Should you use a first-party pixel?

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Transcript:

Taylor Holiday has been a vocal critic of the first party pixels, and there are good reasons why he doesn't like them. On the technical side, he's raised two objections and I'm going to be a debate him on both of those, and then we'll talk about what I think his real objections are. So, for reference, I'm talking about this video specifically at the 10 minute 30 second mark.

I encourage you to watch this whole video. It's a must-watch for anyone in eCommerce. So, let's hear his first objection: “I have to align my measurement with the platform’s optimization.”
I'm not sure why this has to be the case. The data and the job that the platform have are completely different from the data that you have access to as a media buyer and your job as a media buyer.

In fact, I'll take the opposite view. Your decision making is completely unrelated to what the platform is doing. Let me elaborate. The platform cares about delivering your ads to people who have the highest probability of converting within your cost constraints. Doesn't matter whether it's cost cap or lowest cap, they're looking at tons of data that you don't have access to, to decide if they should serve your ad, who to serve your ad to and where to serve your ad.

Your job is to align your measurement of the ad performance with your profitability goals, and then decide if it makes sense to keep running that ad. Remember, you don't know or understand the platform's decision, so you should focus on measuring the outcome. Here's why it is hard to align your measurement with platform's optimization settings.

The number one reason is that the platform's optimization is now capped at a seven day click window, and ads have a lagging effect on conversion, also known as conversion lift. Now, this is super important for products with longer consideration phase, and as the AOV rises, this consideration phase becomes longer.

What this means is that if an ad got a click today, that could lead to conversions well beyond the 7-day optimization window that you've told meta to optimize and report on. Also, recently, meta bought back that 28 day click base reporting, even though it can only optimize for a seven day click (window). My guess is that they want you to understand the lagging effect of advertising better, so they're sharing this data with you.

Another reason to not align your measurement with what the platform is optimizing for is that the platform doesn't actually know your business metrics and objectives.

So things like what percentage of customers that the campaign drove. Our new versus repeat. What is the cost of customer acquisition for new customers? Is that profitable? What's your repeat purchase rate? None of these are factors in Meta's decision making. This is what Taylor recommends in this video, that channel metrics are wholly insufficient, so focus on higher level business and profitability metrics. 

My point is, if an external tool can help you measure and get you these business metrics without having to run spreadsheets every time and simplify your decision making at a campaign level, then why not use them? And if money's a concern, we provide a hundred percent free first party pixel for all Shopify stores.

To sum up my response, meta is optimized for convergence and cost control. You have no role there. You are supervising for profitability and meta doesn't have all the information that's relevant for your business. So Meta's optimizing and you are supervising. Both of these are independent functions.

Taylor's second point is a little more nuanced and harder to follow. So, let's get into it. Let's listen to this 20-second clip. “... the past indicated performance and the future decisions of the platform. There will not be a relationship between those things.”

Taylor's point is the information that you have in your external measurement tool represents the past. Facebook is making decisions on real time dynamics of the auction marketplace. 

Things can change fast there. A holiday event, a political event, all of those can disrupt the auction dynamics. And your third-party tool has no means of predicting what's happening right this minute. This can have a strange effect that makes no sense from the outside, but in fact, makes absolute sense for Meta as they have the complete picture. So if you manage your ads using an external tool, you are looking at the past, not at the present, and it certainly does not represent the future. Facebook calls this the breakdown effect.

Yes, this is a real thing, and Taylor is a hundred percent right in about 5% of the cases. 95% of the times, however, when things are normal and there is no external factor or stimuli, past performance is a strong indicator of future performance. This is also what is guiding Facebook's prediction algorithm, as any ad’s estimated action rate is modeled on past data.

My observation from running ads is that when you have a solid creative or a solid offer that is working, it's going to work. But on this issue, you should decide for yourself.

How often do you find that the past performance of a creative or an ad is not a solid indicator of its future performance? 

I want to be clear about one more thing.  I find in-app platform analytics to be very valuable and I recommend all our users to use them. 

The first party data complements this data set, and it's supposed to give you your business level insights and assist in making profitability decisions when these two data sets diverge. Having said that, since we started rolling out access to our free first party pixel, 90 to 95% of the times, what we are observing on the first party closely aligns with what meta is reporting.

In fact, the gap between Meta's reporting and external measurement is getting, um, is getting narrower day by day. So to, to sum up, I find that the disconnect between in-app and first party is narrowing every day. Both of these have separate functions, but they're directly aligned , in almost 90% of the cases.

It's almost like this debate is unnecessary. So why does Taylor keep hating on these first party pixels?

Now let's talk about what I think really bothers Taylor's and to a large extent, I share his frustration with the whole first party pixel industry, of which I am a part. It is not the pixel. It is the marketing of the Pixel. It is totally disingenuous. The whole notion that a pixel can somehow improve your advertising is just plain silly.

Great ads, great copy, great Hooks a great offer. A high converting landing page will all improve your advertising. A pixel will not. A pixel is a measurement device. It's like saying you bought a wing machine and now you lose weight.  A pixel at best can guide your spending, but it produces no miracles on its own.

Finally, I want to share something that I learned on my recent trip to Shoptalk One Pixel company is paying as much as a hundred thousand dollars to agencies to exclusively push their product and tweet about them. And you can tell who's bullshitting you if you hear an agency owner talking about, or tweeting something like, hey, this is how we improved an account by 42% in two months: first we implemented this attribution app" Well, now you know what their motivation is, and it's not your account.

That's a choice they've made and the agencies that are working with them. But eventually all of that cost is being born by the brands and founders.

So as far as brands are concerned, especially the smaller seven to eight figure brands, I'd say don't be a sheep and fall for these gimmicks. 

Get involved, get your hands dirty and see what you actually need versus what is being pushed to you.

Hope this helps. Have a good day.