If you know anything about advertising, then you probably don’t want to hear me babble about the Apple IOS update. This however is more geared towards business owners who have no idea what’s going on and just see their results tanking.
Very, very quick recap: Apple’s new update now makes all iPhone users have to opt-in to being tracked by any app across the internet.
So, if someone says “no” to Facebook’s opt-in, then Facebook can no longer follow that person around the internet to see what they’re interested in, what topics they’re curious about, and what products they’re looking to buy.
If the fact that Facebook does this seems creepy, well, it is. But it’s also what hundreds of other apps/websites have been doing for a while and what made their ad platform such a gold-mine.
Currently, 96% of iPhone users have opted out of being tracked by Facebook or any other app for that matter.
So… what are the implications of this?
Lower ROAS, Higher CPAs
The past couple of weeks have been hellish to say the least for Facebook and it’s advertisers.
Yes, including us too…
Results are dropping across the board in both conversion based metrics and engagement/brand awareness based metrics.
Clients that once had a healthy 300-600% return on ad spend (ROAS) now have in the low 100% range.
Just to put that in perspective, before the update $1 in ad spend would most of the time result in $3 to $6 in revenue. After the update most are getting maybe $1.30 in revenue from that same $1.
Simultaneously, CPAs (cost per acquisition) have skyrocketed. On one account, a client used to get a purchase at an average cost of $26. That same client is now getting purchases anywhere from $60-$80, way above their break even point.
And finally, CPMs (cost per 1000 impressions) are going crazy with some audiences now costing $30 when they were teetering around the $6 mark before.
It leaves you to think, what is Facebook saying about this?
Don’t Listen to Facebook Reps
The best advice I could give anyone right now is to take EVERYTHING a Facebook rep says with a grain of salt. Now more than ever, those guys have absolutely no idea what they’re talking about.
Well… I wouldn’t say absolutely no idea, but they’re pretty much as lost as the rest of us.
We have multiple Facebook reps we work with at JEMSU for our larger client accounts and what’s great about that is it lets me hear a multitude of opinions on similar situations.
I recently had one rep tell me to fatten up audiences both for lookalikes and interests since Apple users won’t be included in those pools anymore and therefore those audiences are going to be way smaller than the estimate Facebook gives.
Basically, this rep wanted me to combine all interests into one ad set – versus testing different interests against each other – and increase all lookalikes to 5-10%.
Literally a day later, I had another rep tell me my audiences were too large and my lookalikes were not “accurate enough” since I was using them at 5% and not 1-2%.
So… you see my hesitation for not wholeheartedly trusting everything they say.
At the end of the day, they’re just passing down what their employer tells them to and who knows what Facebook’s true intentions are outside of lining their own pockets.
As much as this sucks, we still have to find the ideal method for our clients. So what’s the right way to go?
Larger Pools or More Accurate Ones?
Any good marketer knows that regardless of what has worked in the past or what others are recommending you do for the future, the only way to learn and know for sure is by testing.
In this case, we’re testing larger audience pools against more accurate ones.
I’ve done this with multiple clients at this point and what I can tell you is that there’s no tried and true answer.
It will vary from client to client depending on the sizes of their custom audiences and the industries they’re in as well. There’s no way to truly know until you test.
One of our extremely niche, not mass market clients started tanking after the update. Their audience was already small, but got even smaller and as a result, CPMs were shooting up and people were just not converting.
We tried expanding this client’s lookalikes to 5% and added detailed targeting expansions for their niche interests. This did bring CPMs down but really didn’t do anything to improve conversions.
So, instead we moved back to 1-2% but combined those with multiple lookalikes – e.g. 2% purchase lookalikes, 2% add to cart lookalikes, 2% view content lookalikes, etc.
For another client who sells mass market products, we combined interests, turned on detailed targeting expansion, and ran 5-7% lookalikes when we were running 1% lookalikes and single interest ad sets before.
This change to higher percentage lookalikes and combining audiences worked really well and is consistent with what the first Facebook rep said about increasing audience sizes.
What I will say is that for most clients, we’ve found best results somewhere in between the two Facebook reps’ opinions.
Nothing as dramatic as combining all audiences together within one to two ad sets. But also not having so many ad sets with just a 1% lookalike competing against each other.
One thing that is consistent with what both reps said and what we’ve been seeing is that the “audience hacking” of the old days is most likely gone as we know it.
The End of Audience Hacking
In layman’s terms, audience hacking just describes the slight tweaks Facebook media buyers make to audiences to test against others and ultimately reach the most desirable results.
This includes but is not limited to testing 1%, 2%, 3%, 4%, 5% lookalikes against each other and testing ad sets with similar interests against each other like “street fashion” and “streetwear”.
The days where you could perform these types of tactics successfully are over. Audiences are just no longer accurate enough or big enough to support it.
You should actually be spending as little time as possible on campaign and ad set tactics from now on.
So then this begs the question, what should you be spending your time on?
Focus on Creatives
The online advertising industry is moving in a special direction. With a shift away from audience hacking and similar tactics, the focus is left on creatives, or the actual ad itself.
Ad creative is an all encompassing term that includes picture, video, ad copy, call to actions, and anything else that might show on an ad that someone sees.
If you can afford one, invest in a creative team as soon as possible. Professional video production, designs, professional copywriting, so on and so forth.
The ROI will be more impactful than any one who will claim to know the “secret” to Facebook or any other ad platform.
There are a lot of businesses that as we speak are successfully running broad targeting campaigns (no interests or lookalikes just demographics and location) with a killer video and their returns are through the roof.
In fact, that’s most likely where the industry is permanently headed towards anyways. More and more advertisers are seeing a lot of success from broad targeting and great creatives.
Take TV advertising as an example. They aren’t even able to provide their advertisers with 1% of the detailed targeting that Facebook provides its advertisers with. Yet, companies have successfully been advertising on TV for decades.
That’s because these companies focus on making the best creatives that will appeal regardless of how honed-in the audience is.
Is There a Silver Lining?
So what’s the silver lining in all of this? Is there even one?
Well yes, there are a couple…
First off, just because we’ve seen the other side and how effective these online advertising platforms like Facebook can be, doesn’t mean the methods they were using were the best.
For the most part I think we can all agree that privacy is of the utmost importance in our current day and age and to blindly be followed everywhere we go on the internet by these platforms is not an easy pill to swallow.
On the other hand, ads are not going to stop being served and getting ones that are relevant to us is much more appealing than seeing ads for random businesses we have no interest in.
Apple’s update has moved the industry in the right direction, and having to deal with privacy while successfully running digital advertising campaigns is something we need to get used to. The big problem advertisers have with Apple is the way they went about it.
Another thing is that in some sense, the playing field has become a bit more even. Before businesses had to learn these technical audience tactics while also balancing well produced creatives.
Now, with these campaign and audience tactics becoming more obsolete, businesses can put their collective brain power towards making the best creatives they possibly can paired with compelling offers.
It simply breaks down to focusing on one thing is easier than two.
So where do we go from here? Everything we’ve discussed is the case for now, but what about the future of Facebook advertising?
There are some ideas that are being thrown around the industry and they are all very different from each other. I’ll quickly run through the top three.
1. The end of Facebook as we know it
Some advertisers out there believe that in the long-term, this Apple update may be so detrimental that it will be the end of Facebook ads as we know it.
This is backed by the notion that usually Android follows Apple in the changes that they make and eventually, even Android phones will require this opt-in which will render the other 50% of people on Facebook untrackable.
With 96% of people opting out on iPhones, there’s no reason to think that percentage wouldn’t be the same for Android users.
If this happened and Facebook wasn’t able to track 96% of all users on their platform, the only thing they would be able to rely on is what users search and like when on Facebook and Instagram, nothing else.
This would not be nearly enough info to provide effective audiences for advertisers and the channel would more or less turn into a brand awareness/engagement platform.
2. The Walled-Garden approach
Another idea is that Facebook will weather the storm by implementing a walled-garden approach on both Facebook and Instagram.
The walled-garden approach is pretty simple. Basically, instead of having to follow users around the internet, Facebook will have all advertising and purchasing activities revolve in their platforms for logged-in users and track them across their devices.
This means that when a user clicks an ad, they won’t go to an external website, instead they’ll go to an Instagram shop for that brand where they will be able to browse, take actions, and purchase products without ever leaving the platform.
This has a couple of advantages for both businesses and Facebook. With users not leaving the platform, Facebook will be able to track every single thing they do without having to worry about not tracking them after they leave.
For brands, this also reduces friction for customers when they usually click on an ad and have to wait for a website to load. Instead with this walled-garden approach, they’ll be taken to a fast loading shop that is customized but also standardized so conversion rate optimization won’t be as big of a concern.
There’s actually some merit in this idea or something similar to this as one of our Facebook reps provided insight that their developers are working on “something big” to offset this update.
What that “something big” is, no one but the higher ups know, but I’m confident that the geniuses over there will figure something out especially when their entire future depends on it.
3. Facebook will survive but its effectiveness won’t
The most common sense idea out there is that once everyone’s phones have updated and there aren’t many people left to opt-in, Facebook’s AI algorithm will be able to sense some stability and figure out a way to effectively provide results.
The downside is that this effectiveness will never return to what it previously was and advertisers will need to rely more heavily on their creatives and a healthy mix of other online advertising channels like YouTube, TikTok, Snapchat, etc.
Where Facebook advertising heads in the future is anyone’s guess. All we can do for now is analyze the data, test, and pivot accordingly.