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In the wake of Apple’s App Tracking Transparency changes, Meta and the brands that use its advertising tools to power their performance marketing stood to lose the most.
The ability to block Apple's Identifier for Advertisers (IDFA) in the 2021 iOS update diminished attribution capabilities, and in doing so it delivered a direct hit to the audience-building and retargeting that made the advertising engine behind Facebook and Instagram such a powerful machine.
But as the fallout from iOS 14.5 becomes more clear a year later, there are signs that Meta’s position in ecommerce isn’t fading completely. It continues to capture a large portion of spend, and is developing new products that are built for a privacy-first digital advertising market.
This may be the beginning of a new era for Meta advertising, but Facebook and Instagram remain a viable channel for brands to reach consumers, and even one where they can find success.
To be sure, the IDFA changes dealt a blow. On a corporate level, this is reflected in Meta's revenue hit from ATT, which executives forecast to reach $10 billion in 2022. At the same time, there are real signs that the dominance it once held is diminishing. According to Insider Intelligence, the Meta-Google ad duopoly will dip below 50% share for the first time since 2014 to 48.4% in 2022, as Amazon and TikTok gain, Axios reported.
This led to a real shift for ecommerce in 2022. Meta’s advertising capabilities were a linchpin of the direct-to-consumer playbook, and brands that used it have suffered from the signal loss. This year, more brands that vaulted to prominence by selling through their own website and advertising on Meta diversified their advertising to many channels, and rewrote their retail strategies by expanding to Amazon, wholesale and brick-and-mortar channels. The big names to make these changes are Glossier and Peloton, but DTC founders throughout the community have talked about how they are undergoing a new wave of experimentation with a multichannel approach all year.
The timing of all of this is particularly difficult. ATT happened to arrive in a year when the ecommerce growth of the pandemic reset to 2019 levels and inflation cut into discretionary spending, so the advertising shift is coming at the same time as a tougher environment for digital commerce. Meta CEO Mark Zuckerberg spoke to this as he announced Meta layoffs this fall. The trajectory of Meta and ecommerce are linked. That being said, it is not the case that ATT and its effects on Meta advertising were the only reason that brands found tougher sledding in 2022. Demand, a pullback in venture capital and rising customer acquisition costs are also among the reasons.
Yet, in all of this, Meta’s market position hasn’t exactly fallen off a cliff. At the peak of dominance in 2017, it had 20% market share in digital advertising. This year, that share has fallen to just 19.6%, according to Insider Intelligence. In the third quarter, revenue from advertising was $27.2 billion, which is by no means a small business. Meanwhile, ad impressions increased 17% year-over-year across the company's apps.
Going forward, the question is not so much whether it can survive as an advertising behemoth, but whether it can recalibrate for the changed landscape.
One example of how it wants to do so is Advantage+ shopping campaigns, a new ecommerce-focused ad type launched in August that is Meta's largest post-iOS 14.5 release to date. With this product, Meta employed AI to simplify the process of creating ads, and delivering relevant ads to users. Here’s how it describes the product:
In just a few steps, an advertiser sets their business objective, target country, advertising creative, and budget. After that, they let our AI systems do the rest: optimizing to find the right person, with the right message, and at the right time to deliver a strong ROI. By leveraging AI and automation, it helps advertisers get smarter – faster – on which campaigns are driving results.
The results of a recent pilot that were reported by the company shows promise. The summer test with 31 advertisers found that, on average, Advantage+ shopping campaigns improved cost per acquisition (CPA) by 17% and return on ad spend (ROAS) by 32% when compared with a usual campaign.
As a result, the test was expanded from ecommerce and retailers to a wider range of CPG brands and entertainment companies.
On Black Friday-Cyber Monday, brands made Advantage+ a bigger part of their ad spend. Meta reported the following this week:
True Classic made Advantage+ 40% of its total spend for the holiday shopping weekend, and saw 25.6% lift in return-on-ad-spend when compared to its second and third highest existing campaigns.
Hollister made the ad type a majority of its investment on Black Friday-Cyber Monday, and achieved its strongest Facebook and Instagram performance in years.
Wolverine Boots went all-in, with 100% of spend on Advantage+. The result was 55% growth in CPM when compared with the same period last year.
Hydrow, the at-home rowing company, had more than half of its November Meta investment in Advantage+, and found a 55% decrease in cost-per-purchase.
Like many data points shared by companies, these leave us wishing we could learn more. For a deeper look under the hood, AdExchanger has a look at what the product means for ad buyers. For those seeking more about how it all works, Mobile Dev Memo has a solid analysis.
But the point on a high level is that brands are still using Meta advertising, and finding new ways to reach customers through its tools. In the fall, Meta also released Custom Audience, which uses AI to find people who are likely to be interested in a product. It's a new product but performs a function similar to Lookalike Audience, which drove so much spend pre-ATT.
Tools from others in the ecosystem could also help. Shopify, which provided the commerce infrastructure to DTC as Meta provided advertising, earlier this year released its Audiences product. It allows brands to leverage Shopify’s network to create lookalike audiences for use on social advertising properties such as Meta, which in turn holds out the promise of improving targeting. Executives have said early results show promise, even as use is limited for now.
iOS 14.5 changed things, and the shifts we saw this year will still matter going forward. Retail media networks, including not just Amazon but also Walmart, Instacart, DoorDash and retailers from Ulta to Nordstrom, stand to gain in a world where first-party data is even more valuable. Content and commerce will also continue to converge, making shoppable content and CTV more prominent. Tools that help advertisers measure and understand interactions across channels will be critical. Meanwhile, more privacy-oriented changes are likely to be coming. As ATT settles in, the digital ad industry is still preparing for the demise of third-party cookies, even though the sunset date continues to get pushed back.
Through it all, new solutions will be built for this landscape, and this year's releases indicate Meta will be among those creating them. To see what’s working, brands must follow the data for their own campaigns – not the stock price, or even the headlines. After all, Meta has a long history of delivering results, even when it is facing controversy.
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At the NRF Big Show, the consumer electronics brand offered a look at devices and displays designed for the store experience.
We're taught that enterprise and consumer are different. They require different approaches to market, and the features required can vary depending on the specific needs. Yet there are a number of elements that are constant across these segments. Operating in both, and there are advantages learned from expertise in one area that can be applied to another.
This came to light inside Samsung booth at the 2023 NRF Big Show.
Think of Samsung, and consumer smartphones and TVs may come to mind. None of that was on display in New York, however.
The company’s booth offered a look at the technology and systems that the electronics brand provides for retailers.
Joe Hasenzahl, director of sales for B2B mobility for retail at Samsung Electronics America, demonstrated several of the features of Samsung’s enterprise devices for retail associates.
In-store mobility devices look like a smartphone, but they are a “ruggedized” and have distinct features. There are swappable batteries. They can survive a fall on concrete, and can be submerged in water for 30 minutes. Plus, there is a big screen, built-in software to take contactless payment and additional device security. While a consumer phone may have a few communication functions, this one is designed to be a whiteboard, walkie talkie, payment processor, point of sale and training device all in one.
“Nobody in retail has one job, and neither does your device,” Hasenzahl said. “It's got to be able to do everything because retail has set that dynamic.”
Digital displays show social media. (Courtesy photo)
But break down what the associate wants from a device, and plenty of similarities with consumer technology start to emerge. People want information that they need to function available at their fingertips, and the phone provides that with scheduling and workflow tools. They want to have peer-to-peer communication. The voice activation provides that, and they can use the phone to talk, as it was originally intended.
Hasenzahl said Samsung's approach to designing for the user comes down to three questions: Who is the brand talking to? It may be a customer and it may be an associate. Where is that person? They may be on their couch or in a store. Finally, what is the messaging opportunity?
“It's everywhere from their own personal mobile device, to a device given to an associate in a retail environment by that retailer, all the way up to billboards in Times Square,” Hasenzahl said.
In the end, associates and customers are all people. They want many of the same things.
“We understand how consumers are using mobility and recognizing that there's not a substantial difference between what associates demand and what consumers demand, leaving them with a device that's natural for them, but still designed for the enterprise,” Hasenzahl said.
Display drives an ecosystem.
A display at Samsung's NRF booth. (Courtesy photo)
It’s also worth remembering that consumers have devices when they enter a store, just like associates do.
That insight is helping to inform Samsung’s work on an in-store ecosystem that includes digital signage, sensors, kiosks, a shopper’s device and software to connect and power the whole experience.
Working with technology partners, Samsung is leveraging this connected system to analyze shopper behavior in a store.
The journey starts like this: A shopper may see a sign outside a store, and walk in. When they do, a sensor picks up the signal, and the phone flips over to an in-store mode. This switch doesn’t require a user to opt in, but data is anonymized.
Just like with a website, the system can analyze where a shopper is, how long they spent inside and other key information.
“Here's what we learned from our signage: Analytics are great by themselves, but when you connect them to our signage, it's like peanut butter and jelly put together,” said Parrish Chapman, director of enterprise retail sales at Samsung. “We now can have an action and change that action during the buyer journey…We know when you come in, where the device is traveling, how long you're in every zone. This allows us to automatically change content on the digital signage in the store."
A kiosk in Samsung's retail division. (Courtesy photo)
Additional information can be positioned throughout the store, whether it is on kiosks or relevant social media posts on digital displays through a partnership with Sprinklr. The idea is to offer a host of options that meet preferences and needs of a particular shopping trip.
“Customers are picking how they interact with the technology instead of us telling them,” Chapman said.
Samsung's capabilities can also elevate the sensory experience. The booth included an aroma associated with a cafe and sound triggers through technology from Samsung brands Harman, MagicINFO and Blueforce Development.
While the additional features may lead some to hear the sound of bills ringing up higher and higher, Chapman said this technology can be subsidized in part through advertising. The Samsung Ads network provides digital out-of-home advertising. For retailers, ads could appear on EV charging stations, or in-store displays.
While there are many different offerings, Chapman said the company aims to be “consultative” in its approach, learning both about what the retailer wants and the funding approach. It starts with a display and builds out. Ultimately Samsung wants to make it easier to access this technology and offer flexibility to adopt what fits best. It has established partnerships so that retailers don’t have to work with a multitude of vendors, or even allow Samsung direct network access.
“There is a lot of data out there, and people are overwhelmed,” Chapman said. “We're trying to simplify that equation and show the impact of physical retail with our displays and our ecosystem to help them run their business.”
Just like the consumer and the associate, the retailer also wants an easy-to-use system that makes information available, and helps them perform key functions in as few steps as possible.