In its last earnings call, Facebook made what is becoming a routine announcement. Once again, it had shattered expectations and had a stellar quarter. But there was a comment by their CFO that was picked up by some and should be carefully scrutinised by advertisers as it will have a material impact on budgets and campaign approaches next year.

Basically, Facebook has warned that it won’t sell more space for ads, despite greater demand from advertisers. Facebook’s stance has always been to maintain the quality of content in the newsfeed, ensuring that the majority of posts are from your friends or sources, which you have chosen. Ads are intrusive and kept to a minimum.

But how will it affect advertisers?

Facebook sells media via an auction. As demand from advertisers increases, there will be a commensurate increase in bids for the space. An example of this demand pressure is the season increase in media from November to December as the retail season ramps up to climax at Christmas.

Therefore, advertisers will have to compete more aggressively in bidding in the auction for what media there is, i.e. space in the newsfeed becomes more premium, driving up CPMs.

For marketers, this early warning is opportune. It’s time to go back to the drawing board and redo the sums. It will never be more important to ensure that everything that can, must be optimised, in order to achieve expected returns on investment.

For small businesses, it’s time to play smart. Yes, costs will increase and bigger brands with budgets will be muscling into the newsfeed, potentially squeezing smaller advertisers out of the game.

But small businesses have one big advantage – being nimble. Successful campaigning in the newsfeed requires quick decision-making and responses to consumer reactions. Small businesses have that advantage.

Some survival tips

1. Be clear – Ensure that your business objective is aligned with your campaign. Are you building awareness or generating leads or driving actual sales.

2. Test before scaling – This is a no-brainer. If media is going to cost more, make sure to test and test and test again to get the creative right.

3. Targeting is an important lever – Narrowing the focus too tightly could inadvertently raise media costs. Test using a broader audience and then when confident about the creative, take the risk to narrow the focus.

4. Try different formats – Mixing videos with statics, using carousels can make a difference.

5. Focus on ad quality – This is a key element as it can make push a campaign’s performance up or down by many orders of magnitude. Stale creative; low-quality creative; one size fits all creative; single format creative; will all be penalised in this massively more competitive marketplace.

As Facebook continues to limit its newsfeed inventory (arguably the most valuable piece of internet advertising real estate) it is no longer business as usual. Marketers who value their jobs need to take note urgently.

 

By Nick Gibbons, global head of customer success at ReFUEL4

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