If you’re a DTC merchant that spends a good chunk of your marketing budget on Facebook, you’re not alone. You’re also not alone if you gasped in horror at the news of the upcoming Apple iOS 14 update and how it may impact your return on ad spend (ROAS) numbers and your bottom line. It’s certainly a wake-up call. But one that has actually been a pretty long time coming.
Fortunately, there are some immediate steps you can take to figure out how to continue to analyze your Facebook ad performance and mitigate the impact to marketing on Facebook, Google, Snapchat and other platforms. There also are some changes you should consider making in the longer term to ensure you continue to have the data you need to cost-effectively reach and convert new customers.
Data privacy will continue to challenge marketers
It has been convenient to rely on social media platforms and search engines like Facebook and Google to collect data, segment customers, optimize and run targeted ads. Now with the Apple iOS 14 changes, to continue to stay competitive, DTC brands will have to more rapidly diversify their marketing channels, own their own data and learn how to leverage it and run targeted digital advertising.
Apple’s iOS 14 update is a symptom of a larger trend towards increased data privacy that’s been picking up speed since the EU’s General Data Protection Regulation (GDPR) in 2018 and the California Consumer Privacy Act (CCPA) in 2020, which allow consumers to opt-in or opt-out of the sale or use of their personal data. In addition, browsers like Safari and Firefox have standard features for ad-blocking and anti-tracking, and Chrome says it will block third-party cookies by 2022.
How will the Apple iOS 14 update affect your marketing?
The Apple iOS 14 update to privacy settings requires users to opt in to tracking when an app is first launched, giving apps permission to use Apple’s unique, persistent device identifier, the “Identifier for Advertisers” (IDFA), which tracks users across apps and websites and is used to target and personalize advertising.
Fewer people who opt in to tracking means reduced data, which means ad targeting will be less effective, fewer conversions will be tracked, and ROAS will appear lower.
The update will have a huge impact on platforms like Facebook, Snapchat and Pinterest and search engines like Google in terms of their ability to track users, conversion events and serve up targeted ads. It also will constrain marketers’ ability to do attribution analysis.
What does the opt-in feature look like? Called “App Tracking Transparency (ATT),” it will manifest as a pop-up on apps, asking the user for permission to track their activity. In response, Facebook is testing its own pop-ups that would appear before the Apple ATT pop-up to explain how allowing Facebook to track user activity will benefit consumers by providing more personalized ads and offers, and support businesses that rely on Facebook ads.
Google says it will not use Apple’s IDFA for its iOS apps and so won’t have to show the ATT prompt.
What you should do today
Stay calm! But brands should definitely move quickly to follow recommendations from Facebook on how to mitigate the impact so you can continue to analyze Facebook ad performance. These include four key actions:
- Implement the Facebook Conversions API: This allows you to send events and data from your server to Facebook’s server; Facebook can use the data along with pixel events for reporting and ad optimization.
- Verify your domain in Facebook Business Manager: You’ve probably done this before. What’s different now is that the domain verification needs to be done at the effective top level domain plus one (eTLD+1).
- Pre-select and rank Facebook conversion events: Facebook is recommending that you identify and rank eight conversion events most critical to your business for Facebook to use for campaign optimization, using its Aggregated Event Measurement.
- Establish benchmarks for 7-day click attribution window: To help you better understand how your numbers will be affected when the 28-day attribution window goes away, you may want to benchmark how many conversions Facebook typically reports after the 7-day click window.
What you should do today to prepare for tomorrow
Brands will need to get more hands-on with their data tracking. There are several approaches to take that will help set you up to roll with future changes and restrictions connected with increased data privacy.
Diversify your sources of data for attribution
You don’t want to rely strictly on Facebook telling you customers are coming from Facebook. You’ll find if you rely solely on vendor-reported information, those numbers are going to get worse due to privacy features. Instead, you’ll need to depend more on first-party data and zero-party data and data coming from a variety of sources. For example, a simple way to assign identifiers to channels is to use discount codes for sales offered through different channels. For example, you could tag a promotion with “FB30” when giving a discount on Facebook versus using a general “SHOP30” for your website.
Do your own tracking
Going forward, brands will need to capture customer data and conversion events on their own websites instead of relying on Facebook to capture them. For Facebook specifically, these data and events are sent from your server via the Facebook Conversions API to Facebook’s server for ad optimization and reporting.
In addition to on-site tracking, using post-purchase customer surveys (“How did you hear about us?”) can provide another data point (zero-party data) for more accurate understanding of attribution and what platforms are most effective for your brand. For a good user experience, add the survey to the order confirmation page where it won’t feel intrusive, can be made highly visible, and can also capture other information like “Why did you purchase from us?” or “How can we improve your experience?”
Create a single source of truth
Although you’ve likely always been taking platform data with a grain of salt (e.g., you may see that Facebook-attributed sales are higher than actual sales in Shopify), it will become even more important to have a way to compare and calibrate the numbers to provide a more accurate “single source of truth” to guide your business. Using a data analytics platform is critical for providing this centralized data tracking, as well as for comparing performance, e.g., ROAS and CPA (cost per acquisition) or CPO (cost per order), across platforms.
Shift focus to customer retention
As you build your business, you may be laser-focused on customer acquisition. As you grow, at some point, it’s just as important to consider how to optimize customer retention via different strategies and channels that increase repeat purchases (e.g., email marketing, upselling/cross selling, optimizing customer service, etc.).
Repeat customers ultimately can generate a significant amount of revenue for your brand, more cost-effectively -- it typically can cost up to seven times more to acquire new customers compared to retaining and growing existing customers’ lifetime value (Neil Patel). You’ll need to work to find the right mix between customer acquisition and retention and can make the shift over time; when you’re ready, maybe start with a 90-10 or 80-20 budget split.
Change is the only constant
Brands have always had to adapt their marketing strategies, and we’ve weathered changes like this before. A good example is when Gmail rolled out its Promotions tab in 2013 and the expectation was email marketing Armageddon. What actually happened was that consumers adapted their behaviors and email open rates remained essentially the same as before the rollout (Return Path).
Will platforms like Facebook move to a similar model, with separate news, personal and promotions streams? We’ll have to wait and see. In the meantime, diversifying – and using an analytics platform like Daasity to track and analyze it all – will help you more accurately understand your marketing performance and where to find your best customers despite new data privacy rules and features.