How Apple’s iOS14 Will Change Facebook Ads

Back in June at the WWDC, Apple flagged some big privacy changes were abound.

With their latest iPhone iOS 14 update, Apple has effectively kneecapped the Facebook pixel. The new policy requires apps to request permission (ie. require user opt in) to gather data for ad targeting and behaviour tracking. Knowing that most users will choose to opt out, Facebook has taken up arms with Apple in a very public way because it will mean their ability to both enable advertisers to target ads and track their performance will be severely reduced.

Here's my take on the state of play -

What's Happened

Apple has changed their new iPhone operating system iOS 14 policy - it now requires that apps (including Facebook & Instagram) show a prompt to allow a user to opt out of behavioural tracking (ie. cookies for ad retargeting), lest they be kicked out of the App Store.

This means that many users (probably the majority) will opt out of tracking when prompted. On one hand, it's a big win for privacy-focussed consumers. On the other, it's a loss for advertisers' ability to reach consumers through 'push' marketing - ie. interrupting a customer's social media feed with an ad, as opposed to 'pull' marketing where the customer is actively searching for a product.

What It Means For Facebook Ads

Facebook will need to prompt users in the iPhone app to opt in/out of tracking - for those who do opt out, it will mean:

• Targeting will be compromised - As we won’t be able to gather data on most users' behaviour on Facebook & Instagram (eg. viewing videos, clicking ads, engaging on posts), we'll have less data to accurately target ads - less personalisation, smaller retargeting audiences.

• Performance data could be broken - The tracking connection between ad click and eventual conversion will be removed for opted out users, so we won’t be able to track our ROAS as accurately as we have previously.

Considering a vast majority of Facebook & Instagram ads target users on iPhones, this could have a far reaching effect, (or rather a ’no reach’ effect), where we can gather less data, so our retargeting audiences are smaller. Smaller audiences and less conversion tracking means lower volumes of conversions and a lower/less accurate ROAS due to reduced performance tracking.

What Facebook Is Doing

It's complaining very loudly in the public domain, taking out full-page newspaper ads in the US that claim the change will severely impact small businesses. Apple has responded in the name of user privacy and increased transparency over how data is used.

It's been a tough year for Facebook, what with regulators calling to break it up due to concerns over monopolistic practices, as well as battles here in Australia over new laws which will force Facebook and Google to pay for news content. And this change is going to hurt their ads business - few are buying into their PR touting Facebook as the supporter of small business - like any tech giant, Facebook puts its own profits first, and this is where the greatest pains will be.

What is curious is the lack of impact this has had on Facebook's stock price - about 25% of the US' $40 billion advertising spend lies with them, so Facebook stands to lose up to $6 billion in annual revenue in the US alone (Forbes). Does the stock market not understand the potential impact of this?

Where's Google in all of this?

They'll be affected for sure, but they've been less vocal. Google does rely on retargeting data somewhat for Search & Shopping personalisation, and its the foundation of their Dynamic remarketing ads, but because users willingly hand over a bulk of the data that drives their ads business (search terms), they're possibly less likely to see the severity of impact that Facebook will.

I run Facebook ads. Should I freak out? 🤯

Not yet. It’s uncertain how the changes are going to roll out. By some stage early next year, Facebook will need to request iOS14 user opt ins to data tracing through Apple's new AppTrackingTransparency framework:

• They’ll only be able to use a maximum of 8 conversion events - this is fine for eCommerce, as only a few are most relevant - Video Views, Viewed Content, Add to Cart, Purchase etc; and

• Facebook is recommending advertisers complete domain verification in Business Manage which will allow advertisers greater control over how content appears. Here's how to verify your domain in Business Manager.

Where to next?

At this stage, I suspect as its ability to track data is increasingly reined in, digital advertising may start to look a lot more like TV advertising, where we may be able to target ads based on basic demographics (eg. what openly you've told Facebook like your age, gender, hometown) but not user activity - and they'll be far less traceable in terms of performance. Advertisers will need to lean more heavily on metrics like click through rates, brand recall uplift and end-revenue without the added luxury of pixel data to complete the picture.

For the digital marketer, I have to admit it's a bit disappointing - there's huge satisfaction in crafting the perfect funnel across multiple channels - however it's a natural push-pull in the era of internet AI and expanding privacy laws.

My advice for all merchants is to stay nimble - so many have been too heavily reliant on Facebook & Google ads for cut through. Explore new platforms for a more diverse range of traffic sources (advertising is a quick traffic solution - SEO, PR and organic social content often fall into lower priorities) and continuously invest in a strong customer experience (your platform), customer retention (VIP & loyalty programs) and advocacy (referrals).

As we do in digital, you roll with the punches of change!

Any other suggestions? Comment below!