Apple’s iOS 14.5 update has arrived. And with it, a flood of changes to Facebook Ads Manager.

Not to mention … uncertainty, confusion, and fear.

This article contains everything we know about the new iOS changes — as well as their impact on Facebook advertising and ecommerce trends. But, let’s cut to the chase …

Data on the State of Ecommerce & Online Advertising

As an index, we’ve compiled data from ~200 ecommerce brands totaling +$5.9 billion in online revenue over the last two years.

Those businesses are drawn from Statlas — our proprietary ecommerce growth tool; they represent Common Thread Collective (CTC) clients, ADmission members, and Statlas users.

All metrics have been standardized to Facebook’s default attribution.

Big Picture: Year-over-Year

For clarity, the following charts represent trailing 12-month YoY data. Each metric is also calculated for the three months before iOS 14.5’s release (Feb.–Apr. 2021), and three months after (July–Sept. 2021), excluding May and June 2021 to account for iOS 14.5’s rollout.

Average Facebook Reported ROAS

• Facebook ROAS 2020–21: 2.56
• Facebook ROAS 2021–22: 2.11
• Facebook ROAS YoY %-change: -17.71%

iOS 14.5 Effect on Facebook Reported ROAS

• Pre-iOS Facebook ROAS (Feb.–Apr. 2021): 3.14
• Post-iOS Facebook ROAS (July–Sept. 2021): 1.87
• Pre vs Post Facebook ROAS %-change: -40.48%

Average Marketing Efficiency Rating (MER)

MER = total revenue ÷ total ad spend; often referred to as “blended” ROAS.

• MER 2020–21: 5.03
• MER 2021–22: 4.82
• MER YoY %-change: -4.26%

iOS 14.5 Effect on Marketing Efficiency Rating

• Pre-iOS MER (Feb.–Apr. 2021): 5.24
• Post-iOS MER (July–Sept. 2021): 4.98
• Pre vs Post MER %-change: -4.90%

Average Weekly Facebook Spend per Account

• Facebook Spend 2020–21: $14,534
• Facebook Spend 2021–22: $16,365
• Facebook Spend YoY %-change: +12.60%

iOS 14.5 Effect on Weekly Facebook Spend

• Pre-iOS Spend (Feb.–Apr. 2021): $13,592
• Post-iOS Spend (July–Sept. 2021): $14,454
• Pre vs Post Spend %-change: +6.34%

Average Facebook CPM (Cost per 1k impressions)

• Facebook CPMs 2020–21: $12.18
• Facebook CPMs 2021–22: $13.63
• Facebook CPMs YoY %-change: +11.91%

iOS 14.5 Effect on Facebook CPMs

• Pre-iOS CPMs (Feb.–Apr. 2021): $11.13
• Post-iOS CPMs (July–Sept. 2021): $12.01
• Pre vs Post CPMs %-change: +7.97%

Average Weekly Ecommerce Revenue

• Revenue 2020–21: $146,291
• Revenue 2021–22: $163,913
• Revenue YoY %-change: +12.05%

iOS 14.5 Effect on Average Weekly Ecommerce Revenue

• Pre-iOS Revenue (Feb.–Apr. 2021): $138,953
• Post-iOS Revenue (July–Sept. 2021): $145,445
• Pre vs Post Revenue %-change: +4.67%

Immediate Context: Monthly

Comparing daily averages for the last four weeks year-over-year (YoY) …

• Facebook Spend: +0.18%
• Facebook CPM: -12.34%
• Facebook Revenue: +3.65%
• Facebook Conversion Rate: +3.87%
• Facebook ROAS: +4.02%
• Google CPC: -10.94%
• Google ROAS: -25.06%
• Marketing Efficiency Rating: +1.78%
• Total Ecommerce Revenue: +3.41%
• Average Order Value: +0.39%

Summary of iOS 14, Privacy Updates & Facebook

As of early May, Apple users on all mobile devices are receiving the App Tracking Transparency (ATT) Prompt — giving them the choice to opt-in or opt-out of data tracking.

Before this update, the Pixel could directly connect Facebook users’ app-to-onsite activity — in other words, actions on Facebook with actions on a business’s website.

Now, Facebook’s data, attribution, and tracking will be severely limited.

Data

• Then: Facebook could connect users’ in-app ad views (impressions) to off-app activity — like visits, add-to-carts, purchases, etc.
• Now: iOS 14.5 users will be opted out by default from Facebook’s ability to connect, report, and optimize that activity

Attribution

• Then: Facebook’s window was set to 28-d click + 1-d view; purchases and ROAS were recorded backwards to day-of impression
• Now: Limited to 7-d click + 1-d view; purchases and ROAS are recorded on the day-of conversion; goodbye, delayed attribution

Tracking

• Then: Facebook’s Pixel could track — and therefore, optimize for — as many default or custom events as you wanted
• Now: Only eight manually selected events can be tracked; users who opt-out of ATT are limited to just the top-prioritized event

What You Need to Do as an Ecommerce Brand to Optimize Post Apple’s iOS 14

1. Verify Your Domain in Facebook Business Manager

Verifying your domain is the first, most-immediate, and most-pressing step.

It’s so critical, I created a video walkthrough on exactly how to go through the verification process yourself:

1. Enter your Facebook Business Manager Settings
2. On the left-hand menu, expand Brand Safety > Domains
3. Select your domain from the available list or click “Add” if it doesn’t automatically populate

4. Follow any of the three verification processes — DNS Verification, HTML File Upload, or Meta-tag Verification
5. For simplicity, select the Meta-tag Verification tab and copy  by clicking the text
6. Open your Shopify admin and go: Online Store > Themes > Actions > Edit Code

7. Within Layout, open theme.liquid, search for, and anywhere before … paste thetext from Facebook
8. Save the theme, return to Facebook, refresh, and (lastly) click “Verify”

2. Set Up & Prioritize Aggregated Events Management

In total, Facebook will be limited to eight conversion events for each domain. Those events will be ranked manually within Ads Manager: that is, prioritized for tracking and optimization.

For users that opt-out of ATT, Facebook can only track the highest priority event. Even for users that opt-in, you’ll still be limited to eight.

Here’s how to configure your Aggregated Events Management …

1. Under Shortcuts in Facebook Ads Manager, click Events Manager

2. Select your Pixel and go to the Aggregated Event Measurement tab; click Configure Web Events

3. Hit the dropdown for your site

4. Prioritize your events and enable Value Optimization; for our brands as well as our clients, we’re ordering events — (1) Purchase, (2) Initiate Checkout, (3) Add to Cart, (4) View Content, and then any custom conversions

5. Follow the above hierarchy or adjust as needed

Lastly, ensure your product catalog feed for DPAs (Dynamic Product Ads) is set-up correctly and prepare for management through one conversion event per catalog.

3. Integrate Facebook’s Conversion API (CAPI) with Your Shopify Store

1. Log into Shopify and navigate to the Facebook channel within the App Store; click “Add app”
2. You’ll be redirected to your Apps page inside Shopify; click “Add sales channel”
3. Connect Facebook CAPI from within the Facebook Sales Channel by clicking “Continue setup” under Facebook Marketing
4. Connect your personal Facebook account or the account of someone with Admin permissions to your Facebook Ads Manager and Page
5. Follow the Facebook prompts until a green checkmark appears next to Facebook account ✅

   

   

   Through the remaining drop-downs, connect your …

6. Business Manager account
7. Ad account
8. And Facebook Page
9. Under Data sharing, choose the “Maximum” option which includes Conversions API (CAPI). Select the Facebook Pixel that matches the account you’re using. Note: be sure to match the name and ID number.
10. Click “Accept” and “Finish setup”
11. Validate your setup by …

    Option one: running a test within Facebook’s Data Sources > Test Events > Test Server Events.

    

    Option two: monitoring Purchase activity within the Overview.

    

There are no negative effects to adding the Shopify Conversions API. It will be deduped (de-duplicated) with your regular pixel events and not cause any over reporting. It will simply provide a “lift” in purchase events that we wouldn’t normally see because of ad blockers.

4. Establish Your Own Historical Attribution Benchmark

Already, the ecommerce world was preparing for the end of Facebook’s 28-day attribution window. iOS 14 has pressed home the need to collect, store, and evaluate existing data all the more.

To understand the historical impact of your ads, you’ll need to use a program like Supermetics to import 1-day, 7-day, and 28-day campaign performance into a Google Sheet. Note: This will only apply to pre-iOS-14 time periods and you can no longer access that data directly through Ads Manager’s breakdown.

In addition, you’ll need to anchor that data in a source unaffected by Facebook’s changes. We’ve chosen Google Analytics’ last-click attribution.

Google Analytics data does not rely on Facebook’s new attribution window and ads tracking. However — because Google Analytics can only measure last-click by UTMs — you’ll see lower ROAS than Facebook’s previous 28-day default.

To adjust targets, we’ve pulled month-by-month 2020 data from Google Analytics and Facebook for all of our clients as well as our in-house brands.

To help you do the same, we’ve replicated that template and created a video tutorial …

5. Invest Now (Not Later) in Retention & DTC Diversification

We’ve covered diversification before. Always with a warning.

Typically, what ecommerce owners and marketers mean is: “Let’s find a channel that generates the same or better returns than Facebook and Instagram at the same or better volume.”

To be blunt, such channels don’t exist.

For years, Facebook’s Pixel has sat on virtually every ecommerce storefront online. That data is Facebook’s moat. Not monthly active users, not usage time, not ad creative; data.

iOS 14’s privacy update may finally signal an end to Facebook’s hegemony.

That doesn’t mean a wholesale shift in customer acquisition costs. It does mean the dog days of customer retention, Google, and DTC’s hesitancy toward Amazon are over.

In anticipation of mounting third-party data restrictions …

First, the almighty email just got a whole hell of a lot more almighty. As did first-party data collection.

With retargeting audiences suffering the most, prioritize onsite contact capture (pop-ups), ecommerce email marketing, and customer lifetime value. Community cannot be a buzzword but instead should connect your brand to social causes your customers care about.

Second, demand-generating opportunities on Google — including Google Shopping, Google Ads, and YouTube prospecting — must be as aggressively pursued as demand capture.

The same can be said for other ad platforms, though none are immune from the challenges iOS 14 (see Pinterest, Snap, and TikTok’s statements on Apple’s IDFA Guidelines in the resource at the end of this article).

Third, knee-jerk reticence toward Amazon ought to be reevaluated by DTC operators.

 

And Google. And email. https://t.co/MyFgZnZHY4

— Common Thread Collective (@CommnThreadCo) December 17, 2020

 

Closing Questions on the Future of Facebook Ad Performance

As we look to the future, we’ve set our sights on answering a handful of questions.

• Will broad audiences still perform?
• Will data collection hurt lookalike audiences?
• Will cost controls (caps) be effected?
• Will splitting out remarketing audiences work?
• Will DPAs function and be worth using?
• Will delivery between Android vs Apple shift?
• Will landing pages be the digital marketing default?

As always, we’ll share our learning as it develops.

Be sure to check back on this article or sign up to get weekly data drops on every metric. That’ll add you to our data-only email list (so you won’t miss a single update).

In the end, the final protection comes from the nature of Facebook and the nature of humans.

Driven by supply-and-demand — if performance dwindles, so does price. The system itself is built to require equilibrium.

Less success translates into less spend. Less spend, lower CPMs. Lower CPMs, lower cost per acquisition. And lower costs should drive the platform back into balance.

Visibility could certainly suffer, especially visibility within Facebook Ads Manager. But, Facebook reporting is not the end-all, be-all of your business. At least, it shouldn’t be.

Are these uncertain times? Yes. Is the sky falling? No.

(After all, despite the challenges, people with iPhones are still using Facebook and Instagram, still shopping, and still buying. No prompt, no missing data, will change fundamental human behaviors.)

What Is Apple’s iOS 14 Privacy and Data Use Update?

Just when 2020 seemed put to bed — and 2021’s ecommerce future beamed bright — enter … back-to-back days of full-page ads from the world’s sixth-most-valuable company targeting the third-most-valuable:

For ecommerce businesses whose growth strategies hinge on direct-to-consumer relationships, the crux of the matter isn’t so much politics and PR; but rather, performance.

If we’re tracking correctly (pun intended), iOS 14’s new privacy policy will dramatically affect app developers’ ability to measure and monetize advertising strategies as well as “those that optimize, target, and report on web events.”

How severely this will impact the Facebook Pixel remains to be seen. Especially the relationship between in-app activity on iOS devices and onsite activity by shoppers.

In short, the controversy surrounds three acronyms:

• IDFA
• SKAd Network
• ATT

Identifier for Advertisers (IDFA)

First, Identifier for Advertisers (IDFA) is a unique Apple ID assigned to every device that persists across a user’s applications. On Android devices, it’s known as the Google Play Services ID (GPS ADID). Both are brand-specific subsets of MAIDs (Mobile Advertising Identifiers).

Think of IDFAs as the user-to-app equivalents of cookies-to-browsers or pixels-to-shoppers. On Apple devices, IDFAs track, target, and personalize in-app advertising.

SKAd Network

Second, SKAd Network refers to how Apple’s SDK (software development kit) — the set of tools governing how mobile apps get created, run, and managed — interacts with advertising. Once iOS 14’s privacy updates go into effect, app installs as the result of in-app advertising will be mediated by Apple’s SKAd Network.

That’s a mouthful. Luckily, it applies predominately to application developers and not ecommerce or social-media advertisers.

Moving forward, the SKAd Network will provide click-through attribution for Publisher ID, Campaign ID, and Conversion Value (set by the advertiser). It will exclude view-through attribution for apps as well as click-through attribution for browser, email, and non-in-app ads.

As a result, Facebook will have significantly less insight into the apps its audience installs and runs. By extension, so will business owners and marketers.

App Tracking Transparency (ATT)

Third, App Tracking Transparency (ATT) — or, “AppTrackingTransparency Framework” — is a new and universal prompt that will appear on all apps to all iOS users.

For ecommerce business, ATT lies at the heart of the issue.

How Will iOS 14’s New Policy Affect Facebook Ad Campaigns & Ad Sets?

In late Apr., iOS Apps that collect data for “personalized advertising” began displaying Apple’s ATT prompt. This is an additional layer of privacy atop the current settings:

When a similar prompt was introduced by iOS 13 regarding geographic information, opt-in rates to allow sharing “with apps when they’re not in use” plummeted from 100% to below 50%.

Facebook’s statements reflect similar projections: “In testing we’ve seen more than a 50% drop in Audience Network publisher revenue”; and, “Our studies show, without personalized ads powered by their own data, small businesses could see a cut of over 60% of website sales from ads.”

In context, it’s crucial to point out that Facebook’s figures are preliminary estimates that may mix ecommerce with SDK implications (i.e., app revenue).

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Resource on iOS 14 and Ecommerce

 

• Our Stance on Apple’s iOS 14 Policy Requirements and Guidance to Help You Plan; Jan. 7, 2021 by Facebook (Webinar)
• Preparing Our Partners for iOS 14: Mobile Web Advertising; Dec. 16, 2020 by Facebook for Developers
• User Privacy and Data Use (iOS 14); June-Nov. 2020 by Apple
• Speaking Up for Small Businesses; Dec. 16, 2020 by Dan Levy (VP Ads and Business Products)
• Preparing Our Partners for iOS 14; Aug. 26, 2020 by Facebook
• Small Businesses Deserve to Be Heard (Microsite); by Facebook
• Apple’s IDFA Guidelines from TikTok; updated Dec. 2020
• Impact of iOS 14 on Facebook Advertisers; Dec. 16, 2020 by Jon Loomer (Heavy Hitters Club)
• Preparing For iOS14’s Impact on Facebook Ads (Docsend, Gated); Dec. 31, 2020 by Nick Shackelford

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