Here’s Why You Shouldn’t Worry About Supply Chain Issues This Holiday
by Stephen Graveman
3 Min Read
The social network’s brand safety audit is MIA, and its ad business continues to cope with mobile app tracking privacy changes
4 Min Read
Advertisers who would normally rely on Facebook to generate strong returns during Q4 may need to look elsewhere. As we edge toward Q4 planning, the social network’s problems are looking like they’ll result in an underwhelming and problematic ad environment. This goes double for brands looking to drive conversions and revenue with their ad strategy.
That’s due in large part to an unresolved brand safety issue, as well as the continued fallout from changes to mobile app data tracking brought on by Apple’s iOS14.5 update. That’s left some major pitfalls for advertisers to take into account when building their ad strategies—here’s the current state of things.
Last year Facebook took a lot of heat for brand safety issues. This is nothing new—the social network has had problems with inappropriate content being paired with advertisers’ messaging for years now. But 2020 was especially intense, playing host to an out-of-control pandemic, civil and social protest and unrest, and an extremely contentious election. To say social media was a battleground filled with brand-unsafe content is an understatement
That led to a brand boycott of Facebook’s ad service by major advertisers, including the likes of Verizon, Clorox, Coca-Cola, HP, and Lego. In response, Facebook stated they would address the matter by implementing several measures. This included a 3rd party brand safety and content monetization audit by measurement-verification group Media Ratings Council (MRC), which Facebook said would begin no later than June 2021.
Well, it turns out that brand safety audit hasn’t happened yet. Reporting by Digiday has found that the MRC has been waiting months for Facebook to conduct an “internal readiness process,” with little insight into what that process entails.
“We are on track to complete our readiness and start the audit in July,” a Facebook spokesperson told Digiday. “We’re looking to achieve accreditation with the MRC by the end of this year.” Facebook seems optimistic about starting soon. But the MRC isn’t so confident.
“We can’t really speak to a potential accreditation date, though, which is highly dependent on audit findings,” an MRC spokesperson said. Not only are they unsure of when the audit will be complete—they aren’t even sure what (if any) accreditation would cover. The MRC and Facebook don’t even have a signed agreement in place for the scope of the audit.
“As to what [Facebook] could be potentially accredited for, that’s wholly dependent upon finalization of the audit’s scope, which we can address once we actually have an agreement in place with them,” said the MRC spokesperson. The likelihood of the audit’s results being made public before the end of the year isn’t great, which would prevent advertisers from making informed decisions in time for Q4. Bad timing, and a bad deal for advertisers.
Facebook knew they would have a serious problem on their hands when Apple’s iOS14.5 update went live. “These changes will directly affect [businesses’] ability to use their advertising budgets efficiently and effectively,” said Dan Levy, Facebook’s VP of Ads and Business Products. “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.”
That’s because it asks users to opt-in (versus opting-out) to mobile app ad tracking. Early estimates predicted Facebook could see a $7B decrease in ad revenue, and that opt-in rates would be low.
But opt-ins are far lower than even the most pessimistic predictions. Early opt-in rates struggled to hit 4%, and it hasn’t gotten much better since. The latest numbers show only 10% opting in after months of Facebook and other apps trying to convince users to do so. That’s not a good trajectory, and the percentages will be abysmally low into Q4. It’s safe to say advertisers will not enjoy the same levels of audience targeting and campaign measurement as they did last year on Facebook.
Facebook is no stranger to controversy, but the latest combination of challenges is particularly detrimental to advertisers. This has caused many marketers to seek out alternatives in their planning.
Connected TV marketing, which has seen a massive surge in popularity and effectiveness over the past two years, is touted as a solid alternative. Its targeting and measurement capabilities allow advertisers to target exact audiences via first or third party data, and measure outcomes based on their campaigns thanks to advancements in cross-device measurement. It also sidesteps reporting and targeting issues related to cookies and iOS14.5.
As things stand now, it’s not looking like a very happy rest of the year for Facebook. Advertisers would do well to take note of the potential pitfalls, and avoid relying too heavily on them this year in their media planning.
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