- Apple's new privacy changes effective April 26 will upend app advertising.
- These changes could especially affect direct-to-consumer advertisers, specifically with measurement.
- Many expect brands to go back to old-school advertising techniques.
Editor's Note: This story was originally published March 4.
Apple's new privacy changes are about to upend digital advertising.
Starting this week, app developers will have to ask users for permission before tracking them via Apple's Identifier for Advertisers (IDFA). They're expected to dent advertisers' ability to pinpoint ads for people and see if they're working.
"This is our industry's equivalent of Y2K," Doug Rozen, the CEO of Dentsu Media Americas, said.
One big concern for advertisers is how Apple's policy will limit campaign measurement and attribution on Facebook, with the measurement startup Measured's chief technology officer, Madan Bharadwaj, calling it "a huge blow to measurement." While these changes affect the whole mobile-app ecosystem, many advertisers rely on Facebook and its massive Audience Network to run and personalize ads on their own platforms and other third-party apps.
Facebook said in a recent blog post that it would shutter conversion-lift studies. Such studies use test and control groups to measure incremental returns on ad campaigns and gauge people's propensity to buy the products after seeing ads on the platform, and have been widely used in recent years by a variety of advertisers, including Dick's Sporting Goods and eBay.
With these lift tests going away, some buyers said they expected 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 with another similar market where the TV campaign wasn't aired. One media buyer, who spoke on condition of anonymity because they weren't authorized to speak publicly, said 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, the senior vice president of analytics and marketing science at the 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, told Insider in March it had started informing advertisers about the effects 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 out as much as 7% — or $5 billion — of Facebook's total revenue in the second quarter of 2021, according to the 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 they were preparing advertisers for the impact by encouraging them to beef up their first-party data. Some brands have been getting increasingly creative with gathering first-party data as Apple and 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 the mobile-attribution provider AppsFlyer and MMA Global in September 2020 said they expected at least a 50% reduction in the availability of IDFAs to them once the changes took effect.
The impact could be particularly devastating for a subset of advertisers, including direct-to-consumer and other direct-response advertisers that rely heavily on the Facebook ad ecosystem for performance marketing and user acquisition, ad buyers told Insider. The dating app Bumble, for example, said 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," Measured's Bharadwaj said. "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, Simon Poulton, the vice president of digital intelligence at the digital-ad agency Wpromote, said. This may prompt small businesses that make up the bulk of Facebook's advertisers to cut spending in the short term, which would hurt 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."