‘Advertisers are starting to lose trust’: Why media buyers say Facebook is losing its grip on social ad spend

At least one marketing agency, Tinuiti, which Facebook pointed to as an example of increasing investment on its platforms, hiked it’s year-over-year spending on Facebook and Instagram alongside increased ad spend for platforms like Snapchat, TikTok, and Pinterest.

“We’ve seen this increase 37% YoY on Facebook and 75% YoY on IG (24% growth in Q1 and 53% growth in Q1, respectively). And we’re on pace to spend 61% more on Facebook and Instagram than we did in all of 2019,” said Avi Ben-Zvi, vp of paid social at Tinuiti.

But according to Pew Research, Facebook and other major social media platforms’ growth stalled over the past five years. Facebook’s brand reputation suffered last year after advertisers boycotted the platform with the “Stop Hate for Profit” campaign. And new research from analytics and insight company Skai, shows that social media CPMs have been steadily increasing, up about 12% from 2019. According to Skai, CPMs hovered around $5.71 this time in 2019 and are now at $6.37. 

Also buffeting the social giant is the fact that it is facing a serious challenge in Apple’s data privacy changes, noted Katya Constantine, CEO of performance marketing shop DigiShop Media via email. 

“The biggest cause has certainly been because iOS14 removed some of the most powerful targeting options,” she said. “Also, I imagine that some of the usage has also slipped as the world came out of the pandemic and that removed some inventory and drove up CPMs.”

Elijah Schneider, CEO of social marketing agency Modifly, backs up Constantine’s claims.

“Advertisers are starting to lose trust that consumers lost a long time ago,” Schneider said.

And challenger brands have seen the writing on the wall. Modifly, with a client list that includes startups and direct to consumer brands like Super Coffee drink brand and Beam wellness brand, has seen clients press for serious ad dollar diversification since late last year, said Schneider who added that in 2019 and 2020 at least 80% of Modifly client spend was in Facebook products. At present, that ad spend now sits at 55% on Facebook and 45% on alternative social platforms, like TikTok and Snapchat. (Schneider didn’t share what these breakdowns looked like in actual dollar figures.)

“For brands that are really focused on Gen Z, Facebook is part of the mix. But they’re not necessarily the dominant part of the mix,” said Noah Mallin, chief strategy officer at IMGN Media, where client ad spend on Facebook and Instagram has decreased from 95% of budget in prior years to 75% at present. “They’re much more evenly matched for established big brands where Gen Z is a segment among many,” he added.

In a rush to diversify ad spend, advertisers have divided their digital dollars up amongst everything from alternative social media platforms to digital tools to support a brick-and-mortar presence. There’s no clear kingpin coming to dethrone Facebook and Instagram, although many marketers see promise in TikTok given the platform’s scale and massive audience.

If nothing else, the decline continues to push along the industry-wide conversation around the need to diversify media spend, making for healthy competition among the platforms and more viable options for media buyers, Mallin said.

“I don’t necessarily see [Facebook and Instagram] diminishing to nothing,” Mallin said. “But if you want to have a smart mix and you’ve got the budget for it, you’d want to have Twitch in there and you want to have TikTok in there too.”

That’s not to say Facebook couldn’t make a few changes to delay its decline — and this could just be the latest interaction of changes in the social media landscape, marketers say. When it comes to digital and social media, that landscape is always changing, meaning advertisers will always need to adapt. This pandemic made flexibility a priority, said Wunderman Thompson’s Wyckoff.

“If we start to see CPMs or CPCs go down, you might see an influx back to Facebook and Instagram,” she said. “It’s an ever-evolving world and marketers are going to continue to pay attention and see what’s best.”