How Facebook and Snapchat are preparing brands for the data lockdowns
Some of the most elegant tools advertisers have come to rely on to reach the largest audiences with the most effective ads, won’t work the same way on Facebook, Snapchat and other major sites, as Google and Apple apply new privacy restrictions. Also, the ability to measure how well a campaign performs will be diminished, according to ad experts.
In recent weeks, the ad world has been preparing as Apple and Google lock down data that has been the lifeblood of digital advertising for decades. The scope of the impact on advertisers on sites like Facebook and Snapchat are just now becoming clearer, and both companies have been more outspoken about what’s coming. With less data, brands will have a harder time reaching individual consumers, leading to potentially smaller audiences for ads. The social media platforms will have a harder time creating “lookalike” audiences -- new customers who look like ones brands already have, based on their internet activity -- which are essential to finding new customers. Also, brands won’t be as accurate when they measure the effectiveness of ad campaigns.
“Facebook’s ability to profile users across websites, which is a large part of the reason why their lookalikes are so powerful, because they can currently do that across apps, across websites. Now, that ability will diminish once [Google] Chrome rolls out some of the proposals that they’ve had,” says Nii Ahene, chief strategy officer at Tinuiti, a performance marketing firm.
Last week, Google explicitly stated that it will not replace third-party cookies with any new IDs that rely on personal information to target individuals online; data like personal email address or unique device IDs are out. Third-party cookies are trackers placed on consumers' web browsers that have been integral to running online ads through automated auctions, but they will soon be obsolete. Google is testing ways to advertise on Chrome, mobile devices and through its ad network that will use aggregate pools of consumers, which are viewed as more anonymous.
“We’re aligned with Google, who like us, continues investment in technology to enable relevant advertising while supporting the free and open web,” a Facebook spokesperson said in an email. “Building more tools that support privacy-protective personalized advertising and collaborating with the industry is how all companies in the ecosystem should move forward in service of people and businesses.”
Meanwhile, Apple has caused the most immediate concerns for digital advertising with changes coming to iOS 14.5, its iPhone software. This week, Snapchat released comprehensive guidance for advertisers and app partners about Apple’s changes, which are expected to hit this month. Snapchat has been working closely with Apple to comply with its new mandates, which force apps to obtain consent from every user to track them online for the purposes of ad targeting. “Snapchat plans to show the tracking prompt (‘modal’) to users and continue to collect identifiers such as IDFA for Opt-in events on iOS 14,” Snapchat said in its guidance this week. “Snapchat will account for these changes with several recommended preparations around campaign management as well as new product capabilities.”
Snapchat said that brands that build “custom audiences,” which are segments of customers that brands bring to a platform in order to target ads, could find fewer matches. Also, Dynamic Ads on Snapchat could lose some of their power, because those ads are built to retarget users who visited a brand’s website.
The ad industry expects similar drops in performance on all the platforms, including Facebook, Pinterest, Twitter and others.
Meanwhile, Facebook and Google have said they plan to move away from collecting IDFAs, Apple’s Identifier for Advertisers. That’s the ID that app developers need consent to use. The IDFA consent framework is a nightmare for many app developers worried that consumers will just drop out of view. “We do expect there to be high opt out rates,” David Wehner, Facebook’s chief financial officer, told Wall Street analysts on an earnings call in February.
If users opt-out of tracking that has ramifications for brands, which will not get the same level of clarity into how ad campaigns performed. A brand, for instance, may snag a new customer, but it won’t be able to say which ads led to the “conversion.”
Apple and Google are building new “conversion tracking” tools that rely more on modeling and statistics to determine effectiveness, rather than direct tracking of the consumer. Facebook is also building new models for conversions, as that’s one of the areas where advertisers are seeing the most impact from the privacy changes.
Brands will need to have a new level of trust in the metrics shared by Facebook and others, because data could be based on “modeling” and not necessarily clear signals that an individual consumers sent, Ahene says.
“Facebook is pretty much saying, ‘Hey, we have limited information. We don’t necessarily know explicitly which users have converted, but based on information coming from [Apple] we’re going to make a projection,'” Ahene says.
Meanwhile, the whole industry is discussing the future of digital advertising at the Interactive Advertising Bureau’s leadership summit this week. Facebook Chief Operating Office Sheryl Sandberg was scheduled to speak on Thursday.
“Most brands are in a wait-and-see mode,” says Kunal Gupta, CEO of Polar, a social media display ad company. But there is one benefit to relying less on data, Gupta says. Brands will have to return to focusing on the design of their ads. “Creative will have to work harder for brands as audience targeting becomes less effective,” Gupta says.