Personalization is a key tactic for modern marketers. Consumers do not longer care about ‘one size fits all’ campaigns. But now strive to be understood and appealed to personally. Most digital marketers claim that ‘data is everything‘. This does not mean, however, that all data is valuable. Marketers need to be able to dissect relevant data for their marketing goals. This is where cohort analysis comes in. A cohort analysis is an analytical technique that breaks data into related categories. These categories, or cohorts, are defined by shared characteristics over a set period of time. Let’s see the cohort reports with iOS14 changes.
Businesses use cohort analysis to study customer behavior across the business life cycle. Defining a cohort goes beyond simple market segmentation and straightforward demographics. To create a cohort, marketers will refer to specific groups of users’ app activity against time periods and behaviors they wish to analyze. Rather than breaking up consumers into segmented groups, such as age or gender, cohort analysis draws on historical data to identify trends or changes in consumer activity throughout the customer journey. Marketers utilize this data to improve user acquisition, retention, and lifetime value.
What is Cohort analysis in performance marketing?
Performance marketing uses paid advertising to harness the power of brand marketing. The overall aim of performance marketing is to achieve performance-based results, such as higher conversions or cheaper results.
Unlike traditional marketing, which is oftentimes immeasurable, performance marketing is specifically designed to drive, track and attribute to the ROI of the specified action. Performance marketing gives the advertiser the ability to determine an action, and pay for this action. Only when it’s complete, whether it’s clicks, conversions, or leads.
As organic growth becomes more and more challenging to achieve, performance marketers know that the key to driving growth is through the right data. Cohort reporting helps companies identify customer trends and patterns over time, allowing marketers to tailor marketing strategies to the needs and wants of the cohort. Data from cohort reporting can ensure both the relevance and accuracy of a performance marketing campaign.
How did it work before iOS14?
Last year, Apple announced new privacy measures would be put in place in their iOS14 update. These measures went live following mass concerns about data privacy and how both users and legislators access the data. These concerns have spurred regulations. Such as General Data Protection Regulation (GDPR), which introduced new laws and guidelines surrounding personal data.
The app industry, however, adjusted to these changes with ease and continued to prosper. It was Apple’s announcement at WWDC 2020 that users would essentially be prompted to opt-out of data tracking that shook up the global marketing community. While the fallout for mobile marketers may not be as catastrophic as many had predicted, there has been a shift in how advertisers conduct cohort analyses.
The new privacy measures, known as App Tracking Transparency (ATT), force app owners to ask the users’ permission using a standardized prompt, created by Apple. Up until these measures got live, marketers relied on the Identifier for Advertisers (IDFA) to track users for cohort analysis across apps and services.
The IDFA is specifically to give marketers and ad networks access to an individual’s mobile device identifier, to collect information, analyze patterns based on an individual’s online behavior, and serve very personalized ads.
Later, an advertiser can use the IDFA to segment app users with similar characteristics into buckets based on their engagement with an app over time and use the insights to identify, define and refine KPIs.
How Will the Apple iOS 14 IDFA Update Impact cohort analysis?
Apple’s decision to ask users for explicit permission to allow IDFA tracking ultimately means that fewer people will opt in. And advertisers will no longer have access to the user-level data they have been relying on for the past decade.
With 81% of all iOS users updating to iOS version 14.5+, and an opt-in rate of 8% to 15% for those who have been prompted by an ATT alert, brands can struggle to develop relevant and targeted ads.
Marketers have now one option to access the vital data they need for cohort analysis; the ATT framework which provides access to the IDFA after the user’s permission. Users who consent to data sharing can be measured and analyzed in the same way.
However, for users that choose to opt-out, it gets harder to do cohort analysis as the SKAdNetwork postback doesn’t include the conversion time stamp and without IDFA, marketers won’t be able to know that.
Conclusion – Cohort Reports with iOS14 changes
The changes brought about by the rollout of iOS 14.5+ have altered marketing strategies. But they have not been as severe for user acquisition or retention as many people predicted. At least for brands spending 7-figure on advertising budgets.
Performance-focused marketing is under a lot of pressure without the capability of targeting, measuring attribution, and optimizing consumer data. So what can we do? What is clear is that we need to get creative about how we move forward with our marketing efforts. We need to adapt to a system that prioritizes individual privacy. That consolidates our advertising campaigns and looks at how we strategize to increase user consent. Reach out if you want to hear more or check out our latest industry insights here.