Facebook and The Future of Customer Aquisition

Apple iOS14 has the potential to bring substantial change to Facebook’s ability to target, track, and measure advertisers’ performance across Facebook’s platforms. But even before the Apple iOS announcement, it was clear that Facebook has its constraints in terms of profitable customer acquisition.

There is a limit to how large a company can grow through Facebook alone. At a certain point, every brand will hit a point of diminishing returns on customer acquisition – lookalike audiences become duplicative, incremental reach becomes more difficult, and real CPAs rise as a result. We’ve outlined below the potential impacts of Apple iOS as well as how we have seen clients pivot away from Facebook to a more diversified marketing mix.

Potential Impacts of Apple iOS

While the exact impact is hard to gauge at this point, it is clear that Apple iOS14will limit Facebook’s ability to target and measure ads.

  • Facebook will be required to prompt users for permission to track them across apps and websites through 3rd party pixels. If a user opts out, Facebook will not be able to attribute product or ad views within the platform to purchases on an advertiser’s site.
  • Not only will this limit measurement, but it will also limit Facebook’s ability to target opted out users, optimize audiences based on conversion data, and accurately separate prospects versus site visitors or past purchases
  • Facebook is sun-setting the 28-day click attribution window and shifting to a 7-day click default attribution window

To combat these changes, we recommend verifying your domain on Facebook, implementing the Facebook Conversion API, and shifting all performance reporting (historical and current) to a 7-day click attribution window.

Where to Find Incremental Reach

Having reached a point of diminishing marginal returns on Facebook, many brands take a harder look at other channels. There are no shortage of options: Direct Mail, TV, OTT, podcasts, other social platforms, and performance-oriented digital display and native. As you test, vet, and validate these channels, keep in mind:

  • Many brands use Facebook for top-of-funnel acquisition and mid and bottom-of-funnel site remarketing. Ensure you have a strong customer database or CDP, are testing new retention channels such as SMS, and have a strong email acquisition program to ensure site visitors can be pushed down the purchase funnel.
  • Build separate campaigns and reporting for acquisition versus retention (which is standard in direct mail, but less common in digital!) to ensure there is a clear understanding around cost to acquire versus cost to retain
  • Integrate and work towards consistency across channels – messaging, brand experience, and audiences should be consistent and integrated, even as you test into new channels

While diversifying budgets away from marketing channels that are historically strong performers seems daunting, we are confident that the brands who have a diversified marketing mix across channels, campaign types, and platforms will see the strongest results.

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