Facebook achieved a 46% growth in advertising revenue for the first three months of 2021. If you are a marketer who advertises via Facebook or indeed any other social media platform – you might be asking yourself why you’ve not seen the returns you’d like.
During Econsultancy Live last month, Michael Duke, chief product officer at Good Growth, set out to explain why social advertising presents a challenge to growth for many brands. His argument is that marketers struggle to understand a fundamental aspect of customer engagement within social.
Social media is underperforming, despite growth
We all know that social media is growing exponentially, explains Duke. “Facebook is knocking on the door of 50 million [users in the UK], TikTok has grown from essentially nothing to 13 million [UK] users in a matter of a couple of years, so more and more organisations are thinking, well, ‘how do we make social work for us?’”
Facebook’s reporting shows that it has grown its global advertising revenue to approximately $25 billion in the first three months of 2021, which is “an enormous amount of growth in social media, paid social media, marketing essentially,” says Duke. In the UK, specifically, social media advertising revenue as a whole is forecasted to reach nearly $12 billion by 2025 – which means it’s almost tripled in size in the space of eight years (according to the same forecast).
“Not only are more people using social media, Photo Editing Servicesbut more organisations are spending increasing amounts of money to try and bring those people into their online channels, to try to build familiarity and engagement with their proposition, trying to drive revenue, trying to drive growth,” he explains.
Duke suggests that where this becomes problematic is if you look at performance by key marketing channels. Ultimately, he says, “we see social media underperform.”
A case of the ‘Red Queen’
The most obvious challenge here is the return-on-ad-spend (ROAS) metric. Duke uses Facebook as an example, which typically uses either a 28-day view or a 7-day click attribution model. “It doesn’t really matter which one you use; the objective of the model is to assign as many conversions as possible to your ad spend,” he explains.
“So you have this challenge, the data is not wrong – there’s a difference between data being biased and being wrong – but it’s not trying to help you make the best decisions.”
“Ultimately, what’s the actual result of this?” he asks. “You’re spending more money, and not just that but you’re spending more time. You require teams to run this advertising, data reporting, but – despite that – you’re not moving forward.”
Duke calls this conundrum the ‘Red Queen’ (an analogy inspired by Alice in Wonderland), which, in other words, means “essentially, you have to run as fast as you can just to stay where you are, and that’s what a lot of organisations are doing. If they want to get anywhere and they want to grow, they have to run twice as fast as they can.”