Digital ad spend is increasing on Facebook, and with lastminute.com recently announcing ploughing a huge chunk of its digital spend into the platform instead of Google, Facebook is showing no signs of slowing down.
So why is more PPC money going into Facebook? And what’s really happening to spend on Google?
It’s mainly down to product development and the maturity of the respective advertising ecosystems. Google Ads has been around for 20 years and has long been the moreish money-pit of advertising due to its accountability and last-click measurement. As a result, some search markets are extremely competitive, so it’s only sensible to look elsewhere and diversify for better value.
Facebook’s conversion-focused campaign formats have developed over the last few years and they are increasingly successful at demonstrating ROI, albeit within a walled garden. Products like dynamic ads for broad audiences are showing how powerful Facebook’s machine learning has become at finding users who will take action. Whilst not perfect, it is also very appealing to advertisers to be able to pull reports that show ROI against campaigns targeting new audiences, straight from the platforms. As a result, Facebook are also making it an increasingly attractive platform that rewards short-termism. Pair this with its scale and it becomes difficult to overlook on media plans. It’s easy to see the increasing appeal against the most competitive search markets and increasing CPCs.
As more advertisers appear on Facebook the obvious fear is that the platform will become saturated and its value will decrease. Yet the same could be said of paid Search and, although some PPC markets are now incredibly competitive, there are plenty of advertisers still continuing to find value.
There are a number of reasons why saturation is similarly a long way off for Facebook:
● Continuing improvements in targeting and automated bidding strategies are increasing conversion rates, meaning advertisers can afford to pay increasing CPMs as long as they’re finding the most valuable users.
● Improvements in the mobile user experience are increasing benchmark conversion rates. As with improving bidding models, advertisers can afford to pay higher CPMs if they ensure a higher rate of conversion when the user makes it to the site.
● It’s in Facebook’s interests to ensure that as many advertisers are encouraged to use the platform as possible, so they will do everything possible to make sure that value can be seen to be extracted on their behalf. This includes educating advertisers to measure activity in the right way (or their way) to justify increased competition, as well as educating them on creative best practice.
In reality, spend on Google is still growing, just not at the same pace as Facebook. As Facebook’s solutions mature we would naturally expect its growth to plateau. Google is also increasing efforts to diversify their advertising and measurement solutions in video and display to appeal to advertisers chasing more immediately reportable returns in these channels.
Crucially, it’s not as simple as comparing Facebook with Google. User’s consumed and interact with advertising on their respective platforms in very different ways and they all play different parts in the journey to conversion. The desire to look immediately to the bottom of the funnel and focus on short-term goals is something that clients need to be wary of, and marketers must avoid being seduced by last-interaction attribution, siloed reporting and short-term ROI.
Advertisers should be encouraged to integrate long term measurement solutions such as econometrics and brand studies to rubber stamp ROI and achieve the best mix.
Written by Adam Chugg, Head of Biddable, the7stars
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