Marketers are no strangers to change, but that doesn't necessarily mean they welcome it with open arms. The recent iOS 14 and 15 updates, as well as Google privacy changes, have many marketers feeling anxious and uncertain.
This is particularly true for direct-to-consumer (D2C) brands that heavily rely on Facebook, Instagram, and Google Ads as their primary acquisition channels, as well as email for their main communication channel. As these changes loom, marketing teams are under increased pressure to decipher their impact on their business and identify new avenues for future growth.
The primary focus of privacy changes is on app tracking transparency (ATT). Apple and Google recognize that users are concerned about being tracked and want to have the ability to opt-out of tracking whenever possible.
To address this concern, the iOS 14 privacy feature restricts the amount of data that can be collected by third-party tracking scripts. Users must now manually opt-in when prompted if they are comfortable with their data being collected. As more users become concerned about online privacy, it is anticipated that the majority of users will choose to opt-out of tracking.
But, Apple wasn’t finished with only focusing on privacy changes for ads. With the iOS 15 update, they changed how email tracking works. With Apple Mail representing 52% of all email opens, these changes are going to hurt. Brands can no longer track metrics like open rates which makes it harder to see how your emails are performing.
What Google’s privacy changes mean for marketers
The positive news is that brands will still be able to track individual activity on their own websites. However, brands utilizing tracking technology will need to adhere to specific guidelines to monitor these users effectively. They will also have the ability to target ads to specific cohorts and profiles. Google stands to benefit greatly from this shift, as it only modestly restricts its traditional targeted advertising reach while incorporating Facebook's profiling-based advertising approach into its repertoire.
It is important to note that advertising and customer acquisition costs were already on the rise before these privacy changes took effect. The shift in consumer purchasing behavior from physical stores to online platforms, accelerated by COVID-19 restrictions, has intensified competition among advertisers targeting the same audience. The influx of new advertisers has driven up the price of digital advertising.
Advertising & customer acquisition costs were already on the rise
The days of guaranteed low cost per conversion through paid ads are long gone. As more brands leverage social media and Google ads, the cost of advertising on these platforms continues to climb. While ads can still be effective for brands selling higher-priced products, they have become increasingly unprofitable for those offering discounted or lower-priced items.
With the privacy restrictions imposed by platforms like Facebook and Google, there is likely to be a further increase in acquisition costs for direct-to-consumer (D2C) brands advertising on these platforms. This, in turn, makes it even more challenging to create profitable ad campaigns due to restricted targeting options. Advertising itself is not obsolete, but it necessitates adjusting campaign strategies and budgets accordingly.
In this evolving landscape, marketers must adapt to the changing dynamics of digital advertising. Exploring alternative strategies, such as influencer marketing, content marketing, and organic social media growth, can provide avenues for cost-effective and impactful customer acquisition. It is crucial for marketers to stay abreast of privacy changes, reassess their targeting and advertising strategies, and explore diversified approaches to ensure continued success in the evolving digital marketing landscape.
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