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Paid Ads: What is Next with Privacy Laws and Advertising

Apple recently introduced an iOS 14 update that had a significant impact on advertising performance, primarily on Facebook. This has put a dent in many advertisers' marketing performance.

In 2020 Apple announced, and then released, an opt-in prompt on each app which allows them to choose whether they want to give permission to third-party sites like Facebook to track user data.

Let's look at how these changes have affected advertisers.

Changes in Mobile Web Advertising

Apple has created the “PCM” protocol for web attribution. The protocol will restrict data that businesses and platforms may access.

Here's an example of how PCM works and how it is different.

Suppose an iOS 14 user is serving an ad on Instagram and then is taken to a web page to complete a purchase. Because of PCM, this would be lost and not attributed to the original source. Also, tracking users in a different geographical region will be difficult. For example, if someone in Spain is served an advertisement for a US-based business, but is then redirected back to the local version of a website based on their location (e.g., Spanish language), the purchase would not be correctly tracked.

Facebook is working on better tools to counter this problem, but there still has been a lot of disruption.

Changes to Optimization and Targeting

With iOS 14.5, Apple will limit the number of events that can be optimized to eight. This means that advertisers will only be able to optimize up to eight conversions per domain. But they can still track more events for other purposes. So, if you're an advertiser you'll need to prioritize the eight most important events for your business. One thing to note is that the eight-events cap is only limiting the number of events you should be optimizing towards. However, you might still track more events for other purposes such as reporting and audience creation.

Apple’s new iOS update hinders optimization, especially if there aren’t enough data points. This isn’t very good news for small-scale advertisers who don’t have many data points as opposed to the big players. And as more and more people upgrade their operating systems to iOS 14.5 the size of retargeted audiences will also shrink over the course of time.

Changes to Measurement

Changes to the new default window will contribute to under-reporting on organic channels like social media posts. You should also expect an increase in dark social traffic - which is when people privately share content with others on their social channels. Dark traffic has always been difficult to track, but the new iOS update will make it even more challenging.

There will also be a new 3-day delay on data that comes from iOS 14 users. This is because of the PCM protocol described earlier in this article. PCM not only restricts data access - it also delays it.

Limited data will make it harder for advertisers to know if their ads are performing or not.

More Changes to Facebook Business Manager Tool

If you're already a Facebook advertiser, then you know how much everyone hates the Business Manager tool. It changes frequently, without explanation, and in not-very-user-friendly ways. The changes in iOS will drive even more changes to the Business Manager Tool because Facebook cannot have a separate, different interface for Android and iOS. This may well result in having less data available from Android users as well (as of this writing, changes to the Business Tool are ongoing).

That's iOS. What About Retargeting Changes?

In 2019, Google announced that they would be changing their cookie policy in January 2020. They planned to remove 3rd party cookies and implement new rules for retargeting. That was delayed by the pandemic, and Google's need to refocus on other parts of their business to support radical social shifts. Then, in 2021, after the massive disruption of the Apple iOS 14 update, Google announced it would delay those changes to 2022. But they are clear that the changes are happening. Evolving privacy laws and expectations make this a priority for Google.

When these changes occur, it will be significantly more difficult to run retargeting ads, which advertisers have been using to "chase" website visitors around the net following an initial response to an ad. While many advertising sales groups have promised to come up with alternatives, it's not clear yet what those alternatives will be. And since the ability to track users across websites is one of the most powerful ways to target ads, we expect disruption to sales related to reduced advertising results. After all, if you can’t track people, you can’t retarget them.

One way to counter the negative effects of this change is to increase your efforts to collect email addresses and SMS numbers, which will allow you to remarket to website visitors based on first-party (your own) data.

You can expect advertising to continue to change over the next several years as privacy laws become more strict and advertising companies innovate new ways to reach customers. In the meantime, beef up your internal capacity to remarket to your website visitors, and plan to see higher advertising costs as companies accustomed to extensive retargeting now have to lean on "first pass" advertising to get the traffic they had become accustomed to.