Let’s talk about Facebook. Facebook has been a leading advertising platform for years, attributed to aspects like longevity and amount of active users. How has Facebook been so successful? User data.
Now that user data is becoming less accessible, many companies that have relied on third-party data are struggling to deal with the inevitable setbacks of privacy restrictions. Facebook is one of the many companies that did not efficiently prepare for this advertising revolution. Last year, Facebook lost over $10 billion due to Apple’s recent privacy changes, which allow users to opt out of data tracking.
Facebook ads are no longer as effective, and yet businesses are expected to pay more for their advertisements. Currently, Facebook ads’ CTR (click-through-rate) dropped by .9% while CPM (cost-per-mille) increased by 90%. It’s important to note that Facebook is not the only platform that is going down this path. Platforms like Google & YouTube, TikTok, and Snapchat are all following this trend.
In this article, we’ll talk more about the reason behind Facebook’s failure and how you can prepare yourself with a longterm advertising solution for the new year.
E-commerce is booming. Global online retail sales reached 4.9 trillion U.S. dollars, and projections indicate a growth of over 50% in the next four years. With more and more businesses joining the online retail space, the demand for ad inventory has skyrocketed.
The landscape of e-commerce is being inundated by so much advertising demand, supply hasn’t quite caught up, increasing the cost of ad space. But there’s even more bad news. While Facebook ads are getting more expensive, their user base is steadily declining. In just one quarter in 2022, Facebook lost 2 million active users.
In other words, supply is limited, demand is growing, audiences are leaving, and costs are increasing. You don’t need to be an advertising expert to know when you’re being strung along.
You kind of are. Other than its contribution to the rise of social media, do you know what else Facebook is known for? If you guessed privacy violations, then you’d be correct.
According to Forbes, Facebook has long been the most popular social media platform for online shopping. Why? As we stated before, Facebook is one of the biggest offenders when it comes to tracking user data, like off-site activity, browser history, and other online purchases. This PII (Personally Identifiable Information) tempts advertisers with targeting leverage. However, as legislation cracks down on the use of personal data and online users become more aware of this issue, Facebook’s foundational advertising methods are no longer viable.
Governments worldwide are enforcing new online privacy laws and antitrust measures, forcing companies like Facebook to make reforms and pay fines for privacy breaches. In fact, Facebook has been fined billions of dollars for violating privacy laws. The most recent transgression was earlier this year, when the EU fined Facebook $1.3 billion for violating their data protection regulations.
In addition to political influence, growing consumer mistrust and concerns about privacy have led users to take steps to protect their privacy, opting out of tracking mechanisms and limiting data sharing on platforms like Facebook. Facebook has repeatedly broken their users' trust, which is why many of them have left the platform or limited access to their personal data.
Now, users are the ones watching, and they’re not happy.
Depends on who you are.
If you’re an online user, we encourage you to continue learning more about your privacy rights. WowYow is always happy to raise awareness about issues like this in the media and advertising industry. You can read more about advertising trends here.
You should be concerned, especially if you are using Facebook as your advertising solution. Big companies like Facebook and Google are more familiar, but they’re not always the best solution - especially with the coming Cookie Apocalypse.
It’s important to get ahead of the game and find solutions that 1. Align with current privacy laws and 2. Can still provide you with effective results. At WowYow, we believe that contextual advertising is the best alternative solution for behavioral ads. It bases its targeting on the content that a user is currently viewing rather than digging into a user’s personal online history. We wrote a whole article on the contextual vs behavioral methods here.
The bottom line is that you should be looking for new digital publishers or ad exchanges that accomplish the requirements listed above. Don’t let your marketing budget go down the drain!
If you’re a digital publisher, this can be a golden opportunity if you work fast! With e-commerce rising, you’re in a prime position to optimize revenue potential. You can make it easier on yourself by joining an ad exchange, automating your ad fill and maximizing your revenue.
Here’s the thing though: you need to find a solution that abides by privacy regulations. The digital media landscape is changing fast, and you want to be using a solution that has already adapted rather than one that is treading water. WowYow recommends finding a solution that uses contextual data to enhance audience targeting.
Whatever you choose to do for your marketing strategy, just remember to be prepared.
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