Over the last month, if you’ve been listening closely, you’d be able to hear a quiet rumbling within the app marketing community. In early May, Facebook began informing app marketers of a new policy change – the social media giant would no longer provide device level data back to advertisers via Mobile Measurement Partners (MPPs). These MPP partners include companies like Kochava, Fiksu and even Yahoo’s recently acquired Flurry.
Typically when Facebook makes a big policy change, you’ll hear it being shouted from the mountain tops, but this one feels different. Do a search on the topic and you’ll find one (maybe two) articles that discuss the policy change. Either no one fully understands the deep impact this will have on the app marketing community or Facebook has done a great job muffling the media, so as not to create a panic.
While this policy change may not have hit most major trades or even seem like a big change to the way advertisers will work with Facebook in the future, the decision to no longer provide device ID’s through MPPs will have a major impact on the entire app ecosystem.
To understand the impact, we must first understand the importance of the data itself. Collecting device level data allows app marketers to not only retarget consumers more efficiently across their mobile device(s), it also allows them to derive ad attribution. In the past, app marketers would be able to determine what Facebook ads drove downloads and, more importantly, which of those downloads provided quality Lifetime Value; otherwise known as LTV. Once they understood these pieces of the puzzle, they would be able to create look-a-like models for future campaigns in an attempt to drive downloads of similar value.
The recent changes to how Facebook shares data with app marketers, essentially negates both of these practices; making it much more difficult to understand ROI on the platform. To put this into context, let’s look at a hypothetical example.
Let’s say in a month’s amount of time, an app marketer spent $100,000 on Facebook app installs, $100,000 on display ads and $100,000 on value exchange traffic. Post campaign analysis reveals the campaign resulted in a Cost Per Install (CPI) by ad product of $5, $8 and $1 respectively. Now, prior to the recent policy change, that marketer would have been able to attribute the following:
- 20k installs to FB
- LTV of $20
- 12.5k installs to Display
- LTV of $16
- 100k installs to Value Exchange
- LTV of $10
- 25k installs (conservatively) to Organic Traffic
- LTV of $17
In the new Facebook model, this app marketer would still be able to see most of this information, but with one major difference. Because FB will no longer be providing device level data, those 20k Facebook installs will essentially be lumped in with the organic installs via your MPP dashboard. So while you’ll be able to understand that your $100k of Facebook media drove 20k installs out of the (now) 45k installs tagged organic, they won’t be able to determine which traffic source (Facebook or Organic) drove installs with higher LTVs. As you can imagine, these numbers become even more difficult to decipher if you’re a major app advertiser, like Supercell, spending millions across multiple platforms; some with little to no attribution like Traditional TV or OOH.
At a difference of $3 more an install and $4 less LTV, would it actually be worth it to this advertiser to simply focus their efforts towards display versus continuing to spend on Facebook? While it seems less efficient in the short term, the granularity in reporting will allow them to model off this traffic more efficiently; ultimately creating cost savings on the front end and increased long-term ROI post-install.
Alternatively, the same advertiser could begin to shift their budget more towards mass awareness vehicles, like TV, since we know traditional TV CPM’s are on the decline (especially on cable networks) and they are already seeing a $17 LTV from their organic downloads. In either case, Facebook’s new policy could actually end up having negative effects on their overall mobile revenue, of which 50% is made up of app install campaigns, according to recent eMarketer reports.
While Facebook positions this as a shift towards ‘people based measurement, with a focus on audiences instead of devices’ and places app install campaigns on a level playing field with the rest of their ad products, several MPPs have agreed that this change in data sharing could be an underhanded move by Facebook to force app marketers to begin using their analytics tools like the Facebook SDK; ultimately giving the social media giant insights into data like post-download engagements and cutting MPPs out of the mix in the future. This is one area Facebook doesn’t have a lot of data and this highly coveted information could be a huge benefit back to their ad business moving forward.
In the face of such diminished reporting the decision ultimately falls upon the app marketer to determine if spending on Facebook, simply to take advantage of the mass scale of the platform, is still as valuable as it once was. Is it better to have transparency on attribution or mass scale? Many of the larger app marketers are already working to make a decision on this topic, but early reports show that many of them are struggling to justify large portions of their budget being spent on a digital platform that will no longer track back to the associated LTV of a user.