Retargeted advertising—connecting with consumers who previously visited your website or mobile app—is one of the most obvious ways digital data is used to power internet ads, but recent privacy updates to Apple have put them in danger, and the companies that live to retarget are trying to figure out what to do next.

Constellation Agency, a marketing technology agency, is one of those companies. “You actually have lost all retargeting capabilities,” says Diana Lee, CEO and co-founder of Constellation Agency.

At least, the old way of retargeting is over, Lee says. The classic retargeting tactics relied on the old infrastructure of the internet, like device IDs and cookies, which are increasingly being phased out by Apple and Google. Brands used to be able to build persistent profiles on consumers based on what they did on their websites, and then hit them with ads elsewhere online for the same clothes or groceries they just browsed.

With that method losing its effectiveness, Constellation has tapped into one of the workarounds by promoting “immersive” ads on Facebook and Instagram that let consumers interact with products directly in the ad unit, as if they were a brand’s own website, thereby collecting the same data to retarget ads.

“People believe in digital retailing on a website,” Lee says, “but with the ‘cookieless’ future and iOS 14 changes, interest data from websites are going away.”

In April, Apple implemented anti-tracking policies in an iPhone iOS 14 software update, which forced apps to ask users to track their device activity. If users opt out, then the apps do not get access to what’s known as the Apple Identifier for Advertisers, which is a code associated with each device that is used by ad tech companies like Constellation Agencies to target, retarget and measure the effectiveness of ads.

There has not been any official number released from Apple or major apps like Facebook that confirm exactly how many users agree to be tracked, but Lee and others say the opt-in rate is exceedingly low. (Lee cites widely accepted industry stats from Flurry Analytics in May that claimed that 96% of people opt-out of tracking, though there have been multiple reports that offer varying degrees of consent, and every app has a different rate of consent.)

What is clear is that advertisers large and small are having more difficulty targeting ads; and there are fewer conversions where consumers take actions on those ads, like making a purchase or downloading a game.

Facebook is one of the sites where the effect on advertisers is most pronounced. Facebook is so large, with more than 10 million advertisers using its automated ad manager system, that any changes are more visible.

Jesse Pujji, co-founder of Ampush, a marketing technology platform, is one of those Facebook advertising specialists who is feeling the effects of Apple’s new rules.

In a recent Twitter thread, Pujji presented a hypothetical scenario about a consumer on Facebook, he called “Sara.” “Before iOS 14.5+, Facebook could track ‘Sara’ from her clicks on an ad to her specific activity on a brand’s site, store this data, and continue to collect, building up a database on Sara’s patterns. Now what happens when Sara opts out of tracking,” Pujji said.

“Advertisers saw this translate into a drop in conversion rate of [more than] 20%,” Pujji said.

In a phone interview this week, Pujji says it is more difficult to track when Facebook ads are leading to sales on pages outside of Facebook. “Facebook is under reporting its own effectiveness,” he says.

Facebook obviously does not want to lose its ability to show advertisers that the ads are working or relinquish credit for sales. The social network accounts for upward of 60% of sales for the advertisers that Pujji manages, he says.

Facebook has been making changes to its platform that show the direction it is heading to bypass Apple’s stranglehold on data. The answer is similar to what Constellation Agency has developed with ads that don’t leave Facebook. Constellation agency has an ad platform that creates immersive ads that collect data right inside of Facebook and Instagram when a consumer goes into the ad and plays with products and pricing.

Data restrictions will make it harder to retarget across platforms, such as going from Facebook to another service, says James Bourner, senior VP, global head of display at Jellyfish, a marketing technology agency.  So, the new ad products that collect data from one place, they won’t help outside of where that data was collected.

“You really wouldn’t be able to take that information to target across the open web because that would require a cookie,” Bourner says. “Love it or hate it, if cookies disappear tomorrow, if you’re going to retarget, you’re going to have trouble doing it across the open web. You’re going to have to focus those efforts into owned-and-operated territory [like Facebook.] It involves a little bit more work.”

“Unless you actually have ad units where you can complete the transaction they can’t retarget you anymore," Lee says. "So the future is less reliant on website interests.” Those “interests” that used to be collected by cookies on websites or embedded in device IDs, could now be collected by the ad, Lee says, and the advertiser can retarget the consumer on Facebook and Instagram.

Facebook has similar goals by integrating more with brands and advertisers and encouraging shopping right on the service through partnerships with e-commerce companies like Shopify. Last year, Facebook and Instagram both launched digital storefronts called Shops, which ideally, encourage consumers to stay right within its app rather than jump to an outside website, where that retargeting loses effectiveness.

“The one way they can get around all of this is ensuring the transaction actually happens on Facebook or Instagram,” Pujji says. “And then tracking won’t be a problem at all.”