POV: Are Advertisers Questioning Facebook Advertising ROI?

This morning, we woke up to new images of the Facebook logo set in a post-apocalyptic landscape, alongside headlines that declare that advertisers are questioning the effectiveness of their ad spend on the platform.

5.14.18_FacebookAdvertisingROI_Digiday

Check out that very Digiday article we’re referencing here.

We say new images, because it’s not the first time we’ve seen Facebook portrayed in chaos – from Zuck’s head in the nuclear cloud, to the floods of Cambridge Analytica news stories, to today’s post-apocalyptic era shot. Given the doomsday perspective here, we thought it’d be a good time to break this down together – to both summarize the recent press and our thinking on the subject:

One. Always question the effectiveness of your ad spend. As we are constantly measuring the impact of our channels, there are three reasons we continue to allocate budget to the Facebook ecosystem to the degree that we do:

  1. Ad Tech: Facebook enables audience segmentation and re-engagement opportunities that are not available with other channels and platforms.
  2. Scale: the sheer number of users on the platform who are accustomed to native engagement with ads and content from brands that are relevant to them.
  3. Performance: The Facebook ecosystem drives traffic and conversions at a higher rate and lower cost than many alternatives, because of the first and second points above.

The advertisers quoted in today’s press admit that they know their Facebook investment is effective in driving traffic (we would agree, and add, in “driving sales”). Their question, rather, is focused on “what else” these ads are doing for their brand, particularly as it relates to video advertising. For video advertisers, this question has become paramount, with digital video spend accounting for an increasingly large share of overall media investment, including Linear TV.

Two. These concerns over video on the platform are a long time coming. Facebook charges advertisers for a video view after just :03, compared to the :15 or close to completed views that counts in the Google realm. Facebook has now begun to count and report on views after just :02, based on its research on ad recall. At the same time, with the changes to the newsfeed algorithm announced in January, Facebook has told advertisers to expect a deprioritization of video in the Newsfeed, and that costs for those few seconds would increase. Now, with Facebook restricting access to third party data, advertisers will also have a harder time executing a unified audience strategy across platforms in their buys.

And, Three. The past few years have also marked a renaissance in premium video content creation, with investment spiking by the likes Netflix, Hulu, Amazon, and NBCU. Audiences are watching more video than ever before: digital viewing has eroded TV ratings, but as digital viewing proliferates across screens, time spent across devices has proven to be additive. Audiences have more choice than ever of what to watch and where to watch it, and are intentional about their preferences and viewing habits.

For advertisers, Premium Digital Video has opened entirely new inventory sources, as viewership has skyrocketed on digitally connected living room screens, (CTV) as well as hand held apps (OTT). Video exposure has shifted sharply away from desktop and mobile web, and has moved to connected TVs and over the top apps. As opposed to Facebook’s :02 threshold and history of misrepresenting video viewership, these channels offer nearly 100% viewability, completion rates, and share of screen, with sound on.

It should not come as a surprise that as new distribution channels mature, advertisers are re-evaluating their media mix and questioning their video investments on Facebook. We will see how Facebook responds in the future with Facebook Watch and TV, but in the short-term, video is a critical component of both brand and commerce initiatives. Facebook remains a strong traffic driver, and advertisers should diversify their media investment to meet their audiences’ consumption habits.

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