Facebook’s Limited Data Use & What it Means for (LD)U

Michael Goodwin, Senior Strategist

Limited Data Use (LDU), effectively blocks Facebook from capturing website pixel data for California users. Their announcement specified that LDU would be auto-enabled for all businesses beginning July 1 and would move to opt-in after August 1. Businesses not subject to the CCPA have the option to disable LDU at any time.

What are the implications of the Limited Data Use Feature?

Let’s start by understanding Facebook’s broader response to the CCPA. From the outset, Facebook has positioned itself as a “Service Provider” under the new law. Facebook has argued that because they provide their pixel service for free and sell advertising space on their platform (as opposed to PI), they are technically not subject to provisions which govern the purchase or sale of PI. Whether that is a legally viable position remains to be seen, but for now it means that Facebook has effectively pushed the burden of CCPA compliance down to its advertisers.

A charitable interpretation might portray Facebook’s pivot to LDU as an indication that the company is taking the new law in stride – leveraging its resources to build features which encourage compliance among advertisers, even if that jeopardizes advertiser ROI. On the other hand, it’s difficult not to see this as Facebook smiling through gritted teeth, playing nice, and hoping that regulators don’t look their way. Viewed through that lens, the recent LDU rollout looks a bit like a tell, an indication that Facebook feels the tenuousness of their position as a self-appointed “service provider” and is gearing up for legal challenges on that subject. The latter is important as it suggests that we should prepare for further changes in how this law is applied to Facebook.

What does this mean for you?

Your business may meet the criteria for exemption at the moment, but that dynamic could quickly change if California challenges Facebook’s status as a service provider.

Immediate Advertiser Impacts & TacticsSince the rollout of LDU at the start of the month, we have been closely monitoring cross-account performance trends and working closely with Facebook to outline potential impacts and next steps.

If CCPA does not apply to your business:

We recommend that you disable LDU. You should expect to see an immediate performance boost, especially if your campaigns index heavily in California. We have generally seen a sizeable increase in conversion rates among advertisers who disable LDU. The LDU feature will automatically disable at the end of the month, but eligible advertisers who wait until then will miss out on potential ROI gains.

If CCPA does apply to your business:

In this case, the LDU rollout represents a new normal that necessitates certain adaptations. Because LDU blocks website pixel tracking, you will not be able to track on-site events such as page views, add to carts or purchases for California-based customers. This data loss has, unsurprisingly, proven to be disruptive to Facebook’s optimization algorithms and has contributed to decreased ROI and greater campaign volatility for impacted advertisers.

For advertisers in this situation, there are two primary paths forward for account optimization:

1. Retain the status quo of account setup (Facebook's recommendation).

Facebook has argued that their algorithm will normalize over time, but they have not provided specifics on how long that recalibration may take. Retaining the status quo could help to expedite the recalibration period and allow for cleaner pre-post comparison. With this approach, we recommend leveraging your own data sources to benchmark Facebook CPA’s pre and post LDU. If onsite behavior has not changed meaningfully, it may suggest that Facebook is still providing a similar incremental impact, and that in-platform efficiency targets should be revised to reflect this.

2. Removing California from legacy targeting and building new campaigns that exclusively target customers in California.

As new states adopt similar policies to the CCPA, these campaigns could expand to encompass a number of regions with more stringent PI protections. For any LDU campaigns, you should expect to see much lower ROI and consider rethinking optimization goals and efficiency targets. On the other hand, this quarantining strategy would prevent disruption to legacy campaigns, and allow Facebook’s algorithm to continue to optimize these campaigns with the full suite of website pixel data.

Both approaches are viable, and preference between the two depends on a variety of account specific factors. We advise you to work with your account team to choose the path that is best suited to the goals and structure of your advertising program.

Regardless of how you choose to structure your account to accommodate LDU, we recommend passing back site-side conversion data. This process will involve a manual lift – but will help to fill in some of the data gaps created by LDU and allow, for example, advertisers to retain important distinctions between net new prospects and existing customers.

Questions? Let us know and we can navigate this together!