For the last few years, Facebook and Instagram have dominated advertisers’ media mix. But recently, media buyers say ad spend on social media’s biggest platforms has started to deteriorate.
It’s more of a slow leak than a mass exodus, with client ad spend dedicated to Facebook and Instagram recently declining by 5-10% over the last year, according to Hallie Wyckoff, group director of social media at Wunderman Thompson Commerce.
“It’s happening now because of the pandemic, in all honesty,” Wyckoff said. “There were so many changes in marketing budgets last year where a lot of brands pulled back for a bit or had to be more lean with what they were willing to spend.”
For Wunderman Thompson, with clients including major marketers like Unilever and Coca-Cola, ad dollars that may have gone to Facebook and Instagram have recently shifted to alternative platforms like TikTok — or to efforts to improve or build out social commerce opportunities, as well as working with influencers, Wyckoff said.
Given Facebook and Instagram’s scale, targeting capabilities and range in ad unit offerings, advertisers and media buyers predict it won’t lose its crown any time soon. In fact, the platform’s ad business is holding up for now, per previous Digiday reporting. However, the platform’s flaws like waning interest from younger audiences, rising cost per impression and mounting data privacy issues are giving way to challengers like TikTok, Snap and even Pinterest. The flaws have gotten worse because the pandemic has made for an uncertain future and constant shifts in people’s shopping habits, which has advertisers looking for alternatives.
When asked for comment, a Facebook spokesperson pointed to the platform’s Q2 2021 earnings call, in which Facebook reported strong business growth and noting that total revenue for Q2 was $29.1 billion, which is a 56% year-over-year increase. According to chief financial officer David Wehner, speaking during Facebook’s most recent earnings call on July 28, the growth was predominately driven by verticals that performed well over the course of the pandemic, like online commerce and consumer packaged goods.
At least one marketing agency, Tinuiti, which Facebook pointed to as an example of increasing investment on its platforms, hiked it’s year-over-year spending on Facebook and Instagram alongside increased ad spend for platforms like Snapchat, TikTok, and Pinterest.
“We’ve seen this increase 37% YoY on Facebook and 75% YoY on IG (24% growth in Q1 and 53% growth in Q1, respectively). And we’re on pace to spend 61% more on Facebook and Instagram than we did in all of 2019,” said Avi Ben-Zvi, vp of paid social at Tinuiti.
But according to Pew Research, Facebook and other major social media platforms’ growth stalled over the past five years. Facebook’s brand reputation suffered last year after advertisers boycotted the platform with the “Stop Hate for Profit” campaign. And new research from analytics and insight company Skai, shows that social media CPMs have been steadily increasing, up about 12% from 2019. According to Skai, CPMs hovered around $5.71 this time in 2019 and are now at $6.37.
Also buffeting the social giant is the fact that it is facing a serious challenge in Apple’s data privacy changes, noted Katya Constantine, CEO of performance marketing shop DigiShop Media via email.
“The biggest cause has certainly been because iOS14 removed some of the most powerful targeting options,” she said. “Also, I imagine that some of the usage has also slipped as the world came out of the pandemic and that removed some inventory and drove up CPMs.”
Elijah Schneider, CEO of social marketing agency Modifly, backs up Constantine’s claims.
“Advertisers are starting to lose trust that consumers lost a long time ago,” Schneider said.
And challenger brands have seen the writing on the wall. Modifly, with a client list that includes startups and direct to consumer brands like Super Coffee drink brand and Beam wellness brand, has seen clients press for serious ad dollar diversification since late last year, said Schneider who added that in 2019 and 2020 at least 80% of Modifly client spend was in Facebook products. At present, that ad spend now sits at 55% on Facebook and 45% on alternative social platforms, like TikTok and Snapchat. (Schneider didn’t share what these breakdowns looked like in actual dollar figures.)
“For brands that are really focused on Gen Z, Facebook is part of the mix. But they’re not necessarily the dominant part of the mix,” said Noah Mallin, chief strategy officer at IMGN Media, where client ad spend on Facebook and Instagram has decreased from 95% of budget in prior years to 75% at present. “They’re much more evenly matched for established big brands where Gen Z is a segment among many,” he added.
In a rush to diversify ad spend, advertisers have divided their digital dollars up amongst everything from alternative social media platforms to digital tools to support a brick-and-mortar presence. There’s no clear kingpin coming to dethrone Facebook and Instagram, although many marketers see promise in TikTok given the platform’s scale and massive audience.
If nothing else, the decline continues to push along the industry-wide conversation around the need to diversify media spend, making for healthy competition among the platforms and more viable options for media buyers, Mallin said.
“I don’t necessarily see [Facebook and Instagram] diminishing to nothing,” Mallin said. “But if you want to have a smart mix and you’ve got the budget for it, you’d want to have Twitch in there and you want to have TikTok in there too.”
That’s not to say Facebook couldn’t make a few changes to delay its decline — and this could just be the latest interaction of changes in the social media landscape, marketers say. When it comes to digital and social media, that landscape is always changing, meaning advertisers will always need to adapt. This pandemic made flexibility a priority, said Wunderman Thompson’s Wyckoff.
“If we start to see CPMs or CPCs go down, you might see an influx back to Facebook and Instagram,” she said. “It’s an ever-evolving world and marketers are going to continue to pay attention and see what’s best.”
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