How Facebook’s Feud with Apple May Impact Auto Dealers

For years, Facebook has been a powerful resource for auto retailers who have leveraged the social platform’s ability to drive and target advertisements that are uniquely and individually tailored to a car shopper’s interests.

In fact, Facebook advertising offers auto retailers a chance to connect with an estimated 2.80 billion monthly active users according to Hootsuite¹, and with 258 million of them in North America, according to recent data from Statista², the opportunity is massive. Furthermore, the amount of data Facebook gathers on user behavior and engagement empowers them to deliver ad messaging at an extremely efficient level.

However, with Apple set to implement new privacy measures, the impact to Facebook will be significant, and will impact the way auto retailers need to leverage Facebook to ensure continued efficiency and results.

What Is Happening Between Apple and Facebook?

Apple’s new privacy update in iOS14 is reported to consist of an operating system that will more aggressively warn users of applications that attempt to access their data and give people the opportunity to opt out of any companies and apps that are trying to track their activity.

For obvious reasons, Facebook is not happy about this because it will impact their ability to gather some of the broader user data they use to deliver targeted ads. This will likely impact the effectiveness of less sophisticated ad campaigns, which represents a large cross-section of the money they make from advertisers. For instance, an advertiser today who does not integrate their inventory, customer data or sold data can still execute highly targeted ads that come from Facebook’s ability to track and understand users both in and outside of Facebook’s apps.

What’s at stake here is not just the issue of privacy, but also one of access. No one wants to feel like they’re being tracked. However, Facebook’s ability to offer a personalized user experience through its sophisticated algorithms are the reason why everyday people are presented with ads that are uniquely tailored to them and their interests. There are actually millions of people out there who are in the market for a new vehicle, and while they often don’t realize it, the engagement data does show that shoppers appreciate when a dealer provides them with a relevant offer for a vehicle they’ve been shopping for. It makes their shopping experience that much easier, faster and a timely incentive delivered in the ad can even save them money and expedite their purchase — win-win.

Why Targeted Ads Help Consumers Expedite the Shopping Process

When consumers reach out to a dealership today, they are serious about buying and are ready to do so quickly — largely because of the targeted offers dealers have presented them online. According to a recent automotive buyer study from Marchex, 97% of people report that they are somewhat or very serious, and a full 75% anticipate purchasing within three weeks of initial contact, with 39% planning to buy within a week or less³.

Targeted ads help consumers find the vehicles and offers they are interested in much faster today compared to years past when dealers only had traditional media to leverage without the power to target their messages at a more personalized level.

When this new update is implemented, and people choose to opt out of being tracked, they will not be presented with ads that pertain to them in terms of their recent car searches. With the iOS 14 update, the auto industry will be faced with an immediate need to leverage more first-party data or even diversify into additional advertising tactics to maintain momentum in driving shoppers through their doors.

Furthermore, it will be imperative that retailers monitor their digital advertising performance metrics closely over the first three to six months to identify changes when the switch to iOS 14 takes place. Through monitoring of ad performance, they can quickly begin to identify if and when changes, or a shift in strategy will be needed. Regardless of what’s ahead, there is a lot that can be done today with the data you own to insulate your advertising from significant impact and minimize exposure.

Minimizing Your Exposure

Any update will likely change the way retailers approach a targeted advertising campaign. Depending on the severity of the impact, it may also place a greater emphasis on other platforms or mediums, such as Facebook/Instagram Video, YouTube and connected TV content.

Industry estimates show that CTV households are expected to grow 82% by 2023⁴, and cord-cutter and cord-never households will increase to 44% of the population⁵ during the same period.

According to the Video Advertising Bureau⁶, it was believed that ad spending on addressable TV would reach $3.3 billion by the end of 2020, up 343% dating back to 2016. OTT content will play a large part for users. Premium video ads via OTT are expected to achieve a 98% completion rate,⁷ according to Freewheel, and this by far outperforms that of tablets, smartphones and even desktop platforms.

That said, the general trend toward user privacy is likely to continue and will undoubtedly impact more verticals outside of Facebook sooner than later (see Google’s elimination of third-party cookies⁸). With this in mind it’s critical that dealers immediately move to leverage the customer data they hold in their DMS and CRM systems to create cohorts of their best customer profiles. Working with a capable advertising partner can ensure you do not violate privacy laws in the use and transfer of this data and will empower you to define first-party data cohorts that Google, Facebook and other major ad channels can use to match across their user databases and define highly targeted audiences without the use of third-party data, or user behavior outside of their apps.

Outside of this due diligence, auto retailers should not make any drastic changes for the time being. The smart move is to ensure you are leveraging your first-party data to define audiences, and then closely monitor digital ad performance and metrics over the next 12 months or so to determine if any changes to privacy policies or data capabilities have any significant impact on web or showroom traffic.

Fortunately, the industry is now equipped with a bevy of tools and resources to help retailers make faster data-driven decisions on the fly to continue serving customers effectively, even when major shifts occur. If you don’t feel like you have access to tools that give you confidence in your decision making, demand clarity from the partners you work with. Data insights and clear benchmarking should be a minimum expectation of each of your vendor relationships.

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