How social fragmentation is creating more opportunities for advertisers

This story is part of an eight-article editorial series that explores the ramifications of a fragmented social marketplace. More from the series →

Back in 2020, direct-to-consumer men’s soap brand Dr. Squatch dedicated most of its social ad dollars to Meta’s Facebook and Instagram, spending zilch on alternative platforms like TikTok and Snap. But over the last three years, as online advertising has changed, Dr. Squatch has been pushing to diversify away from Facebook and Instagram.

Dr. Squatch’s ad spend in 2020

  • $9.6 million total ad spend
  • $8 million on Meta
  • $0 on TikTok or Snap per Sensor Tower

The brand wants to spend on “what’s most effective in the moment,” CMO Josh Friedman previously told Digiday. It’s not the only one.

Brands over the last few years, especially DTC brands, have tried to further diversify their ad spends across alternative social media platforms to become less reliant on Meta as costs increase, ad space becomes saturated and data privacy measures muddy targeting capabilities.

It speaks to a change happening across the social media landscape — Meta is no longer seen as the only place to scale and grow. As such, for the first time in a long time, advertisers’ social media mixes are becoming more diversified beyond Meta to include platforms like Reddit, Snap and of course, TikTok. While diversification efforts aren’t new to the industry, they have accelerated thanks to improved ad structures within existing platforms, like Reddit and Snap, the rise of TikTok, emerging platforms, like BeReal and Mastodon, and ultimately, a reckoning with their reliance on Meta.

Dr. Squatch’s ad spend in 2022

  • Nearly $41 million total ad spend
  • $25 million on Meta
  • $11.3 million on TikTok
  • $3.5 million on Snap per Sensor Tower

“We’re entering the era of alternative social platforms,” said Brendan Gahan, chief social officer and partner at Mekanism. “There has been greater openness to alternative platforms as clients realize their success can’t be solely tied to Meta. They are actively exploring and signing off on a variety of platforms.”

The era of alternative platforms

Facebook, Instagram and Twitter are no longer the only sheriffs in town when it comes to social media advertising. The consequences of which are starting to show: last year, Meta (the parent company of Instagram and Facebook) saw a 2% ad revenue drop as TikTok gained traction, even defying advertising slowdown with economic uncertainty, according to eMarketer. Meanwhile, Twitter lost a significant number of advertisers after Elon Musk’s takeover, seeing its ad revenue dwindle.

With new competitors to these companies, namely Meta, advertisers are shifting their spends to seek out opportunities on alternative platforms, and experiment on them, to ultimately create what they view as more holistic social media strategies. That’s led to more fragmentation across the social media landscape. This new perspective on social media advertising, largely embraced as digital advertising’s guiding star, has impacted everything from how agencies staff their teams to how culture is discussed and shared.

Meta is only a piece of the puzzle now.
Avi Ben-Zvi, vp of paid social at Tinuiti

Meta still offers the most bang for ad bucks, in terms of direct response capabilities and scale. But marketers say alternative platforms are catching up, fragmenting the marketplace while vying for user attention and advertiser dollars.

Per eMarketer, Google and Meta are expected to account for 50.5% of digital ad spending this year. However, that share is predicted slip to 48.7% in 2023 and 47.7% in 2024, per eMarketer’s forecast.

“Meta is only a piece of the puzzle now — a still very large piece of the puzzle, but I don’t think it’s the whole piece of the puzzle anymore,” said Avi Ben-Zvi, vp of paid social at Tinuiti. “Meta is not 95% of the pie anymore and the others are fighting for the 5% of the scraps.”

How we got here

Social media, the crown jewel of digital advertising for some, has become a more fragmented marketplace as advertisers work to produce content, calculate metrics and target audiences across various platforms and their unique algorithms.

Less than five years ago, Meta’s Facebook and Instagram dominated the social media landscape, both in terms of ad dollars and users. Back in 2018, an estimated 68% of U.S. adults used Facebook with 35% using Instagram, according to Pew Research. EMarketer reports that for every $10 spent on any and all advertising, Facebook was taking $1. However, in MullenLowe’s ML:Next consumer survey, research provided exclusively to Digiday, Facebook “appears to be paying the heaviest cost in terms of active users.” The platform suffered a four percentage point decline among social media users since 2020 and Instagram’s growth also slowed with platform usage growing by approximately one percentage point per year since 2020, per the report

Twitter too was a major player, especially around live events, such as the Super Bowl.

With Musk’s takover, Twitter’s own bandage options to plug bleeding ad dollars, such as a spend match program around the Super Bowl this year, wasn’t enough to rehabilitate the bird app in advertisers’ eyes. Particularly given that in three months after Musk’s takeover of Twitter, more than 500 of its top advertisers fled the proverbial coop, according to eMarketer.

“From a consumer standpoint, there’s certainly a void … it wouldn’t surprise me that another product becomes mainstream to start to replace the general territory that [Twitter] had,” said Aaron Shapiro, chairman and founder of Product marketing agency.

Meanwhile, Meta’s problems in the eyes of advertisers have been mounting for some time with blips like Cambridge Analytica, Apple’s iOS 14 data privacy initiatives, increasing CPMs, political tensions and an aging user base.

“There have been more regulations placed on [online advertising] and thus, the way that we used to do things has shifted, and we need to adapt to that world,” said Ben-Zvi at Tinuiti, who has worked with the likes of Poppi drink brand, Rite Aid and Wag pet brand. Meaning, the imposed regulations to online advertising have shaped how the agency does business, namely success measurement.

Alternative platforms

Attempting to capitalize on these stumbles, and to appeal to advertisers, companies like Pinterest, TikTok, Reddit and Snap have improved their ad programs.

Tinuiti has made a point to increase ad spend for clients on these platforms to create a more holistic media strategy. Instead of solely relying on Meta’s direct response capabilities, Ben-Zvi said the agency measures a range of indicators, including effectiveness in terms of sales, brand relevance and engagement across online and in-store sales.

In 2020, the agency spent next to nothing on Reddit and Pinterest. Now, in 2023, Tinuiti wants to increase that spend by 15 times on Reddit and by four times on Pinterest. (Ben-Zvi declined to offer exact spend figures.)

“We’re looking at things more holistically from a business value standpoint. We’re trying to look at things in a more sophisticated manner to take advantage of some of those products that those channels have to offer,” he said.

At Brainlabs digital agency, more than 80% of client ad spend was dedicated to a single social media platform in 2022, leaving just 20% for other channels, according to Ofir Halfon, Brainlab’s global svp of product and former global vp of social. Now, between 30% and 40% of ad spend is planned to be split between at least seven different platforms, per Halfon. (He declined to list specific channels.)

Now that audiences have multiple different social media options, we’re seeing a major shift from Facebook to other platforms.
Sam Kendrick, senior director of social marketing at MMI

While they aren’t new, alternative social media platforms like Reddit, Snap, Pinterest and even LinkedIn have anecdotally become bigger pieces of the advertising spend pie, advertisers say. Especially as those platforms began to prioritize paid ads over organic reach, creating more opportunities for advertisers to reach their audiences. 

“Now that audiences have multiple different social media options, we’re seeing a major shift from Facebook to other platforms,” said Sam Kendrick, senior director of social marketing at MMI in an emailed statement, “and there are subsequently a lot more opportunities for brands — both on paid and organic fronts — especially if they target audiences based on the social platforms they are on.”

Reddit, in particular, has significantly grown its ad revenue. The platform reportedly generated $350 million in 2021, primarily from its ad business, per Business of Apps. But the platform still lacks scale and usage understanding for some advertisers, hindering it from becoming an integral part of any media plan, per previous Digiday reporting.

Meanwhile, some of the emerging platforms like BeReal and Mastodon are considered “distractions” and too niche, according to Courtney Berry, managing director at digital agency Barbarian. While they allow space for experimentation, the lack of scale and infrastructure may not lead to payout. And just because it has the younger generation’s attention, doesn’t make it appropriate or fruitful for brand marketing and advertising, she said.

Despite the glittery appeal of these emerging platforms, advertisers still suspect that TikTok is most poised to assume dominance over social spend.

“TikTok has changed the game. Everybody we’re working with is interested in TikTok and how to make TikTok successful for their marketing,” Product’s Shaprio said. “We’re not that far away from TikTok being a third pillar.” Other pillars, meaning Meta and Google, he added. (He did not offer further details on client TikTok ad spend.)

The rise of TikTok

TikTok has only added to the fledging fragmentation across social media, especially as other platforms have since created their own versions of TikTok’s short-form videos with Instagram’s Reels or YouTube Shorts. It’s made for more competition in the marketplace, impacting everything from how agencies spend client ad dollars to how they hire social teams.

The short-form video app reshaped the social media landscape, according to MullenLowe. Since 2020, usage of TikTok, among those active on social media, has grown by 12 percentage points, outpacing its competitors, per the survey.

“2022 was really the year of every social platform trying to copy TikTok features and functionality in order to be at the top from a consumption and usage standpoint,” said Berry. “I’m not sure that it’s necessarily fragmentation that we’re seeing as much as it is an identity crisis for some of these different social platforms.”

Historically, the OG social media platforms each operated independently with differing features. But over the last few years, there’s been a trend of platforms replicating successful features of their peers to maintain relevance and dominance within the social media landscape. For example, Instagram copied Snapchat with its Stories feature and later TikTok with its Reels competitor. Twitter copied Clubhouse by introducing Spaces. TikTok copied BeReal with TikTok Now. 

TikTok accelerated that trend, making vertical video more mainstream as virtually every social media platform commodified it (i.e. YouTube Shorts, Snap Spotlights, Instagram Reels, Pinterest idea pins, etc.)

“TikTok has such an impact on popular culture that what’s really happening is the other platforms are becoming kind of like TikTok-ified,” Shapiro said. “What often happens is you do a TikTok-first strategy and that content is basically cloned across the other platforms.” 

What comes next

With all of the changes across the social media landscape, the way people search and ultimately use social media has changed, creating new opportunities for advertisers to get in front of them.

What’s yet to be determined is exactly what the future of social media advertising will look like, experts say. But Barbarian’s Berry is operating with two inevitabilities: change is constant, especially in social media where technology and accessibility are rapidly improving. And constant change presents evolving opportunities for advertisers to test, learn, scale and grow, she said.

“As is always the case in our business, it’s balancing that struggle between being first to market, doing something that’s never been done before versus constantly chasing down a shiny new object,” Berry said.

https://digiday.com/?p=490787

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