Unpacking the Latest Changes in Its Digital Advertising Ecosystem
The mere mention of the word Facebook, now Meta, often elicits an emotional response among many of us. And rightfully so. Scandals abound in every direction – privacy violations, proliferation of disinformation, content moderation troubles, accusations of anticompetitive behavior, political manipulation, and deleterious mental health concerns among adults and teens alike. And yet still, Facebook’s third quarter results report ad revenues climbing 33% YOY and monthly active users increasing by 6% YOY, to 2.91 billion worldwide. We can’t possibly untangle the complex tapestry that is Meta in one article – we’d need far more than a 450-page report to do it. But we can help to make sense of a few recent, and upcoming, changes that impact its current revenue engine, digital advertising – and how we, as SMB marketers, can respond to them.
Sensitive Ad Targeting Options
Let’s start with the latest changes in ad targeting. In November, Facebook announced it would remove targeting options related to sensitive topics, specifically ads based on interactions with content related to race, health, religious practices, political beliefs or sexual orientation. This is a good thing, Facebook. Does this take away some ‘easy’ buttons for marketers? Perhaps. But rarely is the path of least resistance the worthwhile road to trod. Diversity, equity, inclusion, privacy – these aren’t just words. These are actions. Removing these targeting options is another step toward those worthy pursuits.
Effective January 19th, the following targeting options will no longer be available:
- Health causes (e.g., “Lung cancer awareness”, “World Diabetes Day”, “Chemotherapy”)
- Sexual orientation (e.g., “same-sex marriage” and “LGBT culture”)
- Religious practices and groups (e.g., “Catholic Church” and “Jewish holidays”)
- Political beliefs, social issues, causes, organizations, and figures
Here at Brkthru, our DEI beliefs and policies have already sworn off many of these. But if you represent a healthcare, government, charitable, religious or political organization or cause, or a company that targets based on these criteria, you may have some pivoting to do.
How can you tweak your strategy? Solutions exist within Facebook and elsewhere on the web.
- Lean into context. Understanding the content your audience consumes online is a more privacy-centric way to capture their attention. Aligning with relevant sites, articles, and keywords will offer natural synergy, versus serving ads based on their previous online activity. That may mean budgets previously allocated to Facebook are spent with programmatic display instead. As an example, the oncology department of a medical center will no longer be able to target ‘chemotherapy’ on Facebook. As an alternative, this advertiser can align their ads elsewhere on the web with content related to cancer prevention, diagnosis, and treatment. It connects the messaging with the moment in a more authentic and humane way.
- Leverage your own data. As conversations, policies, and legislation around privacy continue to take center stage, it’s no secret that first party data will be increasingly valuable. This data can be used on or off Facebook and may include data from your CRM and/or gathered from Facebook itself, based on people who like or follow your page or people who have engaged with your posts or ads. Not only can you target these people directly, but it can also be used to create Lookalike Audiences. Lookalike Audiences will extend the reach of your campaign to people who ‘look’ like your customers, followers, or active engagers. For instance, a Catholic charity may no longer target ‘Catholic Church’ on Facebook. But they can leverage email addresses of previous donors to find them on Facebook. And they can also create audiences with online behaviors like those individuals.
Declining Conversions
In addition to fewer targeting options, another change Facebook announced and implemented in the middle of last year was in response to the widely publicized privacy measures rolled out by Apple in iOS 14.5. To recap, through Apple’s AppTrackingTransparency (ATT) framework, they required all apps in the App Store (Facebook included) to obtain permission to track users. In other words, all people using devices with iOS 14.5 or later must offer explicit permission to share their data with apps. U.S. Apple users are choosing to opt-out of tracking 96% of the time. As a result, advertisers are losing the ability to track these users. Conversions are ‘appearing’ to diminish and retargeting pools are shrinking. We use the word, ‘appearing’ because while we can’t track every sale due to ATT, 26% of Facebook users still make a purchase after clicking on an ad.
What does all of this mean? In most cases, marketers should consider Facebook an ‘upper funnel’ tactic. With diminishing targeting options coupled with declining measurement and attribution, Facebook should be considered a tool to increase awareness and spark interest. It’s still part of the marketing machine, but works to fuel, or add lift, to lower funnel tactics.
Rising Rates
Lastly, when considering the significant Facebook ad changes over the past year, we can’t turn a blind eye to ever-increasing rates. Why are CPMs rising? Well, it’s all connected. The valid pursuit of privacy gives way to fewer targeting and measurement options. Decreasing audience pools (supply) paired with heightened, pandemic-fueled digital ad demand has led to fierce competition and subsequently, higher rates. In fact, industry-wide, Facebook’s (and Instagram’s) CPM prices rose 89% year-over-year, as of July 2021. In examining Brkthru’s CPM trends in the past year, we’ve worked to mitigate increases through efficiencies in our campaign setups. Nonetheless, our CPMs climbed an average of 47% YOY.
While elevated rates are here to stay for the foreseeable future, understanding how to use the platform, as well as maximize efficiencies, will be key. Again, we need to recognize that Facebook is no longer a panacea for performance marketing. If based solely on cost per acquisition (CPA), all of the aforementioned changes make campaign success a much further reach.
However, when used to drive reach, with high-quality image and video creative tailored to your audience(s) – their geo, their language preference, their level of engagement with your brand and content – you improve brand recall and begin to usher prospective customers through the consumer journey.
Like it or not, Facebook accounts for nearly 24% of the U.S. digital ad market. It dominates the 25-54 age demographic, which holds the most purchasing power. In sum, Facebook remains a tool in our media mix toolbox. And it’s up to each of us to decide when, how, or if, to use it.