‘Own the loop’: Why CPG giants like P&G and Johnson & Johnson are buying more Facebook direct-response ads
There was a time when wholesale brands like those owned by Procter & Gamble and Johnson & Johnson mostly relied on brand advertising to drive awareness and preference. But in the direct-to-consumer era, everyone is becoming a direct marketer.
Since the first half of 2018, Gillette has more than doubled the number of direct-response ads it’s running on Facebook. Gillette ran 647 conversion ads on Facebook from January to May. Then, from June to November, that number jumped to 1,407. During the same time period, Pampers tripled the number of DR ads it ran on Facebook, from 128 in the beginning half of the year to 381 in the second half of the year. Aveeno, meanwhile, went from running 59 conversion ads to 148, while Neutrogena went from running only 21 ads to 154, according to BrandTotal data, which tracks both active and dark ads across social media.
On Facebook, conversion ads appear to encompass sponsored posts, carousel ads and video ads that include call-to-actions like “buy now,” “shop now” or “get offer” and link back to their individual websites where consumers can make their purchases directly or, once there, be directed to other sites where they can buy products. CPG companies are choosing to run conversion ads over awareness or consideration ads, the other two ad types Facebook categorizes ads into.
“For companies that didn’t traditionally have a website where they sold products, and instead went through other resellers, we are starting to see a focus on people finding ways to sell their own products and seeing more and more budget go toward conversion-based ads,” said Brittany Richter, svp and head of products and services at Dentsu’s media buying agency iProspect.
While other platforms like Amazon, Instagram and Pinterest are seeing more conversion ads being sold, ad buyers say Facebook is overwhelmingly gaining most of the DR ad budgets. The increase in the number of DR ads is a boon for platforms with their deep pools of customer data for targeting. Overall, CPMs are typically higher for DR ads on any platform because simply put, they ask more of the user and the return can be quantified with a sale.
“If we’re bidding and optimizing toward reach, which we do for awareness campaigns, the CPM will be lower than if we’re bidding or optimizing on something more specific, like a conversion,” said Richter.
One ad buyer said they have seen CPMs as high as $60 on Facebook when a company is trying to reach a hard-to-reach audience with a large budget and content that asks a lot of a customer, such as asking someone to open a new bank account. But when targeting a broad audience with a modest overall budget, asking a customer to do something they might want to do already, CPMs can dip as low as $3.00.
Gillette is running ads that direct consumers to its Gillette on Demand service, which it launched in May 2017, in response to the growth of competitors like Harry’s and Dollar Shave Club, purchased by Unilever in 2016 for reportedly $1 billion. Neutrogena is running ads to bring customers to their own site where they can buy goods directly. Ads for Pampers and Aveeno, on the other hand, are leading users to their websites where they can then choose to buy online through options like Amazon, Jet.com, Walmart or Target. By directing users to their own sites first, Pampers and Aveeno can then see where customers ultimately purchase their products.
“There is an overall trend in the industry of brands marketing directly to consumers,” said Noah King, svp and group director at Havas Media’s Socialyse. “If you own the online store, you own the loop.”
Richter said it’s a dramatic change in strategy from when CPG brands would mostly buy awareness ads on Facebook that directed users to retail stores like Target or Walmart as places where they could purchase their products. She said she began seeing CPG interest in conversion ads on Facebook when the service introduced its Dynamic Ads about three years ago.
“Facebook realized that if they didn’t start doing real conversion-based options that work well, they weren’t going to get the share of the spend that they could,” she said. “Since they have been focused on that, we have been seeing a total uptick in direct-to-response.”
Facebook has introduced a number of upgrades to its dynamic ads in the past year, including first-party cookies for Pixel, categories for dynamic ads which targets people by specific categories like sunglasses instead of individual products, a format that features multiple advertisers in one ad unit and overlays that highlight product prices or discounts.
Karin Tracy, head of industry for retail, luxury and fashion at Facebook, said traditional retailers are also buying more conversion ads as they track people to both their online sites and physical stores.
Renelly Morel, social activation director at GroupM’s Essence, said she is also seeing retailers like Home Depot, Michael’s and Crate & Barrel run more DR ads. The Home Depot is running six times the number of conversion ads than it is awareness or consideration ads. According to BrandTotal, Home Depot is currently running 7,546 conversion ads on Facebook, while its awareness ads number 384 and consideration ads number 667.
“The goal for retailers is to drive return on ad spend which is a key measure of success in retail,” said Morel.
Why YouTube’s focus on competing with streamers may have hurt the platform as brands focus on TikTok
As competition continues to heat up in the digital video and content creation space with TikTok, Instagram and the recent addition of social app BeReal, YouTube may be feeling that heat more and more.
Dentsu’s new global gaming lead reflects on gaming strategy ‘void’ in advertising, media
Despite the rapid rise of gaming in recent years — or perhaps because of it — many brands and marketers are still confused about how to best reach the gaming community. Dentsu's new global gaming lead Brent Koning is equipped to navigate these uncertain waters.
‘Time to go on the offense’: In a choppy ad tech M&A market, strategic investors eye deals
For many strategic investors, it's a good moment to put their corporate development teams to work.
SponsoredPublishers are adapting advertising strategies for a privacy-first world
Tina Iannacchino, senior publisher director, Seedtag So much of the attention around the death of third-party cookies and its impact on the digital advertising industry is focused on the implications for brands and consumers, which is far from the complete picture. The digital publishing industry in the U.S. is massive and set to be shaken […]
Why Spotify makes Wrapped its annual marketing moment
As first-party data becomes increasingly important, so does Spotify's Wrapped end of year marketing campaign.
How Philadelphia Cream Cheese is finding its place on Reddit
Hoping to tap into honest, authentic conversations, Philadelphia Cream Cheese is investing in Reddit ads for the first time.