How Advertisers can Beat Facebook’s new Advertising Paradigm

Trust, privacy, credibility: these elements of Facebook’s brand were tarnished in the Cambridge Analytica scandal. In the wake of that scandal, a new advertising paradigm emerged for marketers using the social media giant – one which must be consciously navigated to continue getting the best bang for your Facebook bucks, writes Kazu Takiguchi, Founder and CEO of Creadits.

What goes up must come down, and this year one of the world’s biggest companies was in freefall. Facebook and Cambridge Analytica were two unrelated terms before March, but the public collision of the two companies forever changed the perception of the social media platform thereafter. Trust, privacy, credibility: these elements of Facebook’s brand were tarnished in the scandal, which involved the unauthorized mining of user data for political spin. Advertising spending slumped on the platform from March to May in the wake of the fallout.

Advertisers spent on average about $140,000 in January which dropped to under $20,000 in May. However, the figure was back up to more than $120,000 in August. While the advertisers may be returning, the social network has yet to fully regain the trust of users, who appear to be growing warier of brands advertising on Facebook. Furthermore, while the spend may be back at pre-scandal levels, research shows that the advertising return on investment (ROI) has not recovered. Advertising ROI, calculated as attributed revenue dollars converted from advertising dollars spent on Facebook, decreased from an index value of 2 in April to below 0.5 from May to August.

So, what does this mean for advertisers? Well, a number of things:

The Cambridge Analytica Fallout

The fallout from the Cambridge Analytica saga continues to threaten the fortunes of Facebook, with major advertisers such as Mozilla and Sonos pulling out and Unilever almost following suit. Some people had the idea that this controversy involving the biggest social media company ever would hurt the company in the long-run - but results show that a few months later their revenue is back. Even as rivals Amazon and Snapchat chip at its market share, Facebook remains one of the two largest players in the online advertising sphere at approximately 19.6% of total US digital ad spend.

Surprisingly, it’s the advertisers themselves taking the hit. Facebook is trying to make its advertising guidelines stricter in the wake of the scandal and reduce the ads people see in favour of content from their family and friends. Add to that the decrease in user engagement on Facebook due to the increasing distrust of the platform, and it’s a double whammy for advertisers.

C3 Metrics COO Jeff Greenfield explained this issue further: "Because of the advertising data scandal surrounding Cambridge Analytica and Facebook's own TV campaign highlighting its error, consumers are far more suspicious of brands advertising on Facebook than ever,” he said. "Between this, increased spend and competition for eyeballs coupled with lower ad load in Facebook feeds, advertisers are no longer seeing the ROI from Facebook they once enjoyed."

Also Read: Why There is No Place For Tasteless Campaigns in the High Tech World of Modern Advertising

The best bang for your Facebook bucks

So, what can advertisers do? There are three basic tips for advertisers trying to combat this hit to engagement. Firstly, instead of trying to focus on one single ad, advertisers should make use of tools on Facebook like Dynamic Creative. This feature means advertisers can upload as many creative ads and options as they want. Facebook then matches the specific ads to specific audiences. If an agency or advertiser only has one creative, the ads will only go to one segment of the audience. Uploading more will allow you to appeal to an expanded audience - undoubtedly increasing the advertising ROI.

Secondly, similar to additional creative options, advertisers should also look at the type of creatives Facebook is trying to push and what is working. For example, Facebook noted a few years ago their desire for more video content in the newsfeed. When advertisers responded and advertised with video, their ads were more successful.

Right now, there is a similar push for foreground promotion on the My Story feature. Different ads in different formats will help advertisers overcome this climate of stiff competition and also work to combat “ad fatigue”: the moment when audiences become over-familiar or even bored after seeing the same ad over and over and over again.

Thirdly -- and this is key -- advertisers should remember that Facebook ideally makes up only part of their integrated advertising ecosystem. The ROI from Facebook ads may have taken a hit, but there is so much more to digital advertising than just this one platform. Audiences may have seen the Facebook ads and decided not to click through, yet this impression can still prove valuable advertisers are bidding on the right keywords for searches on Google.

The point is to not look at Facebook advertising as a standalone tool but part of an entire ecosystem where each touchpoint plays an important role and is correctly attributed for. This can allow advertisers to have a more accurate gauge of ROI as a whole, and the numbers may be much better than previously thought.

Also Read: What are Ad Blockers and How Do they Impact Advertisers?

Approaching new ads

From the perspective of advertisers, it may feel like business as usual on Facebook - but as demonstrated there is a need to refresh ads and refresh them more often. In the wake of the Cambridge Analytica scandal, ad inventory has been reduced on the platform, which means the frequency of each ad is lower and the turnover is higher.  As such, there is more urgency to ensure people are being exposed to newer ads and newer creative.

The downturn of ROI in Facebook advertising is part and parcel of a platform becoming too saturated. Facebook has made it no secret that it will prioritize user content rather than adverts. This is likely in response to a few things: the “Delete Facebook” movement, the downturn of millennial users, and more. The social media giant is clearly concerned about its longevity and making the platform more user-friendly.

This is bad news for advertisers, as the platform is actively reducing ad inventory while there is more business and competition on Facebook all the time. It’s basic economics: Greater demand and lower supply mean that it will be harder to cut through the clutter with your message.

So, advertisers must take note: if you are doing the same thing as last year, your ROI will certainly take a hit. You need to take a different approach from before to make sure your ROI is robust.