Essentially, this update increases the importance of first-party data development, collection, and accuracy.
It’s no secret: free apps and websites often make money by sharing data with ad platforms, like Facebook, about user activity on their properties. This data is turned into targeting segments which advertisers can use to serve people relevant ads. Not only is the amount of data gathered by publishers vast, but the average person visits and interacts with at least 40 publishers a month. This is the primary reason for the rising concern and scrutiny over data privacy; people just can’t keep track of who has information about them and what it’s used for.
Facebook has certainly had a rough couple of years when it comes to concerns over its handling of users’ data. That’s why, on August 20, the social platform began releasing a new tool that allows people to see and control the data it collects on their browsing activity outside of Facebook. It’s aptly called the Off-Facebook Activity tool (formerly the Clear History tool), and it’s designed to give people more transparency and control over the data other apps and websites share with Facebook. Users will be able to review a list of websites and apps that send Facebook information on their activity, as well as give users the ability to remove permissions for the publisher to share information moving forward. This will directly affect the power of Facebook’s business tools like the Facebook Pixel and Software Development Kit (SDK).
A Timeline of Events:
For brands, this new tool has a number of implications for targeting and measurement across Facebook and Instagram campaigns:
Disabling the permissions that allow Facebook to leverage third-party sites for additional data points could lower the size of custom audiences created though the Facebook Pixel. This could include website retargeting, converters, lookalikes of both, and more.
The KSM solution to this issue is to prioritize first-party data. While the Off-Facebook Activity tool means that advertisers might not be able to use the Facebook Pixel to create a suppression list of those who have already purchased online, functionality for leveraging customer lists will remain unchanged. Advertisers can still exclude past purchasers by uploading customer lists as they have been able to do for years. Essentially, this update increases the importance of first-party data development, collection, and accuracy.
The Facebook Pixel allows advertisers to attribute online activity to advertising campaigns. It’s an HTML code that works by embedding into a brand’s web properties. While it seems attribution would take a hit with this update, Facebook prioritized building an updated methodology that will keep measurement and reporting intact while still allowing users to control their privacy. The impact of this change is less than that of targeting, but there is still a chance advertisers will see a slight decrease in the volume of conversions the Facebook Pixel is able to track as more people opt out of tracking.
This update re-emphasizes how important it is to think about a more holistic measurement strategy that encompasses attribution to all the media channels leveraged in a given campaign. Measurement is not a one-size-fits-all effort, so each brand should work with its agency to develop a strategy that is best for their business goals.
For example, if the media plan is primarily digital, there is the opportunity to leverage first-party data to fill in any performance gaps that may no longer be possible to track. This includes Google Analytics data, which can help gauge if website activity has fallen off, or instead, if Facebook’s attribution has. For a more diverse media plan that includes both online and offline data points, it is important to work with analytics teams to understand if a brand lift, conversion lift, or even an attitudinal study could be a better measure of business success across platforms.
When evaluating Facebook performance specifically over time, however, KSM believes that it is important to develop new KPIs that add context to month-over-month performance. Facebook has been adding to their measurement offering by including self-service test and learn studies, post-impression polling studies, and conversion-lift studies with no minimums, which will be more important than ever to leverage as this feature rolls out.
KSM does not recommend shifting dollars away from Facebook simply due to this update.
So why is Facebook making it harder for advertisers when these dollars are their largest source of revenue? Their stated reason is that giving users this control over their privacy will ultimately have a long-term positive effect on their overall business.
While KSM agrees, we also believe that Facebook may be trying to rid itself of data responsibility, given the heat they have felt over the last couple years with the Cambridge Analytica scandal, among other issues. This update is one of many they have made in order to avoid liabilities in data protection. Last year, for example, they removed partner categories from their data offering in the ad platform. Partner categories were targeting options based on data provided by Facebook’s third-party partners such as Acxiom, Experian, and Oracle Data Cloud. Instead of allowing advertisers to tap into those segments seamlessly within the platform, brands and agencies must now partner with third parties directly in order to onboard the segments into the platform. All billing, data collection, and strategy conversations now live outside Facebook walls.
The other question this update raises for brands is whether they should now be prioritizing other social platforms over Facebook. Of course, social strategy and platform mix depends upon a multitude of factors specific to each business and campaign. But, in short, KSM does not recommend shifting dollars away from Facebook simply due to this update. That’s because Facebook provides so many additional benefits that other platforms just don’t have yet. They are the leader in the space as it relates to scale, advertising solutions, creative executions, optimization levers, and low-cost measurement studies and tools. While this will impact the ability to target and measure media leveraging their tools, KSM has solutions that can help fill in those holes.
And beyond Facebook’s enduring strengths, it’s also possible that long-term utilization of this tool will end up being fairly low. Similar to the 2015 media buzz that surrounded Apple’s incorporation of mobile ad blocking technology into its Safari browser, there may simply be a slight uptick in usage at the beginning, followed by a plateau or decline—especially if users fail to revisit and update their preferences down the line. It’s also unlikely that Facebook will put forward a strong awareness campaign to promote this tool, given that the effort feels more like a forced PR play than a genuine concern for users’ data.
Still, it will be interesting to see what other changes Facebook makes to its offerings as privacy and data continue to be hot topics among consumers. For now, there are solutions that we as brands and advertisers can leverage to ensure that campaigns are not disrupted. However, it could certainly become more difficult to navigate the social space in the coming years as policies continue to change.
On a related note… Maximizing the potential of your first-party data:
Are you doing your best to properly collect, cleanse, organize, and utilize your customers’ information? Here’s a checklist of key considerations:
- Opt-in and cleanse: In today’s world, clean and smart data reigns supreme. The last thing a brand needs is to hold on to outdated or incorrect information about their customers. Work with your legal counsel to implement proper opt-in and data collection approaches, and cleanse your data through regular audits and by implementing a data quality plan.
- Choose the right CDP and/or CRM platform: There are a multitude of Customer Data Platform and Customer Relationship Management options to choose from. Making sense of them all, and choosing the best for your organization’s specific needs, is a tall order. KSM can help you sort through the slew of options, and find the setup that best fits your business category and goals.
- Segment audiences based on interests and activity: Organization is key to effectively scaling precision-driven campaigns. Beyond grouping audience demographics, segmenting people based upon their customer journeys and purchase activity is essential to achieving smart and personal connections with your customers.
- Align your approach with brand and business goals: It’s the other side of the segmentation coin. Are you a retailer looking to boost cart sizes? A bank trying to increase mortgage lending activity? A restaurant group seeking to drive more family traffic? Customer data is obviously one critical ingredient for realizing these goals, and ensuring your segmentation aligns with and considers these core business goals is crucial to the overall success of your first-party data strategy.
- Stay current on data regulation issues: It’s been a tense few years for data-heavy industries. Between GDPR, CCPA, and the rising prospect of other local and federal data-privacy laws, things don’t appear to be slowing down anytime soon. At the moment, legislative and legal developments are continuing to arise on a regular basis, and KSM encourages brands to work with their legal and/or compliance teams to review the latest updates to ensure an understanding of potential business implications.