The pros and cons of advertising on Facebook

Over the past year, marketers and retail brands have grappled with how to best utilize Meta-owned Facebook and Instagram. For many digital native brands, Facebook was a major part of their advertising strategies. Then came Apple’s iOS 14 privacy changes in April 2021, which had a huge impact on algorithms as it became harder for platforms like Facebook and Pinterest to track and target users.

Since then, digital advertising was largely upset, with many retail brands rushing to diversify their marketing channel mix to reduce the dominance of Facebook and Instagram.

But Meta’s platforms, Facebook and Instagram, are still considered the biggest converters of digital sales. As such, there is widespread debate over whether or not to be on the platform – and, if so, how much money to spend on it.

Below, Modern Retail breaks down brands’ arguments for and against advertising on Facebook.

Pros: Meta still has the greatest potential for scale

For brands with large followings on Facebook and Instagram, simply turning them off isn’t a realistic option.

“I’m still a big believer [in Meta] because it continues to deliver unparalleled scale and sales volume,” said Ryan Pamplin, co-founder and CEO of personal blender BlendJet. The mixer brand has more than 645,000 Instagram followers, as well as 100,000 members in its Facebook recipe sharing group.

“Facebook and Instagram continue to take the lion’s share of our budget and will continue as long as they have the users, which I don’t see changing anytime soon,” Pamplin said. “We are more diverse than ever, but not at the expense of our budget across all Meta platforms.”

Despite the instinct of many traders disconnect from facebook, Pamplin said BlendJet’s website conversion rate “has continued to increase over time thanks to our ongoing creative and website optimizations.” He confirmed that the company was unaffected by last year’s iOS changes and that the company had changed campaign spending accordingly. “We adjust our ad spend throughout the day, every day,” he said. “When the cost of acquiring a customer exceeds a certain level, we decrease spend, and when it decreases, we increase spend to maximize our scale.”

Pamplin credits the BlendJet videos the in-house team creates each week as one of the reasons Facebook platforms still work, which he says have “high production value.” Her recent ASMR mixing video is one example, which features soothing whispers about blending smoothies. On YouTube, the specific video currently has 3.6 million views; On Facebook and Instagram, he has more than 100 million across multiple versions.

“We have over 300 active ads with different variations running right now,” he said. “The key is to create visually stimulating content that grabs users’ attention and keeps them scrolling long enough to understand how your product is the pill to their pain.”

Pamplin said the company also uses Facebook Shops and Live Shopping, “which is growing very quickly for us.” BlendJet’s Facebook Live Shopping events generated “six figures in sales” with minimal paid promotion, he said. Another key Meta strategy, he said, “is that we respond to every comment and build real relationships with our potential customers.” It requires investing in a great team, Pamplin said. “But that’s a game-changer.”

“By running large numbers of ads everywhere in all formats, we reach over two million people a day through Facebook and Instagram alone,” Pamplin said. While the company has adapted the video strategy to its YouTube and TikTok accounts, Pamplin said that number is still “unmatched” when it comes to social reach.

Cons: Conversions have plummeted

Plant-based superfood blend brand Your Super wants to move away from the restless DTC playbook by removing much of its Facebook and Instagram ads. “Since the iOS changes, we’ve seen a big enough drop in conversion rate, which makes it hard to continue spending millions on Facebook,” said Kristel de Groot, co-founder and CMO of YourSuper.

The company launched in Europe in 2014 and debuted in the United States in early 2018. Since then, social media ad spend, dominated by Facebook and Instagram, has accounted for around 70-80% of its advertising budget. total.

This month, Your Super reduced its spending on Meta from $1.5 million per month to around $200,000. “We’ve been trying to turn it off for the past month to test how the conversion without output will look like,” DeGroot said. She said that so far, DTC conversion rates have remained relatively similar to last year’s levels, thanks to Your Super’s organic engagement on Facebook and Instagram. She said the new budget better reflects how well Facebook and Instagram have done this year.

Instead, the company will focus on advertising Amazon and promoting its new brick-and-mortar retail rollouts. The brand is launching this year at Target, The Vitamin Shoppe, CVS and Sprouts stores. Your Super’s direct-to-consumer sales hit $60 million in 2021 and are expected to continue growing alongside Amazon and wholesale this year, according to de Groot.

Despite testing different creative campaigns over the past year, including various videos and photography, de Groot said conversion rates were “significantly lower” than what the brand started using heavily. Facebook in 2018.

Other retail brands that benefited from Facebook’s heyday in the late 2010s also felt a drop in conversion. Clothing brand Outerknown, for example, saw a 25% decline in return on spend in the months following Apple’s iOS 14 rollout.

De Groot added that getting new customers through Facebook and Instagram has become too expensive in 2022. “It doesn’t make sense to acquire customers at this price,” she said, adding that “Most importantly, we are focused on retention and trying to double the lifetime value of our customers.

Pros: Reaching wealthier demographics

Jane Win, a jewelry brand launched in 2019, is still widely sold through its DTC website with around 15% wholesale distribution through specialty retailers. The model naturally pushed Jane Win’s digital advertising budget to Facebook and Instagram, which remain relatively effective at attracting older fine jewelry shoppers.

Emily Bajalia, who leads startup marketing, said with the brand’s average order value being around $300, conversion isn’t always easy through other platforms like Pinterest or TikTok. “We see big impressions, but you have to take them with a grain of salt.”

Bajalia said that, for now, the majority of potential spenders in the jewelry category are spending their time on established social feeds, and Facebook and Instagram are the most prominent.

So, despite conversion declines on Facebook since last April, Bajalia explained that the company is still consistently spending on Meta while trying to diversify its ad mix, including working more with Google Shopping and affiliate marketing. She also noted that since the privacy changes took place, Jane Win has been contacted by Facebook’s internal marketing teams for campaign advice.

“We’re not going to be leaving Meta anytime soon,” she said. “But as a DTC brand, we shouldn’t rely on it for sales.”

Cons: Costs are skyrocketing

A number of CPG brands have struggled with increasing CPMs on Facebook. One example is digestive supplements brand Arrae, whose Facebook ads have skyrocketed since its launch in 2019 – prompting the DTC brand to invest in cheaper TikTok ads instead. Arrae co-founder Nish Samantray said Modern Retail Facebook’s CPM rate has risen above the $25 range for the company. That’s nearly double the CPMs of TikTok, which is rapidly expanding its beta advertising platform.

Another CPG brand, instant ramen brand DTC Immi, is also determining just how dominant Meta will be among its mix. as paid content costs continue to rise. With that, Immi is rapidly moving towards the cheaper TikTok.

Still, the ramen brand is totally off the platform. Kevin Lee, co-founder of Immi, said the brand increased its ad spend on Facebook this year to continue creating consistent sales on the platform. He agreed that Meta’s advertising model “has become a necessary evil” over the past two years. To make the most of Facebook and Instagram, Immi set up an in-house content team to create and execute unique campaigns featuring the brand’s noodle recipes.

But high Meta costs make Immi look for cheaper digital conversion channels. The company has migrated part of its total budget to TikTok’s beta ads. “We want this to work as fast as possible,” Lee said. This decision is important to avoid injecting money into Meta, which is increasingly becoming a money sink. “Each month we notice that CPAs are going up a bit,” he said.

About Nereida Nystrom

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