Litigation for and against Facebook ads

Over the past year, marketers and retail brands have grappled with how best to use Meta-owned Facebook and Instagram. For many digitally local brands, Facebook has been an important part of their advertising strategy. Then came Apple’s iOS 14 privacy changes in April 2021; this had a huge impact on algorithms as platforms like Facebook and Pinterest became harder to track and target users.

Since then digital advertising has been greatly overturned, Many retail brands are rushing to diversify their marketing channel mix to lessen the dominance of Facebook and Instagram.

But Meta’s platforms, Facebook and Instagram, are still considered the biggest digital sales converters. As such, there is widespread debate about whether to be on the platform and, if so, how much money should be spent on it.

Below, Modern Retail examines cases for and against brands advertising on Facebook.

For: Meta still has the most scale potential

For brands with a large following on Facebook and Instagram, turning them off isn’t a realistic option.

“I still have great faith [in Meta] because it continues to deliver unmatched scale and sales volume,” said Ryan Pamplin, co-founder and CEO of personal blender BlendJet. The Blender brand has more than 645,000 Instagram followers and 100,000 members in its recipe sharing group on Facebook.

“Facebook and Instagram continue to take the lion’s share of our budget and will continue as long as they have users, which isn’t going to change anytime soon,” Pamplin said. “We are more diverse than ever before, but not at the expense of our budget on Meta platforms.”

Despite the instincts of many marketers get off facebookBlendJet’s website conversion rate “continues to increase over time thanks to our ongoing creative and website optimizations,” Pamplin said. He confirmed that the company saw no impact from last year’s iOS changes, and the company adjusted its campaign spend accordingly. “We adjust our ad spend every day, throughout the day,” she said. “When the cost of acquiring a customer rises above a certain level, we reduce expenditure, and when it falls, we increase expenditure to maximize our scale.”

Pamplin sees the BlendJet videos the in-house team creates each week as one of the reasons Facebook platforms still work, saying it has “high production value.” Latest ASMR blending video One example of this is that includes soothing whispers over the smoothie blend. On YouTube, the particular video has now been viewed 3.6 million times; There are more than 100 million on Facebook and Instagram, in various versions.

“We have over 300 active ads with different variations currently running,” he said. “The key is to make visually stimulating content that grabs users’ attention and keeps them from scrolling long enough to realize that your product is the cure for their pain.”

Pamplin said the company also uses Facebook Stores and Live Shopping, which are “growing very fast for us.” BlendJet’s Facebook Live Shopping events delivered “six figures in sales” with a minimal fee promotion, he said. Another important Meta strategy is that we “respond to every single comment and build real relationships with our potential customers,” he said. Pamplin said this requires investing in a great team. “But it’s a game changer.”

“We reach more than two million people a day on Facebook and Instagram alone, running lots of ads everywhere, in every format,” Pamplin said. While the company has adapted its video strategy to its YouTube and TikTok accounts, Pamplin said that figure is still “unmatched” when it comes to social outreach.

Against: Conversions dropped

Plant-based superfood mix brand Your Super is looking to get away from the smashed DTC playbook by dropping the bulk of its Facebook and Instagram ads. “Since iOS changed, we’ve seen a big enough drop in conversion that it’s hard to keep spending millions on Facebook,” YourSuper co-founder and CMO Kristel de Groot said.

The company launched in Europe in 2014 and made its US debut in early 2018. Since then, social ad spend, dominated by Facebook and Instagram, has accounted for around 70% to 80% of the total advertising budget.

This month, Your Super cut its Meta-wide spending from $1.5 million per month to nearly $200,000. “For the past month, we’ve been trying to turn it off to test how it would look without the conversion,” DeGroot said. He said that so far, DTC conversion rates have remained relatively similar to last year’s levels, thanks to Your Super’s organic Facebook and Instagram engagement. He said the new budget better reflects how well Facebook and Instagram are doing this year.

Instead, the company will focus on Amazon advertising and promoting new physical retail. The brand is available at Target, The Vitamin Shoppe, CVS and Sprouts stores this year. Direct-to-consumer sales of your Super reached $60 million in 2021 and are expected to continue to grow this year along with Amazon and wholesale, according to Groot.

Despite testing different creative campaigns, including video and various photography, last year, de Groot said conversion rates were “significantly lower” than when the brand started using Facebook heavily in 2018.

Other retail brands that took advantage of Facebook’s heyday in the late 2010s have similarly felt conversion declines. Clothing brand Outerknown, for example, experienced a 25% drop in return on spend in the months after Apple’s iOS 14 launch.

De Groot added that in 2022, acquiring new customers via Facebook and Instagram is becoming too expensive. “There’s no point in acquiring customers at this cost,” he added, “and most importantly, we focus on retention and try to double the lifetime value of our customers.”

For: Reaching the deep pocket demographic

Jane Win, a jewelry brand launched in 2019, is still largely sold through the DTC website, with about 15% wholesale distribution at specialty retailers. Naturally, the model diverted Jane Win’s digital advertising budget to Facebook and Instagram, and those budgets continued to be relatively effective in attracting vintage jewelry shoppers.

Emily Bajalia, who originally headed marketing, said that conversion through other platforms like Pinterest or TikTok isn’t always easy, as the brand’s average order value is around $300. “We’re seeing great impressions, but you have to take them with a grain of salt.”

Bajalia said that currently the majority of potential spenders in the jewelry category spend their time on embedded social feeds, with Facebook and Instagram being the biggest.

So, despite seeing some conversion drops on Facebook since last April, Bajalia explained that the company has been consistently spending on Meta as it tries to diversify its ad mix, including working more with Google Shopping and affiliate marketing. He also noted that since the privacy changes took place, Jane Win has received outreach by Facebook’s in-house marketing teams for campaign tips.

“We will not be leaving Meta completely anytime soon,” he said. “But as a DTC brand we shouldn’t rely on it for sale.”

Against: Costs are rising

A number of CPG brands have struggled with increasing CPMs on Facebook. One example is the digestive supplements brand Arrae, whose Facebook ads have skyrocketed since launching in 2019 – pushing the DTC brand to invest in cheaper TikTok ads instead. Arrae co-founder Nish Samantray said Modern Retail Facebook’s CPM rate has crossed the $25 range for the company. That’s nearly double the CPMs of TikTok, which is quickly building its beta ad platform.

Another CPG brand, DTC instant ramen brand Immi, is also in the middle of figuring out how Meta will dominate among its mix. As paid content costs continue to rise. With that, Immi rapidly moving towards cheaper TikTok.

Still, the ramen brand is completely off the platform. Immi co-founder Kevin Lee said the brand has increased its Facebook ad spend this year to continue generating consistent sales across the platform. He acknowledged that Meta’s advertising model had “become a necessary evil” over the past two years. To get the most out of Facebook and Instagram, Immi has created an in-house content team to create and run unique campaigns featuring the brand’s noodle recipes.

However, Meta’s high costs push Immi to look for cheaper digital conversion channels. The company moved some of its total budget to TikTok’s beta ads. “We want it to work as fast as possible,” Lee said. The move is important to avoid pumping cash into the Meta, which is becoming more and more of a money pit. “Every month, we notice that CPAs go up a little bit,” he said.

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