As people are spending more time on social media platforms, the demand for paid ads on Facebook is decreasing, writes, Yuval Ben-Itzhak, CEO, Socialbakers
Faced with the prospect of social distancing and more time at home, people are increasingly turning to the online world to help them feel connected, informed, and entertained. This should spell opportunity for brands. After all, people are spending more time than ever on social media. Unfortunately, given fear and economic uncertainty, many marketers are actually reducing their Facebook ad spend instead, as Mark Zuckerberg recently told The New York Times. Social media data shows, that this may prove to be a costly mistake with a high opportunity cost for brands. Let’s look at why.
To understand the likely impact of COVID-19 on brand and user behavior on social media, Socialbakers recently completed an in-depth analysis based on data from our global social media marketing platform, which is used by brand marketers across the globe. The goal of the analysis was to provide marketers with key insights into how the social media landscape is changing and how they should be marketing today in order to come out stronger tomorrow. The data available today already shows that ad spend in East Asia is bouncing back as business starts to return to normal, which should be an encouraging sign for regions like North America and Europe where the purse strings have tightened in the wake of the pandemic.
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Our recent analysis considered 2,376,721 Facebook posts from 40,563 brand profiles across multiple regions from January 1 – March 15. It revealed lower demand for paid ads on Facebook, lower CPC and increased performance of organic content.
Additionally, the analysis revealed that more users are online during this period, as social distancing forces people to spend more time at home. More users being online means that there are more people to whom ads can be served. The combination of the lower cost of ads with the fact that more people are online presents a real advantage for savvy marketers looking to reach and engage with their audiences during this time of crisis.
Although many ad budgets have been frozen or reduced due to economic uncertainty, brands across all regions are posting more organic content. This is a smart move. People are at home and spending hours online. Brands can and should provide more content. But by decreasing or freezing their budgets, most brands are also failing to take advantage of dramatically reduced ad costs. For example, in December 2019 in North America, cost-per-click (CPC) was around 0.64$. By mid-March it was just half of that: 0.32$. Data for Western Europe tells a similar story. Going into December 2019, CPC was around 0.43$. By mid-March it was down to 0.20$. Savvy marketers should be taking advantage of these historically low costs. Most aren’t.
It should come as no surprise that ad spend reflects regional variations in the battle against COVID-19. In Western Europe, South Europe and South-East Asia, Facebook ad spend started dropping in early March, with North America showing the steepest decline (ad spend declined by almost 50% between December 2019 and mid-March 2020 in North America.) That’s when the number of cases, hospitalizations, and deaths started rising in those regions. As one might expect, that was also around the same time that ad spend started to pick up in East Asia, as business resumed following the worst of the crisis.
All over the world, as people are forced to spend more time at home, they are looking to social media to help them entertain themselves and connect with others. Brand marketers should be chomping at the bit to take advantage of this opportunity by both developing compelling content and increasing their social media ad spend to take advantage of low CPC costs. Unfortunately, most marketers are providing more content, but stopping short of spending more on social media advertising. They will emerge from this period of social distancing at a strong disadvantage compared to marketers who took advantage of this time.
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The savviest marketers are using this time not just to get closer to their customers -- but to reach more of them and more often. They are investing in getting smarter about what their audiences find compelling at each stage of the customer journey and are investing in expanding their reach by taking advantage of unseasonably low CPC costs. Months from now, when the pandemic is hopefully long past, brand marketers who froze or decreased their budgets will recognize the error of their ways. Brands should be future-proofing their business by embracing digital transformation. If this time is showing us anything, it’s that digital channels are where customer engagement is happening and businesses that neglect them do so at their peril.
When it comes to brand marketing, the winners will be those marketers who used this critical time to stay close to their customers and who took advantage of the low cost of Facebook ads to actually increase their reach. This is not the time to go quiet.