Digital advertisers are faced with unprecedented challenges these days. With the stark increase in ad costs and the barriers posed by changing data privacy laws, it’s no wonder brands and marketing professionals are left wondering how they will optimize their ROAS.
Let’s discuss the major challenges bands and advertisers face today:
Facebook Marketplace Is Oversaturated
Back in 2019 the CPM or cost per thousand impressions on Facebook was reported to average at $5.12. During 2020 the average CPM rose to and as of July 2021, the average CPM is .
Why are costs rising?
There are roughly businesses on Facebook. As a result of the the 2020 pandemic, brick and mortar retailers/brands have have invested and subsequently pivoted to ecommerce for new customer acquisition. This has driven Facebook costs up with no real end in sight. Additionally, brands are not only competing for ad space with other brands but resellers as well. With so many businesses leveraging social media platforms for customer acquisition through paid ads, the CPM has been climbing higher and higher.
Changes In Data Privacy
“…If a business is built on misleading users, on data exploitation, on choices that are no choices at all, then it does not deserve our praise. It deserves reform.” – Tim Cook, Apple CEO at the Privacy and Data Protection conference in January 2021
More than 70% of countries have data privacy laws in place. In the US we do not have a singular law or nationwide data privacy policy. Instead, each state has its own data privacy laws. Additionally, iOS 14 updates require users to opt-in to app and website tracking. These ever-evolving laws and operating systems pose a challenge for brands and advertisers to develop and distribute targeted ads and even more challenging to execute retargeting campaigns.
Choosey Nature Of The Platforms
Facebook, Instagram, and arguably YouTube are not demand-first marketplaces. Thus advertisers face the challenge of catching the attention of potential consumers when they are not actively looking to make purchases. Meanwhile, with so much competition within Facebook Marketplace, Facebook will optimize the ads that are performing well and penalize ads that are not converting well or providing a good user experience. This makes sense when you consider Facebook is a publicly traded company that has an obligation to users and stakeholders to ensure the platform remains engaging and does not cause ad fatigue.
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