If we first off jump back to the start of 2020, Facebook rates were reasonable and, as an advertising platform, the social media giant was stable and performed well.
There was always the question of over reporting and the odd court case over inflated stats, but it was easy for advertisers to drive cost effective conversions using Facebook’s in-platform data.
Almost two years on and the Facebook rates landscape is now very different with two major trends impacting performance.
- Facebook rates for CPM have increased dramatically.
This is partially because of more advertisers onboarding onto Facebook’s ad platform in a bid to keep their business alive during the pandemic. Facebook even had schemes that specifically helped very small businesses to get started.
There is also the rumor on the grapevine that Facebook rates increased to satisfy its investors after the platform struggled to maintain user growth. However, no official statements have been released from Facebook to verify this.
- Less conversions are being recorded pushing Facebook rates for reported CPAs up further.
Advertisers are battling with the aftermath of Apple’s iOS 14.5 update, which left us with a complete overhaul of Facebook’s reporting data and attribution.
Advertisers are seeing less conversions coming through. Looking at our active campaigns and comparing pre and post iOS14, we are seeing roughly 20% of conversions missing, but this is hard to fully quantify and it doesn’t take into account changes to seasonality and the economy.
Default cookie windows have also reduced from 28 day click down to 7 day, which immediately in comparison will drive CPAs up.
Due to less overall data being collected by Facebook, available audiences are shrinking as Facebook is unable to gain the same level of data on a user’s interests if they are not opted into privacy tracking and smaller audiences means more competition and again higher CPMs and CPAs.
The result is Facebook campaigns are seeing huge decreases in performances year on year and conversions are seemingly becoming more expensive.
What can advertisers do to try and pre-empt this?
Here are my top tips:
- Review your creative.
Facebook wants to show good creative to its users and deploys its EAR (Estimated Action Rate) algorithm to decide what ad to show. If your ad has a high engagement rate and is still fresh then it will pick your ad over a competitor’s ad that is poor, or has gone stale. If your EAR is higher, then Facebook will give your ad preferential rates and a lower CPM.
- Implement Conversions API
Facebook recommends implementation of server-to-server tracking called Conversions API. This won’t fill the data gap completely but will record an extra 10-15% of conversions. Google is also moving to this model in 2022, so it is worth investing in.
- Reset your benchmarks
Even if all tracking had remained equal, last year was still inarguably a crazy year where shopping and all behaviour changed. If you are an ecommerce brand you will have seen a boom as users couldn’t head out to the shops. This fundamental change therefore means that performance generated is incomparable to now.
We recommend using 2019 data when making comparisons rather than 2020. Google Analytics is also a good source of comparison as it hasn’t changed its tracking methodologies, so provides more of a like for like comparison.
However, with so many variables it may be that the benchmarks are being reset and we may well have to just consider performance now the new norm.
- Increase the number of ads seen by humans
Deploy an ad fraud detection solution. Removing suspicious and fraudulent clicks from campaigns means that more ads will reach potential customers and that can only be a good thing. With more eyes comes more valuable site traffic and more conversions.
- Consider additional platforms.
For all the reasons Facebook rates are becoming more expensive and this is in the backdrop of decreasing reach. It is important to know your ultimate ROAS or Cost of Sale that you are willing to accept, and when Facebook reaches this limit it may be time to look at additional platforms such as Pinterest and TikTok for incremental reach.
Both platforms have growing audiences and integrations with Shopify to enable social shopping campaigns. As TikTok and Pinterest aren’t as saturated with advertisers as Facebook, the costs per click are predominantly lower and ads have a greater share of voice.
Despite all the 2021 hiccups to performance, Facebook is still a very valuable source of conversions and revenue. There is no silver bullet to return 2020 performance; however these recommendations will help you understand the situation more and provide a good grounding with which to move forward into 2022.
Now that Chrome’s depletion of cookies has moved to 2023, we have an extra year or so to plan for the next big industry shake-up where hopefully the prior heads-up will mean this change is a little more seamless.
Claire Stanley-Manock, Paid Media Director, Connective3