The State of Facebook Advertising in 2016

Over the last year Facebook advertising has changed significantly, and not always for the better. But while the heydays of organic posting may have finally run out, there are still some great opportunities to be had in the pay to play world of bought media. Some of the biggest trends in paid Facebook advertising come in the form of budget allocations and trend capitalization. While advertisers reallocate budgets according to the data they are collecting, the Cost Per Click (CPC) trends and costs don’t always keep up at a similar pace which leads to some excellent arbitrage opportunities in your strategic paid media plans.

 

Here are some of the trends that may present the best opportunities in late 2016 and early 2017 for Facebook Ads:

 

1) Post Engagement Ads Are Becoming More Valuable

Screen Shot 2015-07-08 at 9.32.07 amThere has been a 142% increase in the measured Click Through Rates (CTR) from 2015-2016 to 7.5%. Considering the rule of thumb for online media is 1-2%, 7.5% is a stellar number that I would be happy to have all day long. During this same period CPC has decreased by 83% and engagement ads only make up 19% of all ads on Facebook which means low cost, and low competition.

Now that being said, post engagement ads are more difficult to directly monetize. It’s not as simple as ‘customer clicks ad, customer buys product’. With post engagement ads it’s more about the long game; creating a conversation and winning top of mind brand awareness for a sale at some point in the future. They are all about getting your audience to comment and share your posts. To take advantage of post engagement ads, find your best content and focus on attention grabbing headlines. Write to address your audience’s needs and desires rather than whatever it is that you are selling.

 

2) Video Ads are Increasing in Popularity

Advertisers have increased their budgets for video ads 150% in the last year while at the same time CTR decreased by 13%. CPC has not yet caught up with the increased demand, however, so take advantage of the trend while it is still cheap. Essentially what we are seeing here is one of those lags in the feedback cycle where the ads are increasing in popularity but the cost is still relatively inexpensive. However, that 13% reduction in the CTR means that the audiences are beginning to get tired of them and we will likely see that number continue to grow as more and more advertisers continue to jump on the video bandwagon.

Tip- Don’t forget, videos begin playing with sound muted, so to get the best Return on Investment (ROI) for your ads, make sure to design videos that tell a compelling story without any audio or with subtitles to capture attention quickly.

 

3) Page Like Campaigns Are Less Popular

Screen Shot 2015-06-25 at 7.25.52 pmCPC on Page like campaigns is down 33% while budgets from advertisers is down 70%. Like campaigns have saturated news feeds and people aren’t responding the way they used to. In addition, the growing popularity of businesses buying their likes for social proof rather than organically growing their following or paying for like campaigns have also caused this category to fall out of favor. That being said, page like campaigns still can be used in an effective campaign through retargeting to audiences that have previously liked your content, but have not yet liked your page. This will allow you to take advantage of the falling prices on these ads while getting the most out of your adspend.

 

 

4) Page Conversion Ads Are Getting Crowded

In the same time that Page like Ads have been falling in favor, conversion ads have been booming. This type of ad made up 39% of all ads and 39% of all adspend on Facebook over the last year. Budget allocation for Conversion Ads are up 50% and CPC is rising at a comparable rate. These ads are the bread and butter for what I do since they have the power to optimize the audience for the type of people most likely to complete my conversion goals for clients, however if this trend continues it will likely become more difficult to use in the early stages of smaller campaigns. We might see a simple CPC/Website Clicks model become more effective for the testing phase of campaigns while the conversion pixels gather data and then switch over to conversion ads later in the campaign when Facebook has enough data to adequately target users.

 

Some Additional Thoughts:

Instagram Ads CTR is down by 75%, while the CPC is up well over 100%. This isn’t good for anyone hoping to bank on Instagram ads in the near future. When facebook opened that new channel advertisers flooded in and the market quickly became saturated and the users quickly became annoyed at the ads. I would recommend holding off on Instagram paid ads for the near future unless you really have a great product and some fantastic ads to display them with.

Less than 1% of budgets are spent on Lead Ads. Facebook’s newest rollout for ads seems to be a slow starter. Time will tell if they are worth it or not, but if you are in an industry where collecting emails from just one call to action works well (Such as Real Estate, Insurance, or Finance), then I would say give it a try and allocate some of your budgets to testing it out. Right now there is low competition which also means low costs to you. Focus on writing compelling headlines and use large post text descriptions to convert a viewer without going to a landing page.

 

In summary, there are some pretty great opportunities out there in the middle of all the chaos if you know where to look and how to interpret the data. Using some of the tactics I mentioned above you should be able to work these ads into your overall marketing strategies and find great results at a low cost to you.

 

*Data from Social Bakers & HubSpot