On Feb 3, 2022, Facebook, or Meta now with their new name change, had the single biggest drop in stock market history. Over 328 billion of value was lost in the company over the span of minutes, and Meta reported a 10 billion dollar loss for 2021.
Christopher Claflin (@christopherclaflin) did a great job of succinctly reviewing this situation on his TikTok video, and we’ve pulled out some of his highlights below and added our own take (see the full video embed below). We’ll layout the current state of social advertising and how programmatic advertising is well positioned to help companies expand beyond these platforms.
Meta claims that the stock loss is because of their investment in MetaVerse, but if you’re an avid user of social media or social marketing, you know that the real reason is because their main products, Facebook and Instagram, are losing ground.
Advertisers have been pulling their budgets from the platforms because ROI on those ad dollars has been consistently going down over the last couple of years. The reasons for these are a complex combination of:
- Users are leaving both platforms in droves for new shiny platforms, such as TikTok, for a better user experience.
- Ads lower performance is greatly aligned with release of ios14 updates which makes it harder to see performance, as well as reduction of other targeting groups on Facebook.
Let’s dig into these two points a little more:
Facebook and The Lack of User Experience in Exchange for Features
Claflin makes a great observation that the decline in user experience, “..is happening because Meta’s strategy over the last decade has been to spot up-and-coming competing apps, copy their features and shoehorn them into Facebook and Instagrams feature set.”
- IGTV was launched to compete with Youtube
- Stories was launched to complete with and destroy Snapchat
- And as soon as Tiktok became popular we saw the roll out of Reels.
When Meta launches a new feature they do it solely to make money and this has taken away whatever made them special in the beginning.
From there, Facebook and Instagram have alienated their users and their experience with too many ads, divisive content, data scandals, misuse of personal information, the list goes on and on.
Tiktok has gained immense market share since 2020, and users love the simplicity and user experience. It is by far the most engaging social media app. The TikTok engagement rate is 5.30% on accounts with 100,000+ followers, compared to Instagram 1.10% and Twitter 0.30%
But Wait! Before you run to start figuring out ads on Tiktok – ask yourself if you’re just running after the next carrot.
Following users to the newest social platforms could end up being more of the same. TikTok is a walled garden of insights as well, and there have been concerns about data privacy. It’s banned in some countries, including India, with concerns for how the Chinese government could access user information. There are ways for users and businesses to add on extra controls, and if your audience is there then you should definitely utilize it, but don’t put all your focus in one place.
If users start losing the unique experience of TikTok with targeted ads, they’ll leave there too. And if TikTok isn’t going to follow data privacy best practices, it will have to adapt or risk government intervention.
Facebook iOS14 Impact on Social Ad Performance and Slaps on Wrist with Targeting
The loss of revenue on Facebook and Instagram is not just because users are spending less time there, but advertisers have been seeing dips in performance and an inability to see impact of targeting with iOS14 updates.
The iOS14 release negatively impacted Facebook ads in three key areas that are crucial for success of paid social campaigns.
- Targeting
- Reporting
- Optimization
The iOS14 update drastically limited what advertisers and app developers can track in terms of user activity. It is a win for consumer privacy and is needed, but maybe this drastic backlash from Apple wouldn’t have been necessary if Facebook had been more progressive in data privacy, and creating a better mousetrap, earlier.
Advertisers Who Wish to Scale their Business can Diversify their Media Buying with Programmatic Advertising
It’s important to remember that any social platform utilized for advertising is operating within a “walled garden”. It will always be difficult for advertisers to get a full picture of how their ads are performing.
Walled gardens represent less than 40% of the time spent online in the US according to Openx. Despite these facts, Facebook, Google, and Amazon attracted 67.9% of ad revenues in the US in 2019 according to eMarketer.
Programmatic Advertising is a solution to help marketers diversify their campaign and reach users across the open web on all their devices.
Programmatic advertising also operates within an ecosystem that is fully beneficial to all parties, from publishers to advertisers, and allows for the effective monetization of the open internet.
In an interview with CNBC in September 209, the Chief Marketing Officer of The Trade Desk, Susan Vobeja, quotes that “the vitality of the open internet is more important than ever. Given the growing concerns of [Google and Facebook] and their use of data and their practices and the transparency of their business”
The benefits of walled gardens is that they make it very easy to book advertising. However, many brands are blinded by this convenience and overlook the disadvantages.
- Loss of control:
- Give up the steering wheel and leave data in a black box
- Rely too much on too few platforms
- Advertisers put too much focus on platforms when it is still very convenient to book campaigns via the web, mobile, digital audio, Connected TV and Digital Out of Home
Advertising today should be intelligent, data-driven, and carefully targeted in order to reach specific audiences in the places they are in at certain times.
Work with Above the Fold to Build a Full Funnel Strategy Across the Open Internet
By working with the team at Above the Fold, you will work with a team that has a sound understanding of how the digital landscape pays off when constructing strategy for your business. With Above The Fold, not only do you get access to niche experts but you know you’ll have a strategy developed with a true, in-depth understanding of the digital landscape in mind.
Reach out to us and we’d love to have a productive conversation about your marketing mix and how you can expand reach and performance across the open internet.
