Facebook Ads

What was the impact on Facebook Ads from the IOS 14.5 update from Apple?

CAC is up, ROAS is down, UXAX still thriving.

What is IOS 14.5?

To all of our Apple and iPhone connoisseurs, please opt-in to tracking. To our fellow marketers, we feel your pain... The most recent software update on Apple products is providing users with increased “privacy”. Like we have seen in the past with app permissions for location and face identification for passwords, the newest addition is app tracking transparency (ATT). Users now have the ability to accept or deny an app's ability to capture personal information such as websites you visit, interests you enjoy, and more.

Impact on Facebook Ads

Based on the new updates and requirements Facebook implemented, there will be some major changes. To start, ad sets will only be able to track 1 conversion event at a time. For example, if you liked to track add to cart rate and purchases previously, you no longer will have that ability. Another new limitation will be target audience size. There is no estimate currently on how many users will “opt-in” vs “opt-out” of tracking yet but we expect to see a gradual decrease in overall audience size over the next few weeks or months. The attribution window change will have a direct impact on knowing how your marketing campaigns are performing but we hope to be able to come up with a solution to this problem based on historical data and last click data from Google Analytics.

Facebook Ads Updates & Requirements

Facebook Ads accounts must now meet the following requirements to ensure legitimacy and help minimize the impact of the IOS 14.5 update.

  • Domain Verification - Pixels are now moving over to domain ownership. Move your pixel over to your domain to limit the disruption of data.
  • Conversions - Accounts are now limited to 8 conversion metrics. They must be ranked in order of importance.
  • Attribution - The previous default attribution window was set at 28 day clickthrough, 1 day view. The new attribution window is 7 day clickthrough, 1 day view.
  • Targeting - Audience sizes are likely to decrease due to users opting out of tracking.

Overview of Analysis

To analyze the overall impact of IOS 14 on our ad accounts, we decided to choose a handful of our best performing accounts that are all in the ecommerce industry and share the same goals. The parameters were the previous 1 month of data prior to the change from each client (March 25th - April 25th) and the first week after the update (April 26th - May 2nd). The goal is simple, how are users opting out of tracking impacting our major KPI’s, such as customer acquisition cost (CAC) and return on ad spend (ROAS).

Cold Audiences - CAC

Prior to the update, the average CAC was $56.76. After the update, the CAC skyrocketed to $63.37, a 11.6% increase. The CAC is increasing because anyone who has opted out of tracking, is not being counted in the purchases. Also, due to audience size reductions it is more difficult to reach the same target audience as before.

Cold Audiences - ROAS

The second major impact was on the return on ad spend. Due to the increased cost in acquiring a customer, the return on investment decreased 11.8% the first week. Since the cost to acquire a customer has a direct impact on the return on ad spend (assuming the same average order value) we can also attribute this decrease to audience size and users opting out of tracking.

Retargeting Audiences - CAC

As for the retargeting audience, a similar observation was noticed, but not as drastic. The CAC of the retargeting audiences only increased 5.1%. These users are critical to convert because they have directly expressed interest in the brand and should be able to acquire them at a significantly lower cost than a cold audience. It is expected that the CAC for retargeting continues to increase since new strategies to capture the customers have to be implemented for anyone who has opted out of tracking.

Retargeting Audiences - ROAS

The ROAS for retargeting users has remained almost unchanged with only a loss of .7% decrease. As the CAC continues to climb over the coming weeks, ROAS will also continue to drop. 

Recap of Impact

The increasing cost in customer acquisition, due to the decreased audience size and limitations on tracking users is directly impacting the return on ad spend. This is causing a higher spend on ad accounts to attempt to achieve the same goals. The anticipation of Apple releasing data on what percentage of users have updated their devices and what percent of users have chosen to opt-in vs opt-out of tracking is exciting and will help to predict the overall impact of this update. We will continue to observe and inform you with our take on the impact of IOS 14.5 on a weekly basis until the curve has flattened.

View our interactive report here >

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