Facebook and Instagram Advertising: A Look at the Current Market

In the wake of the COVID-19 pandemic, many sectors of the economy – tourism and brick-and-mortar retailers in particular – have suffered, while several businesses have boomed. To find out how Facebook, Instagram, and the users of those advertising platforms have fared during this period, GLG talked to Brian Meert, CEO of the Los Angeles, California-based digital advertising agency AdvertiseMint and author of The Complete Guide to Facebook Advertising. Edited excerpts of that discussion follow.

What have the past few months looked like for social media advertising?

The year started out strong – then COVID-19 hit. Some companies paused everything outright. Others were unsure, but in general, there was about a 35% to 40% reduction in ad spending within the first week or two of when the pandemic hit. About 30% of our clients paused their ads totally. These were local attractions, restaurants, live events, and other things that were 100% canceled. About 70% of our clients lowered their ad spending across the board. After that, with fewer advertisers and lower CPMs, many e-commerce clients began to see above-average results. And when stimulus checks started to arrive, their sales exploded. More recently, as businesses have started to reopen, e-commerce has cooled a bit from that peak, although it’s still strong. The protests also had something to do with that. Barring a second wave, many of our clients have adapted to this new world.

What will the recovery curve look like?

There are three basic paths. For businesses whose revenues stopped or went to zero, the reopening phase will see them being very cautious with their advertising at first. They won’t be going all-in right away. Businesses that partially paused and had some revenue will start spending more, but also in a subdued way. We’ve noticed a lot of ads for hospitality, with messages like, “We’re reopening and want to put that on your radar, but things aren’t like they were in the past.” For this second tier, ad spending probably will be about 30% to 40% of where it was before as things start to come back. Finally, for many businesses that have adapted to the virtual world and are doing well in it, spending is at or above earlier levels and the outlook is even brighter because so many people have come to prefer shopping online and meeting over Zoom rather than face-to-face. I also think we’ll see even more of a shift to advertising that drives performance rather than focuses on branding.

What’s the overall picture vis-à-vis Facebook?

Through the first half, our total spending with them will be down about 20% versus the first half of 2019. I think spending will rise, but I don’t know if we are going to surpass what we did last year, which was strong. The change in spending has nothing to do with the fundamentals of the Facebook ad platform; it’s all about the impact of COVID-19, which overall has strengthened Facebook, Google, and Amazon because the platforms have helped people continue with their lives and find the things they need.

How has Instagram been performing?

Sales on Instagram have remained solid. Instagram generally accounts for about 30% to 40% of online sales for our clients. For those involved in fashion, beauty, hair, and makeup, it could be 50% or even more, depending on how the client wants to use Instagram. Stories continue to grow in popularity and volume, and there is still room for advertisers to get more efficient with the platform. We see great value there.

What’s your view of Facebook Shops and the partnership with Shopify?

From Facebook’s standpoint, everything it’s doing to connect the dots seems right. It’s got Facebook Pay, which allows people to keep all their payment information right there and send money peer-to-peer. So the ability for you to see something you like, hit a button, and have it show up in the mail is close. The downside is that Facebook has attempted this many times over the last 10 or 15 years, and whenever it’s tried to get into e-commerce, it’s kind of fizzled. What it’s lined up with Facebook Shops from a product standpoint is very strong. It’s easy to implement, and it appears to be seamless. But many of our clients already have something that works and aren’t especially eager to change, which is why the acceptance of this new feature wasn’t necessarily as strong or as well received as I would’ve thought.

What about Google’s and Amazon’s efforts?

Google Shopping is fantastic. It’s comparable to Facebook’s dynamic product ads. Those are generally the most profitable ads we run across the board, and we can’t spend enough on them. They’re efficient and well designed, and they work very well. Amazon has been performing extremely well for the clients that we have that are on Amazon. Its ad platform continues to improve and is similar to Google search in that it’s keyword based. As you figure out your keywords, it becomes a bidding system. As e-commerce demand has risen over the last three months, Amazon was right there, even if some of its shipments didn’t arrive on time. Prime people were still happy the stuff arrived.

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About Brian Meert

Brian Meert is currently the CEO of AdvertiseMint, a digital agency that helps businesses advertise on social media platforms. Previously, Mr. Meert was the Vice President of Internet Marketing for American Bullion Inc. from 2012 to 2014. American Bullion is a leader for adding precious metals to self-directed IRAs. Mr. Meert also built and sold Gofobo.com, an e-ticketing solution used by Disney, Warner Bros, and Universal Studios to build grassroots buzz with movie screenings to targeted audiences before a film’s release.

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This article is adapted from the June 9, 2020, GLG teleconference “Facebook Advertising: June Update.” If you would like access to this teleconference or would like to speak with Brian Meert, or any of our more than 700,000 experts, contact us.

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