Prices in Facebook’s ad auctions plunged between February and March due to the impact of the novel coronavirus.
According to a recent analysis by a buying group of an ad company, cited by The WallStreet Journal, the cost to put an ad in front of Facebook users 1,000 times in March dropped 15 per cent to 20 per cent from February.
Such rates fell about 25 per cent in the same time frame for the digital marketing agency Wpromote LLC, which said it manages more than USD130 million in annual ad spending on Facebook.
The decline was 20 per cent at 4C Insights Inc., a marketing technology company that helped brands manage USD350 million in ad spending across major tech platforms including Facebook, Instagram and Twitter Inc. from January to March.
“I would characterize Facebook ads as being quite the bargain right now,” Aaron Goldman, chief marketing officer at 4C, told the Journal.
March ad spending on Facebook and Instagram through 4C was down by 5 per cent from March 2019, Goldman said. Without the coronavirus, he said he would have expected a 30 per cent increase.
“This is the impact of the pandemic: It has slowed Facebook’s growth,” he said further.
However, Facebook isn’t alone to feel the punch of the coronavirus. The cost of 1,000 impressions fell 22 per cent on Instagram from February to March, Goldman told the newspaper. YouTube, a part of Alphabet Inc.’s Google, also saw a 15 per cent to 20 per cent drop in prices from February to March, according to the ad-holding buying group.
During this crisis, advertisers are pulling back in all sorts of media.
Facebook is trying to keep what spending it can, partly by chasing ad budgets that were once intended for televised sports, according to senior ad agency executives familiar with the matter.
But Facebook’s popularity among marketers, including small businesses and direct-to-consumer brands that rely on it for sales, mean low ad prices create both opportunities and new strategic questions for many advertisers.
The drop in ad rates has further led Facebook advertisers to decide whether to take advantage by reaching more potential customers–or by pocketing the savings heading into an extremely uncertain economy.
In the long run, large ad ecosystems such as those owned by tech giants including Facebook, Google and Amazon.com Inc. will fare better than some rivals in the pandemic and its aftermath, said Goldman. (ANI)
