Digital ad platforms have become a part of everyday life in the 21st century. Understanding each platform’s quirks has become a cottage industry, as advertisers try to stay up to date on best practices to improve ROAS. After all, these platforms are essential to any digital advertising campaign.
Of course, people typically need a computer or mobile phone to access social media. Over the last 20 years, Apple has fought to become the first choice in consumer hardware. The company claimed 1.4 billion active Apple devices in their 2020 Q1 report, with 900 million of those devices being iPhones. In fact, iPhones represent 45% of all smartphones in the US. The proliferation of mobile internet contributed to the growth of platforms like Facebook, who use mobile insights to inform their ad targeting.
Due to growing concerns among consumers, Apple has taken a hard-line approach to data privacy. Recently, Apple announced that the newest update to its mobile operating system will require users’ permission to track their data for advertising purposes.
This new feature, called App Tracking and Transparency, has some advertisers worried that the effectiveness of their digital advertising efforts are about to plummet.
While there’s some truth to these concerns, this update isn’t a death knell for your advertising efforts. This blog will outline the effects of these changes and suggest strategies advertisers can employ to mitigate its effects.
What is the iOS 14.5 update?
Let’s start with a close look at this update to learn how it actually impacts digital advertising.
14.5 is the latest update to the iOS operating system that powers iPhones and iPads. This update introduced a new feature called App Tracking Transparency, which requires apps to obtain a user’s permission before tracking their data on iOS systems. Consumers will be able to see their collected data and how it will be used. Every app that tracks user data will require a separate opt-in.
Apple positions this update as an improvement in privacy controls that simply provides consumers with a greater degree of transparency and control. Companies whose apps are impacted view this update as an anti-competitive business measure. The Facebook ad platform is particularly vulnerable to this update, and some advertisers fear that this update marks the beginning of the end for personalized advertising.
How does this impact Facebook advertising?
Facebook’s data ecosystem was built in part from user behavior data gathered on iOS devices. Before the 14.5 update, Facebook used an Apple feature called Identifier for Advertising, or IDFA, to track off-platform behavior like browsing data. This informs data models and improves ad targeting on Facebook. Digital advertisers rely on Facebook tracking data to create custom audiences for precise ad targeting and attribution.
As of this update, Facebook can no longer track off-platform behavior on iOS unless a user gives explicit permission. This means that Facebook loses one of its most consistent sources of targeting data.
Facebook has condemned this update in a series of public statements, claiming that the update is harmful to small businesses who rely on Facebook advertising. They also accuse Apple of disguising a profit motive as a privacy issue. However, Facebook concedes that they are required to comply with Apple’s terms.
This update has repercussions across the advertising industry. Businesses with mobile apps will have a harder time targeting their Facebook ads, and it will be more difficult to drive conversion events like page views, cart adds, checkouts, and purchases.
The Facebook pixel
The Facebook pixel is a tracking tool that advertisers can use to attribute page visits to their Facebook ad clicks. It’s an essential part of Facebook conversion strategy. However, the pixel has new limitations under the 14.5 update.
- Reporting delays of up to three days
- Removal of delivery breakdowns like age, gender, and location
- Maximum of 8 conversion events per domain
- Less reliable campaign tracking
- 7-day default click attribution for new and existing campaigns
Advertisers who rely on the Facebook pixel for attribution and tracking will need to find alternative methods of gathering data.
What is the current state of this update?
The iOS 14.5 update was released to the public on April 26, 2021 following a beta period. As of May 21st, just 6% of iPhone users have opted in to ad tracking, according to Flurry Analytics. Although this update is just rolling out, the low opt-in numbers suggest that the vast majority of iOS users in the future will not be trackable.
Facebook’s built-in tools like the Facebook Conversion API
It is possible that some consumers could grow irritated with a less personalized ad experience after opting in to iOS 14.5. Research shows that most people prefer ads tailored to their interests and shopping habits.
With that said, the general trend indicates that this change will have a broad impact on advertising personalization. Studies show that the opt-in rate for personalization ads could drop from nearly 100% to below 50%, making audience segmentation twice as difficult to accomplish. Facebook predicts that the average small business could see a 60% revenue cut from this update.
Responding to the iOS 14.5 update
Naturally, advertisers aren’t sure how to respond to this update. Part of Facebook’s strength as an ad platform is the power and sophistication of its ad targeting. Will Facebook ads still be worth the cost?
Even with these changes, digital advertising is still an essential part of your marketing strategy, and there are effective strategies you can use to mitigate the impact of this update.
Consider these approaches to help you improve conversions in the face of this update:
- Rely less on the Facebook pixel. UTMs and other tactics can help determine which campaign, ad set, and ad resulted in conversion.
- Diversify your traffic sources. Find other ways to connect with customers, like Google, Twitter, TikTok, Snapchat, or Pinterest.
- Emphasize retention. Leverage email and SMS marketing to combat rising customer acquisition costs.
- Verify your business domains. This best practice recommended by Facebook and can help you avoid future disruptions.
- Use promo codes and other tools to improve attribution. Adding promo codes to your ads can help you attribute page visits to your mobile ads.
- Focus on areas where you do have control, such as the post-click stage of the ad funnel. Personalized landing pages can improve ROI and lower CPA.
Looking to the future
We don’t know for certain what the future holds for ad personalization, particularly in the case of Apple. The company is currently embroiled in multiple lawsuits around its App Store policies. Meanwhile, Facebook’s data gathering may have reached its nadir, as consumer protection laws like GDPR gain popularity worldwide. Some lawmakers even propose breaking up Facebook and limiting the power of the platform by restructuring the company. In the emerging digital advertising age, anything is possible.
The iOS 14.5 update leaves advertisers with a question. If Facebook ad targeting isn’t as effective as it was, how can we still achieve advertising success?
The answer is to focus on the area where you have the greatest control: the post-click stage of the ad funnel. Even if mobile ad tracking is less effective, you still have a responsibility to create a compelling ad narrative that gives each of your ad groups the story they need to hear in order to convert. If you want to learn more about telling powerful ad narratives on Facebook, check out our ebook on the topic.
It’s impossible to ignore the iOS 14.5 update, but advertisers can use specific techniques to continue to build personalized ad narratives. If you want to find ways to lower your customer acquisition costs and get better returns, Instapage can help. Our team offers three different plans and pricing options to help you see real results. Schedule an Instapage demo here.