Are Consumer Privacy Changes Keeping You Up at Night?

Are Consumer Privacy Changes Keeping You Up at Night?

In a recent conversation with a friend about his Instagram feed, he lamented that while sponsored posts sometimes were an annoyance as he scrolled, he would occasionally pause, engage with content and products he was interested in and sometimes purchase from hopeful advertisers. 

Since the end of April when iOS 14 launched, ads in his feed have become less relevant, and he is more annoyed than ever with generalized advertising that doesn’t reflect his interests, purchasing patterns or behavior. 

In other words, the pendulum has swung the other way. Advertisers’ free rein on personal data has changed, limiting consumer segmentation. The unfortunate result for consumers is social feeds they don’t appreciate as much as they did pre-iOS 14. As a brand or advertiser, if you are looking for what you can do to succeed in today’s changing environment, see our recommendations near the bottom of this post.

Consumer empowerment will continue to shape digital marketing, buoyed by Apple’s new privacy framework and Google’s pledge to discontinue third-party cookies in Chrome by 2023. 

Data privacy is shifting away from an opt-out model in favor of an opt-in structure. This is evident in Apple’s App Tracking Transparency (ATT), which permits users to decide if they would like their data to be tracked when using apps like Facebook. 

Flurry Analytics has observed that less than 6% of mobile app users in the U.S. have opted-in to data tracking in the first 3 weeks from its launch (Fig. 1). This is compounded by the fact that new iPhone 12 users are opted out of data tracking by default.

Fig. 1. U.S. Data on Opt-In Rates. “IOS 14.5 Opt-in Rate - Daily Updates Since Launch.” Flurry, 29 Apr. 2021, www.flurry.com/blog/ios-14-5-opt-in-rate-att-restricted-app-tracking-transparency-worldwide-us-daily-latest-update/.

This creates difficulties in measuring impact and maximizing reach to targeted audiences. Facebook’s advertising attribution has depleted from 28 day click and 7-day view to 7-day click 1 day view and now to a 7 day click only. In short, a brand’s ability to track conversions over longer periods of time has essentially been eliminated. However, the actual impact of these changes should be evaluated in context of the capabilities of alternative new approaches.

But, while we are in a period of understandable concern about how these changes will impact brands and consumers long-term, the market will find a way to solve the problem. 

For instance, Google’s decision to phase out cookies comes with a proposed replacement. Under development is Google’s Privacy Sandbox, a system that relies on anonymized signals to permit ad targeting within Chrome. 

So, any digital marketing plan built within Google’s ecosystem will be efficient since placements across Paid Search, Google’s Display Network, YouTube, etc. will continue to deliver ads to segmented and in-market audiences. Google’s decision to discontinue third-party data tracking will mostly affect the dynamics of display campaigns that are run outside of Google’s owned sites. 

However, Google’s upcoming cookie-tracking replacement, the Federating Learning of Cohorts (FLoC), will allow display to remain an effective option. Cohort grouping systems such as FLoC will cluster sets of people together based on their interests, preferences, and demographics. 

Although the individuals in these groups will remain anonymous for the sake of privacy, advertisers will still be able to place relevant ads m. Based on simulation testing conducted by Google, advertisers using FLoC “can expect to see at least 95% of the conversions per dollar spent when compared to cookie-based advertising” (Bindra)

In tandem with retargeting, we believe that first-party data strategies will be especially instrumental in extending an advertiser’s reach. According to a 2020 Boston Consulting Group study commissioned by Google, “marketers that use all of the first-party data available to them can generate double the incremental revenue from a single ad placement” (Meltzer). 

So where do you begin as an advertiser? We recommend these 4 actions to help your brand be prepared for continued data privacy changes and to be most effective with your digital investments:

  1. Invest the time to better understand your target audience and customer: It is important, now more than ever, to know your audience. Learn more than just your audience is "in the market for coffee" or "in the market for a Toyota". What other interests or behaviors do they have? Are there any that are very common among these customers? What else are they doing online? Are there "outside of the box" methods to target these customers? 

 

Understanding who is going to buy or use the products in a certain way will allow you to reduce wasted marketing dollars.

 

  1. Be flexible as an advertiser and prepare for uncertainty: If 2020 taught us anything, it was to be prepared to roll with the punches, adapt to the changing landscape and to market forces out of your control. Be prepared and ready to quickly adopt new platforms and technologies as they become available. 

 

Testing and trying new platforms and audience targeting methods almost always pay off and allows you to be a few steps ahead of the competition. 

 

  1. Your customer and 1st party data should be a major investment: In addition to learning about your customer, gather as much data as you can at retail point of purchase, e-commerce checkouts, opt-ins and gated content downloads. Store this information in your CRM and then make it available to digital channels for remarketing, look-a-like and other custom audiences.

 

  1. Become knowledgeable and comfortable with audience segment targeting or FLoC: Google has put its eggs in the basket of FLoC, which essentially groups users into categories based on browsing history, then allows you to target categories instead of targeting individual users. 

Other advertising platforms and technology are looking to use unique identifiers, which is similar to “cookies” but not stored in the same way on browsers but essentially it allows you to track cross-device activity.

We understand there are still a lot of unknowns, and some of the largest and most profitable companies in the world are working on alternatives. While we are not yet scanning eyeballs and referencing previous transactions (que Minority Report & Tom Cruise) Max Connect is confident that as the above recommendations are implemented and as we rely more heavily on our clients own 1st party data be successful in digital marketing, we will find ways to best utilize our own Kudos Platform and propriety audience data, and see continued success for our clients.

 

Works Cited

Bindra, Chetna. “Building a Privacy-First Future for Web Advertising.” Google, 25 Jan. 2021, blog.google/products/ads-commerce/2021-01-privacy-sandbox/.

Meltzer , Jonathan. “First-Party Data Transparency - Think with Google.” Google, Dec. 2020, www.thinkwithgoogle.com/marketing-strategies/monetization-strategies/first-party-data-transparency/.