Time to measure off platform: Why your Meta ads are underperforming and how to fix them – Sparro
Australia’s largest digital indie shop Sparro has run the numbers on Facebook spend and found the true impact of Apple’s moves on measurement. Brands are maxing on remarketing and getting no new reach. Time to change tack, says co-founder and partner, Cameron Bryant.
Apple iOS 14 kneecapped Meta’s ability to measure performance and its once-beloved granular audience targeting. Yet many marketers continue using the same tactics and struggle with the resulting poorer performance, increasing ad costs and a far lower reach.
But that’s not going to work out well and brands that have previously relied on the Meta algorithm to deliver their performance and a large chunk of their online revenue are now struggling.
Meta knows this is a concern too. Per Sheryl Sandberg, COO at Meta: “The changes to the ads landscape over the last year have caused significant disruptions to the ways many businesses advertise online”.
It’s only going to get worse. Meta CFO David Wehner notes, “We're also seeing incremental headwinds from iOS 15 and other regulatory changes”.
Meta’s cost per thousand (CPM) increased by 61 per cent YoY, reaching an average CPM of US $17.60, according to Insider. Locally, agencies have reported similar price inflation – and much higher in certain categories.
In Q1 this year, Sparro conducted its own study across Meta spenders, analysing some $2.5m in spend by 10 brands across categories including fashion, electronics, furniture, beauty and FMCG. We found that with decreased signals, companies were on average down 41 per cent on platform revenue (i.e conversion per the FB pixel) and some companies were close to 70 per cent down — especially those with historically larger AOV and longer purchase cycles. Across the businesses studied, most were spending the same or had increased investment.
It’s not a unique issue and Meta is more than aware of this. Per Wehner, “… longer term, we're rebuilding our ads stack to employ more machine learning and AI to be more effective at ads with less data. So we think we've got a response that we're building into the new environment, and we're optimistic about the future.”
No doubt Meta, the $500bn business (though falling fast) will find an answer. But in the meantime, here’s how to fix your underperformance.
What got us here won’t get us there
“We need a return of 8-10x ROI.” Sound familiar? Previously, Facebook could deliver these results. Now, many marketers are pushing their remarketing to the limit with huge frequencies and no new unique reach or audiences.
What’s often missed is the incrementality of ad spend. How much of this audience would have purchased the products anyway and what proportion of our audience is getting fed up with our ads and brand? So, it’s time to re-align, understand what Meta actually delivers via incrementality testing, and…
Take measurement off the platform
Like any platform, Meta knows the struggle with measurement once someone leaves its ecosystem. Wehner states that “medium term, we see the opportunity to move clients more towards on-site conversions. We're seeing a lot of success in things like Click-to-Messaging ads, lead gen ads and then a more nascent effort in shop ads.”
Keeping users on the platform allows for easier tracking for Meta. However, data-driven marketers need to take control of this measurement and own their attribution. Marketing should never be about platform metrics, but somehow we can get sucked into attempting to measure separate channels on the same metrics, regardless of their intention. More often than not, these metrics don’t correlate with your overall business performance.
If not already in place, it’s time to broaden your scope and look at your wider business performance from a first-party audience perspective. Then, you can start to uncover the incrementality of each dollar spent on Meta or any other platform. We think this is best done by incrementality testing, control trials and media mix modelling.
Use the platform for its intention
People use social media to check in on friends, view trends and be inspired. Stopping someone’s thumb scroll and getting their attention has always been difficult, but Facebook and Instagram also build brands and awareness. So, stop trying to convert on every ad, and look to build a brand that resonates.
Choosing a female audience in-market for dresses and targeting with your product list isn’t very innovative, nor is it defensible. Be creative. Reels already make up more than 20 per cent of the time that people spend on Instagram. Video overall makes up 50 per cent of the time that people spend on Facebook, and Reels is growing quickly there as well.
Building social-first creative and understanding its nuances will lead to better engagement, increased brand awareness and, from off-platform measurement, stronger business performance.
De-risk channel-led strategies
Finally, don’t put all your eggs in one basket. Tracking, audiences and measurement are only getting more difficult. Spread your risk by building a testing framework, trying new channels and moving away from one or two channel silos.
Understanding where audiences are and where they’re moving — and speaking to them in the right way — builds a digital strategy that will steer your business through the next wave of marketing challenges and inevitable platform shifts.
Everybody is in the same boat, facing rising costs, labour squeezes, inflation hikes and supply chain challenges — with major changes coming down the track from both platforms and regulators. Against that backdrop, it’s more important than ever that we fully understand the performance of our digital media investments.
That means adapting how we invest, and changing what and how we measure.
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