How to Implement Conversions API

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What does the iOS 14 update mean for advertisers? What is Conversions API and how can you implement it for optimization and overall campaign success? BONUS: Is digital advertising primed to takeover traditional advertising in terms of overall spend and revenue earned in the industry as a whole?

‍Full Q+A Transcript Below:

Isaac Rudansky: Good afternoon, everybody. Thanks for tuning in. I am Isaac Rudansky, as most of you probably know. I'm here with Patrick Gilbert and Danielle and we're here for another live Q&A to answer some of your questions, to talk digital advertising, to cover some updates in the industry.

Today, we're going to focus on iOS 14 for a few minutes because a lot of you have questions around iOS 14; what it means for your business, what it means for your Facebook campaigns, what it might mean for your Google campaigns, what you should be telling your clients. We're here to answer some of those questions.

First, if you haven't gotten your copy of Join or Die: Digital Advertising in the Age of Automation, it's available on Amazon. It's a digital advertising masterclass, real techniques, real strategy - the very secret sauce that we've used to help grow our business, to help grow our clients' campaigns. Check it out on amazon.com. It's written by Patrick Gilbert, by the way, Join or Die: Digital Advertising in the Age of Automation.‍

Okay, we have a podcast coming out this week that goes into depth about the iOS 14 update, so check that out. It's called How to Hide a Dead Body podcast, available on Spotify and Apple Podcasts, and anywhere else except for anywhere that podcasts are not. You can unpack that for a second.

Anyway, Patrick I know I'm going to be jumping out of this session a little bit early but let's cover some of the iOS 14 updates. I encourage everybody to post your questions on the thread here because, if not today, we'll get to them in the next session.‍

Patrick Gilbert: Awesome. Again, we're going to try and quickly cover this because I think a lot of people in the group have at least a vague understanding of what's happening and if you don't, I, even more, encourage you to check out the upcoming How to Hide a Dead Body podcast where the goal of that is really to talk in layman's terms about all the stuff that's happening.

Basically, the very long story short here is that Apple is taking a stance, moving away from third-party tracking and cross-site tracking and just generally using cookies to track data. I think you could speculate that they're doing it specifically to target Facebook and to hurt Facebook. To try and win back some of the market value that is currently going back through Facebook's ecosystem where Apple is saying, "Hey, look, we want our app store to be more valuable than all these different features on Facebook."

That's neither here nor there. The reality of it is back in August we learned about the new iOS 14 updates which include this new IDFA policy. IDFA is the option that advertisers can allow individuals to opt into cross-app tracking. It's always been available but most app companies out there or app developers don't choose to invite their customers to choose whether or not they're going to opt into this.

Now, as of this new protocol referred to as ATT the app tracking transparency protocol, all app developers are being forced to prompt their users with the IDFA prompt allowing them to opt-out, which is going to create a host of issues for a lot of different app developers but it's really, really going to present a lot of challenges for Facebook in particular. Just as far as background. Isaac, do you have anything else to add on that?‍

Isaac Rudansky: No, that's a good background. The only thing that I would add is if you want the TLDR, if you're managing campaigns for a client, direct to consumer brand, direct response advertising through Facebook, I think that you're going to be okay with these changes. No one really knows exactly how all of this will unfold but I think it's much less impactful for direct response Facebook advertisers than it is for let's say, app developers.

Anyway, that's a good primer. Let's continue.‍

Patrick Gilbert: That's a great point. If you're looking for people to look at to learn more about this whole topic, a name that comes up very often is Eric Seufert who runs a website called Mobile Dev Memo. Now, he comes from the mobile gaming landscape and he used to work at the company Rovio that owns Angry Birds. Their ecosystem is being turned on its head because everything that the mobile gaming industry relied on was very heavily influenced by this data that is now going away.

If you are an e-commerce company, software, or a service company, lead gen, this transition is certainly going to be difficult and it's going to be annoying, and it's going to be stressful. Facebook is working extremely hard at providing better solutions to advertisers that ultimately are going to make this better for everybody. I think in the long run you just have to realize that Facebook is still a very valuable advertising platform. Facebook and Instagram collectively hold a lot of consumers' attention.

It's still a place to go if you're trying to find your audience. It's just the tools in which you will be able to leverage to connect with those audiences are going to change over time. It's just going to force everyone to get more creative and to find better systems for optimizing for profit. Isaac, I'm going to let you have the last word knowing that you have to jump in a second, and then I'll continue to talk more about flocks and etc.

Do you have any like last-second tips for Facebook advertising and what they need to be aware of as this takes place?‍

Isaac Rudansky: Yeah, a couple of things just in the clarity level. All of this is as of now really primarily impacting iOS users. This doesn't impact your ability to advertise. It's going to impact ways you could target on Facebook.

People are very confused and sort of how we were a few weeks ago in the dark. Like we didn't know if Facebook would not advertise as much. Are we not going to be able to advertise certain brands and reach certain people? It's like, no. You can reach the same people, you can reach the same devices.

Targeting parameters might change, the quality of certain audiences might change. We don't know exactly how yet. Very similar to a few years ago when Facebook removed zip code targeting. It's like, "Okay, look, I can't target by zip code anymore."

You might have had a really good audience that was performing really well and now because a good amount of that data is no longer available, that audience might not be so great anymore. Those are the types of changes that you're likely to see as far as being an advertiser.

The other thing is there's going to be changes to Facebook's reporting. It seems like Facebook is making some general updates to account for the significant amount of data that's going to be either altered or delayed because of the iOS 14 updates. Patrick, you might talk a little bit more about this, only being able to optimize for eight conversion events. We don't know why the number eight, having to choose a primary conversion event.

We believe that part of that idea of the primary conversion event is because even with users who opt-out of IDFA tracking, Apple might still release the primary conversion action or data associated with that primary conversion action that Facebook's trying to track. Again, we don't know exactly. This is more theory than fact. Some of the reporting might come in a little bit later.

So, your lookback windows and your timelines and how you communicate goals and results and expectations to clients will probably have to be updated. My main piece of advice though is just to stay informed. There's nothing wrong with not knowing but there is something wrong with not knowing what's available to know. The clients won't expect you to have all the answers if the answers haven't been given.

If there's information circulating, it's worth it to take an hour, two hours and just familiarize yourself with these things. Like the IDFA, what is iOS 14, what exactly is app tracking, to begin with, and so on and so forth. Really just an hour or two of reading some of the blogs and some of the resources that we talk about on the podcast are going to be enormously helpful.

I'm just a couple of minutes late to a call so I'll leave you in the very capable hands of Patrick and Danielle. I'll see you guys all in a little bit.‍

Patrick Gilbert: Thanks, Isaac. Just to dive into this topic a little bit more. The reason that this impacts Facebook so significantly is because the vast majority of Facebook's data is acquired outside of Facebook's ecosystem. So, facebook.com, instagram.com, WhatsApp, and partner sites, all these different things that Facebook directly owns.

If I like a page on Facebook or if I follow an Instagram account, Facebook knows that and they can leverage that in their advertising because that's first-party data. What this iOS 14 will change is that they will no longer have as much access to third-party data, which is the vast majority of data that is collected and used for advertising on Facebook. The reason that so many people think that Facebook listens to them and serves ads based on that is because when you go to almost any website if they have the Facebook pixel on that website, which is in most websites, most e-commerce stores, most apps that you're using.

As part of using that you're basically agreeing to let Facebook use your data and so on and so forth. That information now is being constructed, assuming that most amount of users will opt out of that. To Isaac's point, there's always a silver lining. This isn't necessarily the end of Facebook advertising as we know it.

Speaking directly to e-commerce businesses, they're going to be in a good place, I promise you. It's still going to be a very, very good advertising medium. There's a few things that you need to be familiar with as an advertiser or as an agency or a freelancer, whatever you're doing. If you're running Facebook ads on behalf of somebody else you need to get familiar with the term Conversion API.

People will refer to it as CAPI, do some research into what this is. It's basically the new version of the pixel which allows data to be brought back into Facebook's ecosystem without having to use cookies. What used to happen is that something would happen on a web page, let's say it's your Shopify store and it's my Shopify site.com, somebody completes a purchase, and that information currently in the cookie and pixel world is being brought into that cookie and then up into the cloud and then sent back into Facebook.

Now, Conversions API is getting rid of the cookie/getting rid of the pixel and instead of going through the cloud, it's going directly back into Facebook's ecosystem through what's called a server-side application. So, because of the fact that it's server-side and not being extracted into the cloud or saved anywhere, that allows Facebook to still grab that data. Again, there still will be some people that opt out of it so as an e-commerce store you will need to also verify your domain.

If you've ever done Google Merchant Center, you have to verify your domain. That's another thing you're going to have to do here. Then you're going to have to choose what are your conversion events that you are going to report on. Up until now, you've been able to track as many conversion events as you want.

Do you want to track when people hit your pricing page as a conversion action? Fine. Do you want to track time on site as a conversion action? Fine. Add to carts? Fine. In the mobile app world, if you want to track conversion events when people advanced to level two and then level three and then level 100, fine. Those can all be conversion events.

In the new post iOS 14 update, you are limited to eight and you will have to choose which one you value most or technically order in which you value those. If you're an e-commerce store, you probably care about purchases and actual transactions more than add to carts or views of your pricing page or whatever. So, when that comes through Facebook is actually going to continue to report on those conversion actions for people that opt-out.

You're not going to just lose all of this data; it's just going to be sort of confusing in the way that it comes back to you. Instead of coming back in real-time or with a one-day delay, Facebook is essentially going to report on those primary conversion action events three days after they take place. Gone are the days where you're going to be able to log into your Facebook account and have any idea as to what happened yesterday.

That's just the reality of it and you need to be comfortable with that and your clients need to be comfortable with that. Basically, think of it as a dam where Apple controls whether or not the dam is open or closed and data is the free-flowing liquid in between. The data on the one side of the website information, the user on the one side, and Facebook on the other side. After a three-day period, Apple will open the dam allowing the data to come through and you'll be able to report on those purchases.

You'll still get a lot of your data. You'll still be able to get a benchmark idea of return on ad spend; it's going to be okay. I used e-commerce as an example here but lead gen companies, whatever, are still going to have the same level of access. It might just be more challenging in choosing which conversions you care about the most. That's all I'm going to say on the Facebook thing.

If you guys have any other questions feel free to ask them. Again, not to keep plugging the podcast but you should really check out the podcast, it should drop later this week. Subscribe to How to Hide a Dead Body on whatever your podcast provider is. Again, we talk about this at length.

Google is in a much better position than Facebook because Google owns a lot of first-party data. They have the Chrome app. I'm sorry. Well, I guess Chrome is an app, but they have the Chrome browser.

They have Android, a full operating system. They have Gmail, they have YouTube, they have all these different tools that present first-party data environments. While Facebook is only limited to Facebook, Instagram, WhatsApp, and any other thing that they could probably grab some data from, Google has access to a lot of their own first-party data. 

They're at a much more advantageous position than really anybody else which they're going to use to their advantage.

Facebook came out a few weeks ago and they introduced this thing called Flux. They're going to be creating things in a privacy sandbox. Don't worry about all that, basically, the only real takeaway here is Google is in a much better position and not much about the Google ecosystem is going to change. The way in which ads are being served is going to change and I promise you this is going to impact the amount of data that you get back into the system.

We're going to have less search query data; we're going to have less reporting on time of day and all these other things. And it's because of them trying to adhere to the privacy sandbox and the new cookieless legislation basically. As if Apple is a legislator, but they basically are. Google's going to be in a much better position.

Facebook, a lot of advertisers are going to have challenges but still be fine. Ultimately, to as explained before, the best thing you can do is just learn as much about this as possible and continue to be in the know about all these changes that are taking place. I could talk about this whole thing for probably the next two hours so I'm going to stop there.

Danielle, what's next. By the way, Danielle, how are you doing?‍

Danielle Immerman: I'm doing well Patrick. How are you?‍

Patrick Gilbert: I'm doing well. Danielle recently ordered a whole slew of tea for our office and it's been the most exciting thing that's happened to us in a very long time. We have basically like three cabinets worth of exotic teas and I'm all amped up.‍

Danielle Immerman: What could be better than taking a little trip to an exotic faraway land in the middle of the workday?‍

Patrick Gilbert: Not much. Cool. What were some other topics that we wanted to hit on or any other questions that we've gathered from the group?‍

Danielle Immerman: Let's hit on the Wall Street Journal article.‍

Patrick Gilbert: I'm getting a phone call. Okay, I actually have it in front of me which is weird. I didn't plan this. Wall Street Journal published this article the other day in their weekend edition or whatever you call.

It's this crazy data point that I would not have understood otherwise. Facebook, Google, and Apple now control more than 50% of all advertising budgets. This is an absolutely unfathomable and crazy statistic because we're not just talking digital advertising spend, we're talking all advertising. We're saying that of all budgets being spent on advertising across the board, between digital, between television, between print, billboards, you name it, those three companies; Amazon, Facebook, and Google are contributing to more than 50% of that, which is absolutely mind-blowing.

Now, the article assigns credit to the COVID19 pandemic and saying that this has created a new world in which advertisers are finding more success online. They're pointing to trends that e-commerce trends are up year over year and more people are spending time in front of screens than otherwise. All these other things about our behavior as consumers have changed so dramatically that brands like Oreos are being impacted forever and they're pulling their budgets from television and they're putting them on Facebook.

Okay, now that's great. It's a great article and everyone should read it, however, what the article does not actually realize or really call attention to is that it's not as if our behavior has changed so much to society that digital advertising is more valuable than it was a year ago instead, it's just that the last year has forced a lot of these advertisers to consider digital when they did not have a lot of traditional mediums at their disposal.

So, for advertising on billboards in Times Square and all of a sudden nobody's in Times Square because the entire New York City is shut down, you're obviously saying, "Okay, what else should I do with this budget?" "Let's put it into Facebook." Or if you're running television ads during March Madness and March Madness gets canceled, you now have freed up several million dollars that you might put into YouTube.

Also, the whole argument that people are in front of screens more I don't understand, because television is a screen and television is a $70 billion advertising engine and a lot of that money is going to go into Instagram or wherever. And it's not because people are watching less television, it's because advertisers have realized that they can get a better return on ad spend if they're putting it into digital ecosystems.

The article, I should find the quote, actually, I think I have it written down somewhere. What this really did is it forced all these companies to experiment with and unlock the value of automation within these platforms themselves. The one CEO of, I'm going to screw up the name, Vuori is the name of the brand. It's like an athleisure.

I see their ads on Instagram all the time. They sell sweatpants and it looks great. I can't believe I haven't fallen victim yet to their advertising. The CEO of Vuori, it's like an active lifestyle, he's quoted in here saying that he knows who his target customers are, anecdotally speaking but Facebook beats his instincts when trying to find people to target.

He says, "We can identify the age demographics and behavior of our target audience but ultimately the algorithm is much more powerful in terms of identifying people who demonstrate certain shopping behaviors." That is a line that's very, very small in this larger article about digital advertising but that's the main point. It's because Facebook, Google, and Amazon are much better at predicting who is your target audience and when they are best likely or most likely to complete a purchase than any other human advertiser has ever been.

Television advertising, billboard advertising, newspaper advertising, none of that dollar for dollar is as effective as is if you effectively train machine learning algorithms to understand who, what, when, and why. That is the true value of what automation is able to deliver. That is everything that we've been talking about in these sessions and everywhere else and we're seeing that now. More than 50% of all advertising spend is going to these platforms that are heavily automated for a reason.

It is not because of the COVID 19 pandemic, it is because these platforms are just better. I think that's the missing message from this whole thing and I think it's pretty incredible and terrifying to see that they're referring to it as the triopoly. We'll see how that shapes up. That's my take here. I have a couple of questions here.‍

Danielle Immerman: Let's go with this one.‍

Patrick Gilbert: "Is Conversions API mature enough to make the switch?" "I noticed several discrepancies between pixel events and conversion API reporting, even today's warnings it doesn't look stable as yet." "On how to fully fix these problems, how do you approach this?" It's a great question.

There's two different levels of reporting and attribution. There's what Facebook is able to understand and optimize with and then there is what is reported back to you as the advertiser and those two things don't have to be equal. From my understanding, Conversions API is not brand new. It used to be called server-side API.

It's been around for several years. It's very mature. These numbers are not going to be perfect; you're going to see discrepancies in them. I wouldn't be too worried yet.

Facebook has said over the last year or I guess since August, as long as you can utilize the pixel you should in addition to using Conversions API. Just because there's probably some incremental data that you'll be able to pick up on. It is not going to be perfect but it's absolutely mature and it's a solid product.

Basically, Facebook, this is all they have. If you're going to continue to run ads on Facebook, you just have to buy into the idea that Conversions API is something that Facebook has invested a lot of man-hours and resources into because otherwise, they have no other option, they're screwed there. I would say just jump all in. The numbers are never going to be completely clean and that's what I'm actually excited about the most.

It's like, you got to be careful with what I say here, but a lot of advertisers have become greedy and so reliant on what they're reported on in the Facebook dashboard. They live and die by those numbers. You can look at a measurement and say, "Well, we've proven with statistical models that there is revenue data that is attributed to our Facebook investment or our YouTube investment or somewhere else but is not being reported on the dashboard."

This is something that we've been dealing with for years. Where there's an incremental lift that is just not attributed by the systems that we've had in place over the last couple of years. Clients and whatever brands still refuse to understand those models because they live and die by whatever is reported in that return on ad spend column. We as an industry need to get over that and we need to come up with better systems for reporting on our own attribution and understanding our real return on ad spend.

Basically, Conversions API and the Facebook dashboard, and the seven-day attribution window, it should be used as a benchmark for evaluating period over period performance or understanding about trends that are going in a positive direction or in a negative direction and be able to influence some of the decisions that you're making. If you're trying to get a real understanding of profit, you'll need to put other systems in place in addition to the data that you have in Facebook.

Hope that makes sense. Okay, what's next?‍

Danielle Immerman: We can wrap up with your thoughts on this last question.‍

Patrick Gilbert: Okay. "I agree with the billboards, etc." "Video ads are changing although I feel that plenty of cash is available to burn on video ads to create brand awareness as larger brands would benefit from it than smaller businesses, what do you think?"

I'm not totally sure I understand the question. I am extremely bullish on video advertising as a whole. I think that there's few mediums that allow massive reach, fantastic engagement, and a wonderful opportunity to tell your story. As far as the question here, when plenty of cash is available to create brand awareness, thus larger brands would benefit from it.

It's basically saying video doesn't work for small businesses or maybe that's probably not what you're saying. You're suggesting that video is no guarantee compared to advertising. A larger business has more money to burn. I also disagree with that.

I think that you have to just be really careful in your targeting. There is absolute arbitrage available on YouTube, meaning that you can get views on a YouTube ad for pennies. It should be worth a lot more; you're getting a discount. Years ago, I remember I was at the 2016 HubSpot INBOUND conference, and Gary Vaynerchuk was the keynote speaker and he was just screaming the entire time about the value of Facebook advertising and influencer marketing.

He was saying these are two things that you need to be doing now because the majority of brands have not woke up and realized that they should be advertising on Facebook. This was 2016. It was actually the night of the 2016 election, which seems like a lifetime ago. He even said in that talk, Gary Vaynerchuk closed with this and he's like, "You need to do this now because this opportunity doesn't last forever."

"These brands will wake up and they will realize the value of Facebook and then 10 years from now you're going to come to me and say, "Gary, I got all these Facebook campaigns running.'" I'm going to say, "You're still doing Facebook?" "Man, that was so 10 years ago." And that happened in a way.

All these brands woke up and they started advertising on Facebook and it became a lot harder to drive a ton of-. The CPM is adjusted, which is basically what happened. Right now, that opportunity exists with YouTube. Big brands have not realized how valuable it is to advertise on YouTube and other video platforms and even video within Facebook.

If you're running Facebook ads and Instagram ads and not using some sort of video, I don't care if it's a very cheap, poorly produced slideshow that you made in a free, I don't even know the name, Ripple Tool, you should be using video because your competitors are probably not and there are specific placements available on these platforms that are dedicated to video. If you are willing to serve that ad and your competitor is not, you're going to get a monetary advantage.

The smaller businesses that are taking advantage of that, especially the ones that we are working with are absolutely reaping the benefits of it. You just have to be extremely careful with who you're targeting and make sure that you're doing it in a cost-effective way and then find whatever benchmark you're going to use to measure that effectively.

Think about this. This is a key component of what we talk about in Join Or Die: Digital Advertising in the Age of Automation. This idea of liquidity and experimental probability. You are statistically proven to be much better off taking your chances with a larger audience that you are acquiring for a lower cost than you are at getting a few very expensive clicks on bottom-funnel search.

The math has to work out that you're getting a good audience for those penny clicks or whatever but you need to be able to balance that. If you have a budget that you can only afford 10 clicks a day or if you can take that budget and find hopefully your target audience and get 10,000 views on YouTube, you're probably better off targeting on YouTube. That's all say there. Definitely keep experimenting with it; it's a huge value play.

Okay. Is there any other quick questions? Wait. "Just now I came to know about a new Google Ads keyword match type, Smart Match. Your take on this?" I don't have a take on this. This is new to me. I am not familiar.

Is this just what broad match modified and the phrase match became? I'm not sure. I'll circle back on some of these questions that I don't totally have answers to at this point. I think that wraps it up for today.

Thanks for doing this everyone. Thanks for tuning in. Love the questions, very good questions. Leave more questions, we'll continue to answer them. Check out the How to Hide a Dead Body podcast.