “We believe that personalized advertising and user privacy can coexist.”
While the majority of smartphone users around the world own devices running Google’s Android operating system, Apple iPhones are popular in some of the world’s most valuable advertising markets, including Facebook in the United States itself. . created its own pop-up to appear before the one required by Apple, hoping this might encourage more people to grant it permission to track their behavior. During a live audio interview on the Clubhouse app in March, CEO Mark Zuckerberg said Facebook “could even be in a stronger position” following the iOS changes if it means more companies start making sales directly in the apps from Facebook instead of sending users to a web address.
Despite the challenges, advertisers don’t seem ready to give up on Facebook just yet. But media buyers said their small customers were already starting to struggle. Some are not making enough sales to effectively leverage Facebook’s “lookalike” targeting features. Herrmann said he slowed down some of his spending on Facebook until the impact of the tracking changes became clearer. He also started to direct some of his smaller clients to different types of advertising, like paying influencers to market their products.
“I don’t think anyone really understands how many businesses in the world are 100% dependent on Facebook,” Herrmann said. “When you suddenly take that off and [Facebook ads are] 40% less efficient, and will continue to become less efficient over time, it creates a kind of panic.
Others, like David, question Apple’s privacy policy entirely.
“Small businesses are a victim,” he added. “I’m not really sure Apple fully thought about this, or they were aware of it and just thought, ‘We don’t care. This is what we do.
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