Let’s start with why.
A global increase in concern about online privacy has led to legislation in the EU and Australia that issued new requirements on internet advertisers.
While the U.S. government lags in privacy regulations, consumers are increasingly concerned with how their information is collected and stored, which has created market pressure for companies to make a move, if only to try and fend off increased legislation.
- An Apple IOS update, expected Spring 2021, will require customer permission to track user data across applications owned by various companies. Apple controls the single largest share of smartphones in the U.S., accounting for 46.9% of the market.
- This change threatens Facebooks’ advertising model, which collects data from across devices you use to improve ad targeting. Facebook sees this as a threat to its core business and has undertaken a public awareness campaign to stop Apple from adding this feature.
- Facebook has other problems to face as well. They reportedly diverted human resources away from their ad business to defend against political and pandemic misinformation on their platforms in 2020, leaving the ad business primarily run by automated systems. Due to this attention shift, small businesses in the thousands suffered their ad accounts being suspended for no reason at all. They are starting to clear things up, but the small business community has undoubtedly lost some trust in the platform. Facebooks’ most recent TV ad campaign is targeted at wooing them back.
- Google announced they would stop selling ads based on individuals’ browsing across multiple websites. According to the Wall Street Journal, this change alone “could hasten upheaval in the digital advertising industry.” Google accounts for 52% of last year’s global ad spend of $292 billion. https://www.wsj.com/articles/google-to-stop-selling-ads-based-on-your-specific-web-browsing-11614780021
- Twitter, which trails Facebook and Google at 0.9% of global ad spend in 2019, has announced new e-commerce focussed advertising. https://techcrunch.com/2021/03/03/twitter-tests-new-e-commerce-features-for-tweets/ This test is in tandem with other features being introduced in an attempt to boost revenue.
Guidance: Prepare for change, and refocus on the fundamentals.
Be prepared to see conversion rates decrease with variability in cost per conversion.
Standing still is not going to work with your ad campaigns. While it isn’t the end of cross-device ad tracking, it will be a significant dropoff in ad effectiveness for the short term, at least. To counter this effect, experiment with focussing less on conversion-based ads and more on impressions to your general audiences. The ad industry has handed off a lot of targeting to black-box algorithms for the past several years, but strong ads with smart targeting still get the job done and give you more control. A silver lining to the scenario is that less sophisticated advertisers may see results suffer and throw in the towel. This would lead to lower costs for the businesses that stick with it.
Ad quality will become more critical, and by that, I mean, ad quality as perceived by humans, not the algorithms.
Invest in better ad design. The platforms offered us easy-to-use tools to help create ads that looked good to their systems and helped get placed per their targeting systems. Since we know the targeting systems will stop being as effective, we also need to deemphasize the systems’ reliance to create and modify our ads.
Landing Pages are more important than ever.
Spending on ads to lose a prospect on a subpar landing page or website is just wasting money. With broader impression-based advertising and less targeting, your ads, landing pages, and website need to speak to the humans visiting – and they have to carry more of the load than before without the benefit of all the complex AI algorithms helping select just the right visitors.
While adapting to these changes is disruptive, in the long view, they are probably a net positive for business and society overall. The root of these changes is the industry self-regulating to protect user privacy in the absence of meaningful regulation. Are the changes perfect? Of course not. However, they are a move in the right direction.