- Apple’s imminent privacy changes will upend app advertising.
- These changes could especially impact direct-to-consumer advertisers, specifically with measurement.
- Many expect brands to go back to old-school advertising techniques.
- Visit the Business section of Insider for more stories.
Apple’s looming privacy changes are about to upend digital advertising.
The controls are expected to take effect in March and will require app developers to ask users for permission before tracking them using Apple’s Identifier for Advertisers (IDFA). They’re expected to dent advertisers’ ability to pinpoint ads at people and see if they’re working.
“This is our industry’s equivalent of Y2K,” said Doug Rozen, CEO of Dentsu Media Americas.
One big concern for advertisers is how Apple’s policy will limit campaign measurement and attribution on Facebook, with measurement startup Measured’s chief technology officer Madan Bharadwaj calling it “a huge blow to measurement.” While these changes impact the whole mobile app ecosystem, many advertisers rely on Facebook and its massive Audience Network to run and personalize ads on its own platform and other third-party apps.
Facebook said it would shutter conversion lift studies in a blog post published last week. Such studies use test and control groups to measure incremental returns on ad campaigns and gauge people’s propensity to buy their products after seeing ads on the platform, and have been widely used in recent years by a range of advertisers including Dick’s Sporting Goods and eBay.
With these lift tests going away, some buyers said that they expect the industry to go back to older measurement techniques like geo matched-market testing, where advertisers would test TV campaigns by comparing results from ads in one geographical market to another similar market where the TV campaign wasn’t aired. One media buyer, who wasn’t authorized to speak publicly, said that Facebook was running a beta test for such a tool.
“It’s like going back to the ‘Mad Men’ era,” Bharadwaj said. “It’s not the most high-quality approach, but you can automate it a lot more today.”
For others, measurement getting less granular isn’t necessarily bad. Andrew Richardson, SVP of analytics and marketing science at performance marketing agency Tinuiti, said the IDFA changes would lead advertisers to opt for approaches like media-mix modeling and use insights from a variety of sources rather than one platform like Facebook.
Facebook, for its part, said that it had started informing advertisers about the impacts to conversion lift and giving them guidance to prepare for the changes.
The changes are also expected to hurt Facebook’s own business, the company said. IDFAs going away could wipe off as much as 7% — or $5 billion — of Facebook’s total revenue in the second quarter of 2021, according to mobile consultant Eric Seufert. The company also has a new ad campaign touting how it helps small businesses personalize their advertising.
Apple’s changes could especially hurt DTC advertisers
Buyers said that they were preparing advertisers for the impact by encouraging them to beef up on their first-party data. Some brands have been getting increasingly creative with gathering first-party data as Apple, along with Google, clamp down on ad targeting and privacy regulations loom. Google said this week that it would no longer track individual users as they browse the web as part of its move to eliminate third-party cookies that are used to target digital ads.
It’s unknown how many Apple users will opt out of being tracked when given the choice. More than 50% of mobile marketers surveyed by mobile attribution provider AppsFlyer and MMA Global in September 2020 expected at least a 50% reduction in the availability of IDFAs to them once the changes take effect.
The impact could be particularly devastating for a subset of advertisers, including DTC and other direct response advertisers that rely heavily on the Facebook ad ecosystem for performance marketing and user acquisition, ad buyers told Insider. Dating app Bumble, for example, warned of how Apple’s changes could hamper its business. Facebook itself relies on such advertisers for the bulk of its advertising revenue.
“Performance-driven brands that have built their entire user acquisition engines on the back of Facebook measurement and attribution are on edge,” said Measured’s Bharadwaj. “Brand advertising, where you throw half a million dollars on a campaign and can’t measure everything as granularly, is just not the type of advertising that they can afford to do.”
If people don’t opt in, targeting and tracking them across media channels including Facebook will get harder, making it more difficult to measure how ads work on the platform, said Simon Poulton, VP of digital intelligence at digital ad agency WPromote. This may prompt small businesses that make up the bulk of Facebook’s advertisers to cut spending in the short term, hurting their growth, he said.
“When you’re dealing with million-dollar budgets, some targeting efficiency losses hurt, but you are more resilient to explore new targeting techniques,” he said. “But smaller brands typically have much smaller budgets, and may not be able to maintain investment levels if they aren’t seeing the returns.”
