As Meta Stumbles, Major Advertisers Are Finding Other Platforms Do the Job Just as Well

Meta has long sold itself as a magic advertising machine. It brings brand marketers billions of eyeballs and features advanced tech that powers lower-funnel conversions. The company is a priority in every advertiser's media budget, even as scandals have damaged its reputation. But in its fourth-quarter earnings call in February, its pedestal atop the media ecosystem seemed a little less stable. The company projected on the call that Apple’s 2021 privacy update, which lets users opt out of mobile tracking, would contribute a $10 billion hit to revenue in 2022 (less than 10% of the platform's total in 2021). Meta previously used mobile tracking data to learn who consumed ads on Facebook and Instagram, and without it, the platforms are less reliable when it comes to targeting ads and measuring their effectiveness. Moreover, Facebook revealed it had lost users for the first time in its history. The earnings call crystallized something marketers have increasingly become aware of: Meta is losing both its precision and its cool factor. Marketers say that they're increasingly finding channels like TikTok, Google and even TV equally, if not more, effective for brand and performance marketing due to more captivating formats, more precise targeting and lower costs. In 2020, 8% of social spend was on non-Meta inventory at performance marketing agency Tinuiti, whose clients have included e.l.f., PacSun, and Nestlé said vp, corporate communications Ronnie D’Amico. In 2021, non-Meta inventory rose to 14%, even as Meta spend rose overall. “The overall theme we’ve observed at Tinuiti is the proliferation of overall platform diversification across verticals,” D’Amico said. Meta pointed to several examples of big businesses and direct-to-consumer brands that credit the platform with driving sales via tools including live shopping and click-to-message ads. The company also offers solutions to compensate for the loss of data from Apple users, notably a Conversions API that lets businesses match their own conversion data with Meta's information on who is viewing an ad. “We’ve continued to adapt our systems to help businesses succeed while honoring privacy and shared detailed steps [advertisers] can take to maximize performance and measurement," a Meta spokesperson said. "We believe Facebook and Instagram remain the best platforms for businesses to grow and connect with people.” But sources say that while Meta is still a key part of the media mix, brands are beginning to diversify. “Meta is getting squeezed,” said a media buyer at a large global agency who chose to speak anonymously, adding that between 15% and 30% of their clients are reducing spend on Meta. “Google and Amazon are growing at a greater rate than Meta for performance," the source said, adding there is a growing test budget for non-Meta platforms. Finding eyeballs elsewhere For some brands, Facebook and Instagram are already secondary media channels when it comes to planning campaigns. Ivonnie Dulce, group director of social at agency Nexstar Digital, is working on campaigns for a large quick-service restaurant brand and a direct-to-consumer ecommerce brand. And while the brands are spending just enough to have a presence on Facebook, the primary channels for both campaigns are Snap and TikTok. Dulce said Facebook's and Instagram's feed-like structures do not generate the same level of brand resonance that's possible on other platforms, especially TikTok. “I might go and check Facebook or Instagram more times in a day, but I’m on TikTok longer,” Dulce said, noting that while someone may see more ads on Instagram and Facebook, the interaction with a given ad is shorter. A growing body of evidence supports this. This year, U.S. adults were spending a daily average of 38 minutes on TikTok as of February, compared to 31 minutes on Facebook and 29 minutes on Instagram, according to eMarketer data. Snap sat between the two Meta platforms at 30 minutes. David Mirsky, group director at boutique full-service agency MMI Agency, which counts Microsoft, Pantene and Vanguard among its clients, said the passive scrolling experience of Facebook and Instagram, coupled with the platforms' decreased relevance to Gen Z, is even making TV advertising more appealing. He said the growth of ad-supported streaming has rejuvenated advertiser interest in traditional TV commercials, especially because younger viewers are still there. Meta is aware the kind of social media experience it invented over a decade ago—looking at photos of your friends—is waning in popularity, and the company has been future-proofing with its investments in the metaverse and Reels, its short-form video TikTok clone. But the future of Web3 for advertising is still largely unknown, and so far, media buyers are not biting on Reels, finding it delivers weak performance metrics, as Adweek previously reported. Sharper precision elsewhere Since Apple’s App Tracking Transparency framework, which lets users opt out of being tracked by mobile identifiers that fuel ad targeting, went live in April 2021, some performance advertisers are devoting more of their budgets to channels like Amazon and Google, sources said, and both platforms are expected to see greater year-over-year growth in digital ad revenues than Facebook in 2022, per eMarketer data. The narrative has now shifted away from Facebook, but it doesn’t mean that Facebook is ineffective–just less effective.Ivonnie Dulce, group director of social, Nexstar Digital Meta’s relatively weak performance metrics mean brands with stacks of first-party data, such as those in retail or travel, are more likely to ditch Facebook and Instagram than brands without it, according to the anonymous media buyer. But if Meta is increasingly reliant on advertisers without much information on their customers, it's a mixed blessing. Companies without a lot of consumer data, like CPG brands, have mass appeal and are less likely to pay to target granular audiences who can be more expensive to reach. Consumer products giant Proctor & Gamble, the world's largest advertiser, said in 2016 it was reducing Facebook targeting for some products to prioritize greater reach. Is it worth the cost? Meta is not the only platform whose targeting capabilities have been weakened by Apple’s privacy changes or whose precision will be further undermined by Google phasing out the cookie next year. But Meta also charges a premium compared to other platforms. In the first quarter of 2022, the median advertiser at Tinuiti found that Snapchat's cost per thousand impressions (CPM) was 33% cheaper than Meta platforms, while TikTok's was 39% cheaper. Pinterest cost 44% less on average than Meta. And given Meta's recent challenges, some advertisers no longer see the value. For Dulce, cheaper ad rates are the reason Snap is a key pillar of her clients’ strategies. She said CPMs vary between $5 and $7 on Snap, while Facebook hovers around $8 and $12, and they drive similar clickthrough rates. “Your media dollars will go further [on Snapchat],” she said. Performance and price can be mutually destructive for Meta. According to Chris Costello, senior director of marketing research at digital advertising platform Skai, as more people opt out of being tracked, impression volume decreases, making it more expensive for marketers to reach these users. But as price goes up, marketers might be less willing to pay more for weaker data. "The narrative has now shifted away from Facebook, but it doesn’t mean that Facebook is ineffective—just less effective," Dulce said. "We want a balanced media strategy because you could be missing out on different users." An earlier version of this article incorrectly stated that Nestlé was a current client of Tinuiti's. Nestlé is a former client.

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As Meta Stumbles, Major Advertisers Are Finding Other Platforms Do the Job Just as Well

Big brands find marketing opportunities like those once found on Facebook

Catherine Perloff

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Catherine Perloff