Media Briefing: As Facebook CPMs increase, publishers reevaluate their paid acquisition budgets

More bang for the budget

The key hits:

• The Atlantic and Toronto Star are paying to promote articles on Facebook in hopes readers will convert to subscribers after hitting the on-site paywall.
• Despite being a consistently strong channel for paid acquisition, publishers aren’t necessarily guaranteeing the budget allocated for the platform will remain in 2023. 
• While The Atlantic is choosing to in-house the team responsible for paid acquisition strategy to regain flexibility, others are using partners that can do the job for less expensive cost-per-acquisition costs. 

Facebook has been a consistently strong tool in publishers’ paid subscriber acquisition tool box, but as the cost of running ads on the social media platform continues to increase, publishers are questioning how much of their subscription marketing budgets will be allocated to paid acquisition channels like this one in 2023. 

When thinking ahead to 2023, the Toronto Star and The Atlantic have been trying to figure out how to get more conversions out of each dollar spent on the platform. For both publishers, instead of paying outside agencies to produce ads to promote their subscription products, they are now reallocating those dollars to ads promoting individual articles. Then, using the regular paywall strategy or registration wall, those ads – hopefully – end up driving conversions to paid subscriptions or sign ups for newsletters. 

Taking matters into your own hands

In an effort to get more bang out of the paid acquisition budget, The Atlantic moved its paid marketing strategy in-house at the beginning of the year, rather than paying an agency to both produce the creative for the ads and manage the media buying budget on Facebook. 

In the 10 months since moving in-house, The Atlantic’s executive director of consumer strategy and growth Megha Garibaldi would not say how much money was saved, but did say that her team has been able to increase the amount of engagement with ads and the number of conversions to paid subscribers has remained steady.

Garibaldi also wouldn’t disclose how much her team budgets for Facebook ads are in a given year, but said she is going to be flexible with where that total budget ends up netting out. Most annual budgets for paid acquisitions through Facebook are below $1,000,000, with only national publishers surpassing that seven-figure threshold, according to Justin Eisenband, managing director of the Telecom, Media & Technology industry group at FTI Consulting. 

By managing these budgets in-house, Garibaldi said her team is able to scale back the number of ads it puts out on Facebook within a day or two if CPMs increase or conversely or buy more ads if CPMs decrease, rather than waiting on the bureaucracy of an agency to make those changes over the course of several days or weeks. 

In any given month, only about 10% to 20% of the total number of new subscribers to The Atlantic comes from paid marketing, which is focused primarily on Facebook and Google, according to Garibaldi, so spending a lot on art and design for Facebook ads seemed impractical, she said. 

Instead, her team has been promoting The Atlantic’s journalism and content, including both newsier stories and evergreen articles. Now 90% of the ads run through Facebook center around content and only 10% rely on the more traditional ads promoting a specific subscription product or newsletter or podcast, she said. 

“Understanding which pieces are going to do well with what audiences needs a sort of nimbleness that working with an agency hinders,” said Garibaldi. “But because of the flexibility that we have, we’re not very concerned about shrinking budgets,” in 2023. However, she did say that there are bound to be months where the company’s Facebook ad spending is lower or higher than others, as a result of being able to manage the spout so closely. 

The golden ratio

Ultimately deciding a paid acquisition budget will come down to the ratio of customer acquisition cost (CAC) to the lifetime value of a paid subscriber, according to Eisenband. And that ratio should ideally be as close to 1:3 as possible, he added. 

“Depending on the churn rates and pricing – which all feed into the customer lifetime value – the willingness to spend on Facebook might change, in terms of the effectiveness that you’re going to get. Frankly, news publishers might have it a little easier than magazine publishers because magazine publishers traditionally have lower [annual revenue per user],” said Eisenband. 

For example, if a news publisher charges $11 or $12 per month for a subscription, the value of a customer is in excess of $100 by the end of year one. Keeping churn rates in mind – which have increased from 3.5% to 4.5% per month on average over the last six months, according to Eisenband – the CAC of a paid subscriber through Facebook needs to come in at under $33. 

CPAs for newsletters acquisitions are cheaper, but might also get you those subscribers 

Toronto Star is primarily using Facebook ads to drive newsletter subscriptions, circumventing some of the issues that a full-fledged, on-site registration wall incurs. In the past, the ads have solely pushed the newsletter products. Now, the publisher is working with a vendor called Social News Desk that runs ads promoting specific articles from the publisher that when clicked causes the reader to sign up for its free daily newsletter before continuing to read the promoted story.  

In April 2020 – the early days of the pandemic-induced economic downturn – the cost-per-acquisition (CPA) for newsletter subscriptions on Facebook fell from $0.75 to $0.25, thanks to a combination of lower CPMs and significantly higher clickthrough rates, Digiday reported at the time. It’s been a steep incline since then to well above $0.75, according to David Topping, newsroom director, newsletters at the Toronto Star. 

Prior to partnering with Social News Desk and promoting articles vs. running traditional ads, Topping said reaching a CPA of $1 CAD (or about $0.74 USD at the time of publication) was extremely difficult to manage. As of the first two months since the Toronto Star partnered worked with Social News Desk, Topping said CPAs are regularly under that $1 CAD threshold, making investing in Facebook for paid acquisition more sustainable. He declined to say how much the partnership with Social News Desk cost. 

What’s more, early results indicate that the cohort of Facebook users that hit the newsletter sign-up page through those ads ended up converting to paid subscribers at a higher conversion rate than the traditional ads, Topping said. He declined to disclose exact conversion rates but said that more than one thousand people per week sign up for Toronto Star’s newsletters through its Facebook ads. 

As for budgeting out next year, Topping said “we’re planning to spend less on Facebook next year than we did this year,” thanks to the money his team saved by working with Social News Desk.

What we’ve heard

“We’re seeing some shifts [in advertisers’ spending] but not necessarily dramatic cuts. Don’t get me wrong when I say there hasn’t been many cuts. They’re still cuts. They just haven’t been as dramatic as I think we all had feared.”

— Stacey Stewart, UM Worldwide’s U.S. chief marketplace officer, in the latest episode of the Digiday Podcast

3 Qs with Allure’s editor-in-chief Jessica Cruel

Certain publishers have unique considerations for why they want staff to come into the office. For a beauty brand like Allure, the growth of key franchises like its annual “Best of Beauty Awards” in September relies on in-office collaboration where staff can test and organize beauty products together, according to editor-in-chief Jessica Cruel. 

Content around the awards had a 98% increase in onsite traffic and a 60% increase in affiliate clicks year over year 30 days after publishing. It’s a core part of Allure’s seal licensing business, where brands pay to use the awards seal for marketing and product packaging. This year, the business is expected to surpass 2021 revenue, said a Condé Nast spokesperson, who declined to disclose hard dollar amounts.

Cruel spoke with Digiday on why she thinks it’s important for her team to come into the office three days a week, a hybrid model the company implemented in March. — Sara Guaglione

This conversation has been edited and condensed.

Were there any challenges you came across overseeing a hybrid editorial team in your first year as editor-in-chief?

I ask that my team [comes in three days a week] because beauty is so tactile. We have a social series called “Desk Test” and our social media editor walks around [the office] with a product and is like, “try it” and records it. So much of what we do is testing products. And one thing that was very frustrating for me personally when I was at home is the mail. So many things came to my house in boxes. It felt so wasteful. So now we’re able to have our beauty closet hub back in full effect, and we’re able to test easier. 

So the nature of what your team does kind of require you to be together physically?

So much of it – like “Best of Beauty” – is a lot of product managing and sorting. A perfect example is one of our “Breakthrough” [award] winners this year, the Danessa Myricks blurring powder launch. It was a huge launch in the industry. It arrived here at the office… [and we’re] having conversations about our initial reactions to the product. [Being in the office] allows us to test one product on multiple skin tones [and] skin types. It allows us to have conversations for story ideas. Look, hybrid is hard. I won’t sugarcoat that. But I do think for us in such a tactile and visual space, it allows us to communicate better to our readers.

With Allure sunsetting its print magazine after the December issue, does that mean your team will focus on more social media distribution? Are you hiring in those areas?

The way the average beauty consumer engages with content – so much of it is via social, video, search… Our editors, from our beauty closet, live streamed to Pinterest for a good three hours [for Best of Beauty].

Right now we’re just in a period of transition. Will we hire in the future? I’m not sure. We’re going to reach the end of this year, close our December issue and assess.

Numbers to know

$150,000: The annual salary threshold that makes readers more likely to pay for news subscriptions.

147: The total number of push notifications that The Washington Post sent out in a 17-day period.

69%: The percentage of U.S. consumers who will avoid clicking a link to a website if they already know it uses paywalls or registration walls. 

32%: The portion of 42 publishing execs who said they never discount their subscription products.

What we’ve covered

WTF are ‘status quo’ protections for publishing unions?:

• “Status quo” protections bar an employer from unilaterally changing the terms and conditions of employment – considered mandatory subjects of bargaining – for unionized employees while negotiating a union contract. 
• Without status quo protections, an employer could fire union leaders before a contract is agreed upon. 

Learn more about “status quo” protections here. 

Advertising Week Briefing: Media companies evolve digital video use to increase audience, ad revenue:

• For many of the media companies on stage at Advertising Week in Manhattan last week, it’s clear “go big or go home” is the shared strategy for video content this year. And just focusing on YouTube doesn’t cut it anymore.
• Despite the costs that come with producing feature-length films, Time Studio will represent about 25% of the company’s total annual revenue. 

Learn more about publishers’ investment into digital video here.

‘A dollar is a dollar’: Publishers restructure commerce teams to drive revenue, experimentation:

• Media companies are taking it back to the basics and restructuring the teams responsible for their commerce revenue streams.
• Some publishers are shuffling the oversight of commerce under the purview of their revenue chiefs while others are designating roles that focus on maintaining the highest converting categories while other staffers are tasked with experimental platforms and product categories to increase content output. 

Learn more about the new structure of commerce teams here. 

Google launches My Ad Center as ‘Trust in digital experiences has declined’:

• My Ad Center is a portal Google hopes will attract users to sign in and indicate preferences for the types of ads they want to see across its Discover, Search, YouTube, and network properties.
• It will effectively replace Google’s ‘About this ad’ feature but promises users even further control over the type of ads they’ll see, and from which brands.

Learn more about My Ad Center here. 

What we’re reading

Semafor is going after polarization, but possibly ignoring other problems with media:

The problems of the media industry are rooted in polarization, according to Semafor’s mission statement. But Defector argues that the format of content alone won’t be enough for the media startup to solve the ills of the industry. 

Twitter is losing its most active users: 

“Heavy tweeters” – users that log onto Twitter six or seven days a week and tweet about three to four times a week – account for less than 10% of monthly overall users of the social platform, but generate 90% of all tweets and half of the company’s global revenue. The number of these users has been decreasing since the pandemic began, however, according to a report by Reuters. 

CNN’s new CEO has big ambitions, but with that comes more job cuts: 

CNN’s CEO Chris Licht just wrapped his six-month review of the business since taking over the role and is ready to share his conclusions. In an effort to get CNN back on its feet, however, more than 1,000 jobs will have to be eliminated at parent company Warner Bros. Discovery before the end of the year, reported CNBC.