Josh evidences the impact iOS14’s privacy-focused changes had on DTC businesses and the marketing industry
How did an operating system update have an almost universal and substantial impact on direct-to-consumer businesses and the marketing industry? It all started with the arrival of iOS 14. Apple’s privacy-focused changes had significant implications for any small to medium scale business looking to promote their brand and products.
“I was a founder during the iOS 14 change and saw first-hand the impact that had on how we not just operate on Facebook, but generally how our digital marketing shifted,” said Josh Lachkovic to the What’s Possible Community.
Josh is a growth consultant and former founder with 12 years of experience in growth and startup environments. He advises startups across from pre-revenue up to scaled-up publics. He joined the What’s Possible Community sessions to evidence the impact iOS 14 had on businesses across multiple sectors in the last year, how they adjusted their marketing spend, and what the loss of customer data across digital platforms will mean for DTC brands in the long term.
The seismic shift came with iOS 14’s question to iPhone users in early 2021. When they opened the Facebook app, the question that popped up on all users’ screens was: ‘Allow Facebook to track your activity across other companies’ apps and websites?’
Josh reports that the percentage of people who clicked ‘Allow’ in the US was 4%. I.e. The vast majority of users stopped sharing their data with third parties. Google is reportedly looking to implement similar measures.
He argues that when a user is faced with a question about their privacy, they will always opt for more privacy. However, he contends that the question doesn’t consider context or value exchange – it assumes there are no second-order effects to opt-out of tracking.
Josh reckons if the question was asked differently, users might have thought twice. Specifically, if users had been presented with more information on the far-reaching implications for small businesses, the number of users opting out might have been lower.
Historically, DTC brands’ marketing spend was heavily invested in Facebook. It was an effective channel whereby a business could target audiences directly. Josh notes that 78% of startups have decreased their monthly budgets over the last year on Meta platforms with the new privacy changes.
He conducted a survey, which collected data on 35 companies that spent roughly 5-8% of all UK Meta marketing spend – equating to £15m of monthly spend. He found that every brand spending less than £100,000 per month on Facebook was spending 50% less after the iOS 14 changes.
Marketing agencies, fashion companies, and fintech companies with much larger budgets can still achieve much on Facebook; however, the small business advertiser stands to see a cut of over 60% in their sales for every dollar they spend.
“People aren’t going to grow a hundred per cent from one channel like they did like they did a few years ago. Diversification will happen sooner,” Josh said.
Selling a DTC product on Facebook with smaller marketing budgets has become more challenging. The reality is that Facebook users are struggling to find new brands even after opting-in for tracking. Nonetheless, Josh has advice for brands who would have typically been a one-channel brand: diversify and get creative.
DTC brands have had no choice but to diversify where they spend their budgets. The lion’s share of their budgets now goes into paid search, referral marketing, partnerships and influencer marketing. They are all looking to other social media platforms to spend their money on – and some are looking to traditional media.
Josh encourages brands to become creative and agile with their marketing campaigns to attract customer attention.
“TikTok is growing and rapidly, and it’s still – if you’ve got a product which suits it – it’s probably where most of your budget’s going. I know people spending equally now on Facebook and TikTok,” he commented.
Josh concluded with some advice he is giving DTCs to ensure they get the most reliable and growth out of Facebook: