In the coming weeks, Matt Collette, Head of Digital at Edelman Canada, will be delving into these tactics can help brands build an arsenal of zero and first-party data to help them compete in a new era of privacy, as well as to predict the future and the changing relationship between brands and consumers. Today, he examines how we got here and why zero and first-party data should be the number one priority relationship-oriented marketers.
By Matt Collette
The advertising industry collectively breathed a sigh of relief when it became clear that Apple would not be announcing any further privacy restrictions for iOS 16 at its annual developer conference in June. The fact that the Developers Conference is being watched so closely by advertisers shows how dramatically the privacy landscape has changed and the impact this is having on the way we engage with consumers.
Crucially, however, most organizations still have not addressed these changes effectively. A recent Digiday survey shows that 71% of agency and brand executives “are worried and don’t know what’s coming next,” while more than 40% said brands “are going to lose a lot” if third-party support -Cookies is set by Google.
With all the focus on rejecting third-party cookies, I’m concerned that we’re missing the wood for the trees.
Blinded by the massive changes we are witnessing in the data protection landscape, we focus too narrowly on media solutions to regain lost effectiveness and reduce costs. The biggest of these privacy changes came with the introduction of iOS 14.5. The release effectively reverted data tracking defaults and proactively asked users to opt out. Coupled with features like Hide My Email and Private Relay, successive iOS updates have sent a clear signal that while this trend started with social and mobile apps, it won’t end there. Apple has also signaled that device fingerprinting is “as kosher as pigs’ feet in matzah ball soup,” putting an end to one of the most hotly pursued solutions for advertisers.
The excitement surrounding the end of app tracking underscores our addiction to third-party data, which has fueled a media flywheel that marketers have benefited from for the last 15 years. As a result, we have developed a reliance on media to drive growth and offset underperforming elements of the marketing strategy. In fact, year on year, marketing has benefited from improvements in ad effectiveness and spend efficiency due to apps, smartphones and the wealth of data they have provided.
But be careful, the four riders are on the horizon and are galloping towards us. First came ad blockers, then Apple iOS and the move to privacy. Cookie deprecation and the end of the Android ID in 2024 will soon follow, and with it the loss of consumer confidence.
To highlight the impact of these changes on marketing strategy and tactics, we need to consider the impact of iOS 14.5. After the launch, marketers saw an 8% drop in web traffic to their websites from iOS devices. CPM rates on Meta’s platforms increased 66% year over year and impressions fell 22%, even as spend increased nearly 30%. The increase in advertising costs has had a dramatic impact on acquisition costs.
Faced with rising advertising costs on social platforms, marketers did what they do best: they pivoted and shifted their spend to Android devices and SEM. But Google will soon bring its own version of iOS 14.5 privacy changes to Android devices. And moving to SEM had its own cost implications. According to a recent Shopify report, the cost per click for paid search ads increased by 15% between the second and third quarters of 2021. CPM rates have also increased dramatically across the board, with Google, YouTube, TikTok, and Snapchat rates up 64% and 108% year over year, respectively. On top of that, companies like Meta and Snap have repeatedly cited iOS 14.5 as a drag on ad revenue levels.
With more privacy changes for iOS and the other horsemen on the horizon, the strategies and tactics we use to reach consumers and drive growth must change. To move forward, we must focus on building, nurturing, and monetizing audiences and communities. In other words, we are now in the gold rush for zero and first-party data.
Matt Collette is Head of Digital at Edelman Canada and the agency’s Global Managing Director of Digital Growth.