Facebook Ad Spend, Cost Per Click Take a Hit During the Coronavirus Crisis

Facebook issued a mixed update on its stability during the coronavirus pandemic, saying that its infrastructure is running smoothly, despite dealing with a heavier workload, but its revenue is taking a hit. Vice president of analytics Alex Schultz and outgoing vp of engineering Jay Parikh said in a Newsroom post that while activity is up on many of Facebook’s services due to the ongoing crisis and people following social distancing guidelines, "We don’t monetize many of the services where we’re seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of Covid-19.” New data from social media marketing platform Socialbakers added a little more color to the picture. Socialbakers found that brands across all regions have been posting more organic content since the beginning of 2020, speculating that many companies are freezing their advertising budgets due to the economic uncertainly caused by the pandemic. [kickout id="1"] The company analyzed 2,376,721 Facebook posts from 40,563 brand profiles across multiple global regions from Jan. 1 through March 15 and found that the number of paid ads is declining globally, as is cost per click, while the amount of organic content is on the upswing. Socialbakers said, “Overall engagement data on brand profiles per region shows that engagement levels have been steady throughout. However, because people are taking social distance in the real world, we will soon see that translate into social media engagement in the digital world.” According to Socialbakers, CPC in North America fell from $0.64 in December 2019 to $0.32 in mid-March, and ad spend fell nearly 50% in the region during that same time period. CPC declines were similar in Western Europe ($0.43 to $0.20). The company added that ad spend began to rise in East Asia at the start of March, as business started to resume in the area, while the opposite was true in areas such as Western Europe, South Europe and Southeast Asia, where steps to combat Covid-19 were going into full swing. Socialbakers CEO Yuval Ben-Itzhak said, “Socialbakers’ data reflects what we are hearing from brands. Because of uncertainty about the economic environment, they are slowing down investment. This trend is expected to continue as businesses look for less costly alternatives to engage their audiences. This means that organic strategies driven by the right content may win during this period.” He added, “Since we believe that now, more than ever, customers want to hear from the brands they follow, cutting back on social media investment could be a mistake on the part of brands. Brand marketers need to be mindful that, faced with the prospect of social distancing and more time at home, their audiences will be looking to the digital world to keep them feeling connected, updated and entertained.” In terms of infrastructure stability, Schultz and Parikh wrote that total messaging is up over 50% in many countries most affected by the coronavirus, and voice and video calling via Messenger and WhatsApp have more doubled in those nations. For example, in Italy, Facebook is seeing up to 70% more time spent on its applications since the crisis hit, with Instagram Live and Facebook Live views doubling in one week, and a surge of more than 1,000% in calls with three or more participants during the past month. [kickout id="2"] Schultz and Parikh said the company is doing everything it can “to keep our apps fast, stable and reliable,” noting that while it deals with traffic spikes during events such as the Olympic Games and New Year’s Eve, it has time to prepare for those events. They wrote, “The usage growth from Covid-19 is unprecedented across the industry, and we are experiencing new records in usage almost every day.” Facebook is also dealing with the challenge of maintaining stability while most of its employees are working from home. Schultz and Parikh wrote, “We’re monitoring usage patterns carefully, making our systems more efficient and adding capacity as required. To help alleviate potential network congestion, we are temporarily reducing bit rates for videos on Facebook and Instagram in certain regions. Lastly, we’re conducting testing and further preparing so we can quickly respond to any problems that might arise with our services.” They concluded, “As this global public health crisis advances and more people are physically separated from their communities, we expect that people will continue to rely on our services to stay connected during this time, and we hope these connections make it easier for people to stay home.” On a related note, director of platform partnerships Konstantinos Papamiltiadis revealed in a blog post that individual verification for developers is on hold due to the reduced and remote workforce. He wrote, “We’ll resume verification as soon as we can. Business verification will still be available. We are continuing to monitor other impacts this may have on our processes, and we’ll provide updates as the situation evolves.”