How Apple’s iOS 14.5 hurts Facebook’s direct-to-consumer advertisers

“If a brand like Glossier stops spending money on Facebook, they will lose money, as they get customers and revenue directly from Facebook. The DTC business model, for the vast majority of DTC brands, relies on Facebook to drive revenue,” digital marketer and consultant Kevin Simonson told Marketing Brew in 2020 during last summer’s Facebook boycotts.

Now, some DTC marketers are arguing that Facebook isn’t nearly as reliable a marketing platform as it was back then. That’s not only due to a lack of incoming reporting data after Apple’s iOS 14.5 update, but also because of the difficulty attributing the remaining data to different demographics. Many DTC marketers are beginning to look for a more diverse social media mix due to iOS 14.5’s impact on Facebook’s functionality as a marketing and analytics platform.

The great data shortage

ICYMI, Apple’s App Tracking Transparency feature, part of its iOS 14.5 update, came out in April—and made it so users can opt out of being tracked across apps, including Facebook (and Instagram, another DTC sales hub). That means advertisers who rely on Facebook as their primary sales and growth engine now have far less data on how their ads are converting than beforehand.

Although the exact percentage of people who can no longer be tracked is debated, the NYT reported in September that “more than 80% of iPhone users have opted out of tracking worldwide, according to ad tech firms.”

As a result, many DTC marketers are finding themselves having to guess and check how much money to spend on advertising on Facebook’s platforms.

“I think that the data is just less reliable on Facebook than it had been,” Simon Wool, who spoke to us as a growth marketer at DTC baby-food company Little Spoon, though he's since moved to Cometeer as head of performance marketing, told us. “In the past, we could segment all our data by age, gender, location. Now if you go to these breakdowns you can see spend going to different ages, genders, locations etc., but purchases are attributed only to ‘null,’” Wool explained.

“The dashboard does not allow for demographic breakdowns, so we have to rely more heavily on top-of-funnel metrics” he continued, pointing to clicks, CTR, and CPM.

Plus, he’s noticed ad performance data from Facebook showing lots of day-to-day (and week-to-week) fluctuation. Windows for viewing data have shortened, too; before Apple’s update, he could see data come through up to 28 days after someone has clicked an ad, or as little as one day after they saw it. But he said that window has “shrunk tremendously,” saying that the largest window he’s seen is now seven days.

Alex Realmuto is CEO and founder of marketing agency Rubix, which works with DTC clients like Misfits Market, Gravity Blankets, and Moon Pod. According to Realmuto, before the iOS update, Facebook could run reports broken down by categories such as region, age, gender, platform, and device. But now, he said, Facebook “does not support any of these values at the campaign, ad set, or ad level, making audience segmentation with the FB Ads Manager reporting nonexistent.”

To make up for some of these losses, Rubix uses first-party data and UTM-based tracking solutions to glean performance insights, Realmuto shared.

“This reporting can sometimes differ from what the Facebook dashboard reporting might communicate–making it important for advertisers to compare and contrast the data they are seeing from Facebook Ads Manager and their internal data tools,” Realmuto explained, adding that a campaign that might look like it’s underperforming on Facebook could actually be driving a lot of performance.

Less data, more problems

Because of Apple’s changes, Facebook is giving advertisers access to “modeled” conversions, which use aggregated data to help brands get a better understanding of how ads are performing. But modeled data presents its own roadblocks. For instance, Facebook recommends waiting a “minimum of 72 hours” before measuring performance, making it harder for advertisers to get real-time data on their campaigns.

“Modeled data tends to have a three-day lag for those not opting into iOS 14 tracking, which means that if I’m logged into my phone and I purchased a product, but I disabled tracking, it’s not going to show a purchase in Facebook immediately,” Wool explained. He went on to say that, within those three days, Facebook figures out how to sort through that data and, finally, report it back.

This can make it more difficult for brands to optimize ad spend. For example, Wool said Facebook might say an ad drove 150 purchases in one day. But that’s not necessarily the case.  “[Our] back-end data shows that that’s not true,” he explained. “We tested the funnel; the pixel fires properly. It’s just a three-day lag of Facebook finally reporting data that came through late,” he explained.

More broadly, Apple’s iOS update means that the detailed performance metrics are now distorted. Realmuto told us that while DTC brands used to rely on Facebook’s pixel—a piece of code that FB advertisers can put on their website to understand what visitors are doing—to determine purchase intent, it’s no longer nearly as dependable.

“That pixel technology, with the Apple iOS 14 update, is completely antiquated and ineffective because of what Apple has rolled out in their privacy settings,” Realmuto told us.

He added that lookalike audience performance initially dropped off due to the lack of signals Facebook’s pixel can now provide (but has gotten slightly better over the past few months as Facebook’s modeled data efforts improve), and that the shelf life of creative for targeted advertising on Facebook’s platforms is now shorter due to the smaller number of people available for targeting.

According to Realmuto, that “means that ‘wrong’ creative might be served to more and more people—thus driving down performance and forcing advertisers to more quickly tweak/revise their ad creative.”

Impact on sales

Before he left Little Spoon, Wool told us the company was  "missing out" on potential sales it once could have counted on due to the elimination of clear targeting, though it hadn't seemed catastrophic for the brand during his time there.

Wool told us the changes are a bigger issue for newer, smaller DTCs—especially those created after this update rolled out—because they’ll essentially be going in blind with their demographic targeting. Plus, they might not have much of a marketing budget to toy around with.

“The problem here is that for small businesses, they’re the ones that are taking the biggest brunt of this, because they don’t have the funds or resources to test into other channels. So for them, Facebook is their lifeline. I think that they do lose revenue, I do think that they are losing purchases” he said.

“What I wish more people understood is that it is really impacting these small and mid-sized businesses, and those businesses that were super reliant on Facebook. They’re definitely exploring other channels within the paid digital ecosystem,” Realmuto affirmed. “Facebook is on the record saying that at minimum, 15% of total sales are [now] being underreported based on their dashboard. It’s safe to say that, given the amount of [retargeting] that a lot of e-commerce brands lean into, it’s probably significantly higher than that.”

He added that his contemporaries no longer use the Facebook dashboard as a source of truth for sales “much at all” as a result of these changes. Additionally, he thinks it’s safe to say that sales are being negatively impacted for DTCs dependent on Facebook as a result of Apple’s choices—though it’s anyone’s guess by exactly how much.

Looking ahead

Despite all the issues he described, Wool still doesn’t think it’d be a good idea for DTC brands to significantly step down their spending on Facebook advertising right now. “What other channel is going to fill this?” he asked, explaining that no other platform can compete with Facebook’s reach and the sheer volume of eyeballs on these ads.

But what he does think DTCs should do is what every marketing professor told you in college: Diversify your media spend. “You have to find a diverse source of traffic and new ways to target your customers. Whether that’s breaking into new channels, attempting to reach people on TikTok because they just hit 1 billion people on their platform, different forms of retargeting (whether that’s SMS or using display advertising), you just have to really diversify,” Wool told us.

For agencies, Realmuto agreed it’s more important than ever before to have other customer journey measurement tactics in place, such as UTMs and other internal methods of tracking. As for the brands that couldn’t afford to boycott Facebook back in 2020, it’s safe to say they’re probably struggling with the platform more than ever.