How To Combat Paid Social's Rising Costs

In the past 12 months, we’ve heard from a wide variety of businesses that the rising costs of advertising on social media have thrown a spanner into the works when it comes to their long and short-term marketing plans.

Thankfully, at 500 we’ve drawn on years of experience within our social and above the line team to overcome many of the challenges associated with advertising and it’s ‘return to the norm’

First, let’s jump into why costs are rising across platforms such as Facebook, Instagram, TikTok, and Pinterest.

Increased saturation

Throughout the pandemic, most businesses had no choice but to pivot towards social media advertising as traditional methods such as Out Of Home, Cinema and Radio were unviable with most of the population unable to leave their homes. As social media usage skyrocketed, particularly on entertainment platforms such as TikTok and Youtube, brands quickly realised that they had a captive audience in their hands.

Now, post-pandemic, many of these brands continue to utilise social media as a part of their marketing mix, meaning that pre-pandemic prices are unachievable. With more than three million businesses advertising on Facebook, the auction mechanism used to purchase placements has seen prices increase in line with demand. In fact, it is reported that on Meta’s (Facebook and Instagram) CPM, or cost per thousand impressions increased by 61% from 2021 to 2022. 

Platform volatility 

For the newer platforms on the block, namely TikTok, huge jumps in CPM by up to 185% year on year can be attributed to the platform experiencing its own learning phase. As the number of advertisers increases, the lack of a benchmark cost for all actions causes great volatility. 

Such high costs have priced-out many of the smaller businesses that would generally advertise on the Meta platform, with the suggested monthly spend on the platform starting at $10k and extending beyond $100k for top placements such as the brand takeover.

iOS15 and privacy changes

In April, Apple rolled out the new iOS 15, creating an abundance of challenges for marketers due to increased privacy settings available to iPhone users. In summary, users were provided with the option to opt out of data tracking on apps at the click of a button, meaning that the software previously used to track engagement with social media ads was reduced in efficacy. 

For social media platforms, in particular, the Meta Pixel, LinkedIn Tag, and other relevant tracking codes that are implanted into your business's website to capture information such as sales, traffic, and downloads were made approximately 25% less effective. As such, this lack of tracking ability reduces the effectiveness of retargeting users who click through to your website, in line with the traditional funnel method of advertising. 

So, what’s the solution?

The catch-22 of increasing social media advertising costs is the necessity of advertising on social media. With 93% of marketers continuing to use Facebook as a digital advertising platform, the risk of shifting spending off of the platform is falling behind your competitors. 

Thankfully, the team at 500 has identified actions to take to overcome the high costs of advertising on social media.

A multichannel approach

Perhaps the most important message to remember is that social media advertising, particularly on the Meta network, should be a considered moving part of a wider marketing strategy. Relying on social media to be a sole source of revenue is a dangerous trap to fall into, and should instead be supplemented by a wider range of marketing initiatives. By running social advertisements alongside Email Marketing (EDMs), Search Engine Marketing, Out of Home or Television, you can expand your reach and increase overall frequency.

At 500, we adopt this approach for all clients, generally running a digital strategy encompassing Paid & Organic Social Media, SEM, and EDMs.

Prioritise video

Video content has proven more effective than static content across all social media platforms, garnering double the amount of engagement on Facebook and 38% more on Instagram. What’s more, with 88% of users stating that they’ve been convinced to buy a product or service by watching a brand’s video, it’s important to leverage video as much as possible. In fact, at 500, we recommend adopting an 80/20 strategy, of which 80% of social media advertisements are video based. 

With production at the heart of 500 as an agency, we have produced more than 10,000 video-first campaigns that adhere to individual platform best practices. For example, a vast majority of videos are viewed with sound off on Facebook and sound on TikTok, meaning that video concepts must be adapted to suit both. Similarly, we understand that most ads are watched for a maximum of three seconds, meaning that a ‘thumb-stopper’ is required up front to encourage further viewing. 

Collect first-party data

To combat the challenge of iOS failing to capture all website data and limiting your ability to retarget effectively, at 500 we recommend prioritising capturing first-party data. Referring to contact details such as names, email addresses, and phone numbers, first-party data allows advertisers to build detailed digital profiles of the desired target audience that can later be used for retargeting, direct or email marketing.

Collecting first-party data on social media is as simple as running lead-generation campaigns. For commerce stores, this often translates to running giveaways or providing incentives in exchange for the consumer's details. For service-based businesses, lead magnets such as eBooks are just as effective.

Ready to take on social media advertising?

At 500, we’re all over  the ever-changing social media landscape. As an industry leader with a demonstrated history of success, we'll ensure your brand's digital strategy is a winner.

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