Direct-to-Consumer Brands (DTCs) Reduce Their Advertising Spending on Facebook, According to a Digiday Report, Some of them Shifting Up To 30% of Their Ad Spend Out of the platform.
After polling 10 DTC advertisers, Digiday found that all had reduced their ad spending on Facebook, citing high CPMs with lower ad impressions in a news stream now too crowded.
"The effectiveness of Facebook has dropped and particularly deteriorated in late April and early May, which is why we are moving significant expenditures," said Fabian Seelbach, Curology's vice president of marketing, a company that sells treatments for acne.
Seelbach says her company ended up moving 30% of the advertising dollars that she was spending on Facebook from the platform after paying 30% to 50% more on CPMs by the end of the year. ;April. The company plans to further reduce its Facebook advertising budget by 30% in the coming weeks.
"We can not work fast enough to maintain price stability," Seelbach told Digiday.
Part of the money that Curology draws from its Facebook advertising budget will go to Instagram owned by Facebook. According to Seelbach, Instagram Stories CPMs now cost half the cost of Facebook ads on RSS feeds.
Due to the direct line of Facebook to consumers and microtare advertising capabilities, the platform has long been a boon for direct brands to consumers. But in January, the company changed its algorithms to prioritize content compared to sponsored posts, resulting in what many see as a much more competitive landscape as Facebook advertisers bid on a newly limited ad space in the lead. # 39; news.
Brooklinen, another DTC brand interviewed by Digiday, said that at one point she was spending up to 75% of her total advertising budget on Facebook, but that she was now trying to leave as fast as possible after seeing CPMs double over the last year.
"We are struggling in this small real estate gap with everyone and it's hard to get through," says Brooklinen founder Rich Fulop in the Digiday report. "You pay for an impression-based auction so that you essentially offer to anyone and anyone who wants to compete for this space, it has become a hyper-competitive environment."
The Digiday article reports a January AdStage report showing that Facebook's CPMs jumped 122% after the January updates, but as reported by Marketing Land in March, the change in January's algorithm can not be tied to a rise in Facebook CPMs.
"Facebook's performance advertising has become more efficient – more clicks at a lower cost – for AdStage customers in the last four months compared to the previous year." Spending increased 111% from year to year in February Together, these trends are more attributable to the constant pressure on news feeds and ad targeting improvements than the announcement of the change in feeds. January news, "writes Ginny Marvin, Marketing Land publisher, in his article on Facebook AdStage data.]
In fact, the Director of Growth Marketing and AdStage Customer Acquisition told us that at the time, the rise in CPM was proving to his agency that the Facebook's announcement algorithm was equally effective in finding the best ads.
Still, DTC Digiday brands have been reporting significant increases in their Facebook CPMs in recent months. Enough for that, to counter the rising costs, the 10 Digiday history brands have transferred money to Facebook, turning instead to outdoor commercials like radio and radio. printing, and buying television commercials.
"It's a trend now – companies are looking for ways to fill the funnel to get people in a bucket of retargeting," said Roy Schutz, co-founder of Roman, a privately owned company. health care for men. "Especially with television – you see a lot of marks on the direct response side spending more money because it is an effective channel."
MVMT watchmaker CEO, Jake Kassan, echoed Shultz's comments, claiming that the barrier to entry of DTC advertisers trying to build their brand on Facebook is harder than it is. has never been. MVMT is another DTC advertiser that has reduced its Facebook advertising budget to 30% of its overall advertising spend, which includes direct mail, podcasts, radio, and television.
As brands begin to transfer more commercials to non-digital alternatives, it's clear that they leave behind more than just the exposure offered by Facebook.
"It's hard to know who saw a billboard or how it works," Fulop told Digiday. "It's one thing that companies do not have to worry about Facebook, you know exactly what you're going to get, good or bad, you're going to measure it."