Are Privacy Changes Making Advertising Harder?

Posted by Lindsay Brown on June 13, 2022 in Advertising

Apple has made advertising harder for marketers with their privacy changes, but some brands say that it has not made a change in their advertising. Below you will learn how some direct-to-consumer marketers are chasing customers.

As reported by Wall Street Journal on June 6^th, 2022 by Ann-Marie Alcantara.

How Direct-to-Consumer Marketers Are Chasing Customers After Privacy Change

Direct-to-consumer startups that once advertised primarily on Facebook and Instagram are still adapting strategies to reach consumers on and off social media more than a year after a privacy policy change by Apple Inc. upended the digital advertising landscape.

Some direct-to-consumer brands say research shows Facebook and Instagram marketing remains a powerful way to promote themselves, while other DTC brands say Apple’s policy change has led them to consider new ways to acquire customers.

DTC brands like Casper Sleep and Warby Parker for years challenged established brands in their categories, mattresses and eyewear respectively, aided by social-media platforms’ ability to display their ads to just the right potential customers. But Apple’s policy shift undermined such targeted advertising and the measurement of its results.

The new policy left many younger DTCs scrambling in search of advertising options because they lacked the name recognition, alternative sales channels and diversified marketing plans of larger competitors.

In January, Jones Road Beauty cut its ad spending on Meta Platforms Inc.’s Facebook and Instagram by 25% in response to Apple’s move, and because of promising engagement results of marketing efforts on TikTok, said Cody Plofker, the DTC cosmetics brand’s chief marketing officer.

Jones Road Beauty, founded in 2020 and officially named JustSteven LLC, has shifted spending away from Facebook and Instagram ads to TikTok ads, while trying to reach consumers with more content it produces on its own for its website and to post across social media, including on Instagram and TikTok.

Dutch Pet Inc., a telemedicine company for pets founded in 2021, is looking for ways to market itself beyond its current mix of Google, Meta and affiliate marketing, and is considering influencer marketing and direct mail.

In the wake of Apple’s policy change, startup executives must adjust marketing strategies to help their companies reach revenue targets, said Dutch Pet CMO Matt Gehring. “It is just going to take longer to get there, and you’re going to have to risk more dollars on inefficiencies,” said Mr. Gehring, who has led growth marketing efforts at DTC companies including clothing brand Everlane.

At the same time, new strategies forced by Apple’s policy change may help startups reach broader audiences, he added.

“There’s likely a place for your brand with people that, let’s say, three years ago wouldn’t have seen your product just because of how hyper-targeted you were,” Mr. Gehring said.

Taylor Offer, chief executive at Feat Socks Inc., a DTC athleisure brand he founded in 2015, agrees: “It seems like in the past five years we forgot all other marketing channels existed.”

“Now it is back to all those other opportunities,” he said. “You might not get that same-day attribution that you used to get on Facebook and Instagram, but it is building the brand over time.”

Feat has cut its budget for advertising on Facebook and Instagram by 20% and is posting more content on social networks such as LinkedIn and TikTok, and working with smaller-scale influencers and seeking distribution by retailers for the first time.

Some of Feat’s tactics, like engaging more with consumers on social media through direct messages, are almost the opposite of the large-scale targeting of consumers the company had employed.

“It is a community-driven approach, and community-first, and down-and-dirty marketing,” Mr. Offer said. “It is doing things that aren’t scalable. It is responding to every single customer in the DMs and leaving an impression that way.”

The cost for Feat to acquire a new customer has increased to a range of $75 to $100, from $50 to $75 before Apple’s privacy policy change, Mr. Offer said.

Even with the policy change, Meta remains a dominant player in the online advertising market, posting $27.9 billion in total revenue in the first quarter of this year, up 6.6% from the same period a year earlier. That, however, was the company’s slowest revenue growth since going public a decade ago.

Meta has responded to Apple’s new policy in part by measuring ad campaign results with aggregated data for businesses while encouraging users to interact with companies on its platforms.

“We’ve continued to adapt our systems to help businesses succeed, while honoring privacy, and shared detailed steps they can take to maximize performance and measurement,” a Meta spokesperson said. “We believe Facebook and Instagram remain the best platforms for businesses to grow and connect with people.”

Portable blender company BlendJet Inc. said it hasn’t changed how it advertises on Facebook because of Apple’s privacy policy, because it uses outside measurement and research to evaluate and improve its marketing strategy. But Apple’s policy change hurt Facebook’s ability to demonstrate sales stemming from ads, said Ryan Pamplin, chief executive of BlendJet.

Even so, Facebook is still an important way for BlendJet to reach potential customers. In the 30 days before Apple’s privacy changes, BlendJet recorded 60% of its sales via Facebook and Instagram, compared with 57% in the 30 days after the changes and 56% in the first quarter of this year, according to the company.

“It is not that Facebook is not still driving a massive amount of sales—it is,” Mr. Pamplin said. “What’s happened is the amount that they can take credit for in-platform has gone down.”

Has Apple privacy change affected your advertising?