— iOS14.5 — Last year around the beginning of the fourth quarter Apple announced that it will limit the ability for third-party apps to track the consumers’ activity across websites and therefore also the performance of their advertising networks for the privacy of Apple users.
Table of contents
Introduction
If Apple actually made this move with the consumers in mind and not to gain an advantage for their own just launched advertising platform is questionable, however, either way online advertisers worldwide feared the sky was falling.
Throughout this article we will mostly focus on Facebook’s advertising platform, since this is the paid social advertising platform that has the most advertisers and the biggest reach worldwide.
Advertisers feared that the performance of Facebook & online advertising will decline and that they won’t be able to run successful marketing campaigns anymore.
Now almost six months after the update was launched, we can take our first learning of this update and the effect it has and will have on Facebook & paid social advertising.
What is the iOS14.5 update?
Before we dive into how the iOS14.5 update affects Facebook & paid social advertising, let’s first clarify what this update is all about.
With rising data-privacy concerns, Apple introduced its AppTrackingTransparency (ATT) which aims to give consumers more control over their personal data & how advertisers can use this information.
Put simply: Apple gives consumers now the ability to “opt-out” of the tracking of third party platforms like Facebook, Instagram or Snapchat.
What are the possible consequences for Facebook & paid social advertising due to this update?
In the simplest form if a user opts out of the ATT: an off-app action, like a purchase or an add to cart, is not mapped back to an in-app action anymore, like a user clicking your ad to get to your website.
So, in the beginning… online advertisers worldwide were afraid that the sky was falling & the holy customer acquisition machine called Facebook’s advertising platform is “broken” now, because Facebook’s advertising platform & its AI performs off of data.
Meaning, if Facebook & other social platforms have only a limited ability to actually track their consumer heuristics, their algorithms can not work at scale & run the risk of not performing that well.
You can essentially divide the possible consequences into three different categories that are being affected by the update:
- Reporting
- Attribution
- Optimisation
Attribution:
Since, as soon as somebody opts out of Apple’s ATT, Facebook is not able to track his activity across different websites anymore, Facebook therefore is also not able to properly attribute its clicks anymore.
Meaning Facebook is unable to fully track website actions, like add to carts, initiate checkouts or ultimately purchases that have been made by traffic that comes from your Facebook or other paid social advertising ads like TikTok or Snapchat.
Reporting:
Since Facebook & similar social networks like Snapchat therefore have a more difficult time to actually attribute the clicks that come from your advertisements, they also have a more difficult time to actually report back the performance of your marketing campaigns back to you.
Meaning your reports within your ads manager will be skewed and not represent the actual performance of your marketing campaigns.
This does not only lead to less transparency in your marketing campaigns, but also huge potential downside for the optimization of your marketing campaigns.
Optimisation:
This point can actually be divided into two points, because the optimisation of your ads is affected by iOS14.5 in two different ways:
- Lack of transparency within the ads manager & therefor also the inability to properly re-distribute your marketing efforts
- Lack of data which affects the algorithm’s ability to efficiently deliver your ads
What consequences have we noticed since the update hit?
Before the update hit, a lot of rumors & different opinions emerged from “No, this is not going to have any effect” to “Facebook advertising is dead”.
Now, after six months it’s the first time we actually can evaluate the impact of this update based on our real time campaigns here at VictoryMedia.
And it’s good news… However, the first couple of months felt as if we were on the Titanic. Our ad accounts were tanking and our ROAS went down by about 60%. We thought that we had a serious problem, until we noticed that the actual revenues and other funnel metrics apart from purchases & add to carts actually did not change very much.
Metrics like CPMs, CTRs or other on-platform metrics stayed the same for the same distribution of traffic. Meaning, we were reaching the same people at the same cost with the same performance.
The only drop-off that we saw within our ads manager was conversion rate. However, after taking a look at the back-end of the client’s Shopify reports and Google Analytics we could verify that there was no significant decrease in conversions or engagement.
Meaning, fortunately, our problem was the reporting and proper attribution of our traffic rather than a decrease in performance which was good news, because now we could start building a solution for this problem.
What to do in order to cope with this problem?
There are thousand-and-one things that you could do to proactively counteract the attribution & reporting issues that have been caused by the iOS14.5 update, however, for now let’s focus on the following three:
- Improve creative performance
- Use UTM parameters
- Use directional metrics like: new customer revenue or MER
1. Creative performance
For advertisers and business owners that have been in the game long enough, they know that creative is what moves the needle. Plus, at least for us here at VictoryMedia we evaluate all our creative based on on-platform metrics.
Meaning, those metrics are not affected by the iOS14.5 update & the likelihood of them ever being affected is marginal. Therefore, focus on the performance of your creative & improving this, since it will automatically lead to a better performance of your campaigns & more people in the top of the funnel.
2. Use UTM parameters
You might be saying: “Well, how do I know that I get the “right” clicks when I’m improving my creative performance”. Here, UTM parameters will be your new best friend. We have to acknowledge the reality that the times where you could track your consumer behavior within your ads dashboard are gone. You need to analyse your traffic channels a lot more with the help of Google analytics.
UTM trackers are not only great to track your general campaigns’ performance, but also analyse how your particular traffic actually behaves on-site. Meaning, what pages are they clicking? What buttons? How long do they stay on the site?
3. Directional metrics like new customer revenues are key
The days of being able to properly attribute every penny to one ad creative are gone. However, we have directional metrics that can give us a clear picture whether our marketing performance is increasing or decreasing.
Two metrics that we often use for our accounts here are: Marketing Efficiency Ratio (MER) and new customer revenue.
MER: Especially for brands that have less diversified traffic channels and are below $5M in annual revenue this works pretty well. Essentially you just divide your total revenue/ total advertising costs & see whether this number also known as blended ROAS is on KPI or not.
For more sophisticated brands that have numerous different channels this, however, might be a less attractive metric.
New customer revenue: Ultimately, this is what we want to achieve with our marketing campaign. It doesn’t matter whether it’s paid social or Google PPC: The goal is to acquire new customers.
Use those metrics to give you a direction whether your paid social marketing efforts are worthwhile or whether you need to adjust your direction.
Conclusion
iOS14.5 has a significant impact on how we need to advertise on social media platforms like Facebook & Co.. However, this is just the process of a maturing industry.
Digital marketing & eCommerce is not the wild-western anymore that it once was in 2017. Everyday new regulations are established to regulate this market & protect its consumers.
iOS14.5 was one of them & you as a company or marketer have to adapt to this. As always, adapt or die.
However, as mentioned previously, there has not been a negative impact on the performance of paid social advertising especially in regards to Facebook Ads.
This is the bright side – optimisation and delivery is largely unaffected until now.
The hurdle that we have to overcome is an attribution problem.
Having this in mind: Facebook will improve this, we are probably in the valley of all of this right now & with time Facebook will figure out more solutions to give us guidance in those uncharted waters. However, I doubt that we will ever be able to come back to the point of full transparency.
But in those times we just have to think back & put this whole problem into perspective. The icons of advertising, the actual mad men like David Ogilvy or Claude Hopkins, didn’t have access to any of the metrics that we have today.
They probably would have killed somebody to see how many people actually clicked through their ads or know how many people looked at their ads for more than a couple of seconds.
They had none of those metrics, but still they were able to run some of the most successful advertising campaigns ever made & build some of the largest advertising agencies worldwide.
So, before you condemn paid social advertising as “dead” or use this as an excuse on why you are not able to hit your quarterly numbers, make sure to implement those tips and see the situation from another perspective.
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