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Facebook Advertisers Are Questioning ROI
By: Digiday
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Advertisers are more concerned that they are wasting money on Facebook than they are about the platform’s privacy lapses. They are unhappy about how expensive it’s gotten to advertise on a platform that has openly admitted it hasn’t always charged the correct amount for ads. Combine that with lower-than-expected return on investment from pricey inventory like video, and some of those companies are starting to question why Facebook dominates so much of their media plans.

Several advertisers have reported they are examining their media commitments to the platform. Radisson Hotel Group, Adidas, Booking.com and O2 are among those that have already told their marketers and agencies they need to hold Facebook accountable for how it helps drive business growth, and not just buy ads due to their claimed scale and broad reach, according to executives working with those companies. Each of those businesses has either made or is making changes to how they plan and buy their media, and that has inevitably pushed them to question the value of Facebook’s ads.

Radisson Hotels Group will continue to spend on Facebook, albeit with a closer eye on how its ads compare against other platforms. The hotel chain wants the social network to play a key role in its efforts to go all-in on performance marketing, but accepts it may need to revert to a test-and-learn approach that could reduce certain media buys in future.

“If something isn’t working, change it,” said Remy Merckx, vp at Radisson Hotels Group. If Facebook can’t deliver any more returns for Radisson, “then we will spend on other platforms,” he said.

Merckx sees Facebook as a reputable source of third-party data in a post-General Data Protection Regulation world, and therefore, it could be vital in its bid to acquire new customers that it has no other way of reaching at scale. Facebook, despite throttling the amount of data it shares with businesses, has a rich behavioral graph for advertisers to plan media buys against. And for a business like Radisson that want to move their advertising to a performance model, that level of personal data is hard to walk away from. But as Merckx said, Radisson can’t keep buying ads on Facebook because of their claimed scale and broad reach.

Adidas is another advertiser reassessing its relationship with the social network. Adidas knows posts on Facebook drive traffic to its e-commerce site, but beyond that, it has little idea of what those ads do, according to an executive with knowledge of Adidas’ plans. The situation is worse in some markets where Facebook takes up 40 percent of the media plan, said the executive. “It’s not necessarily that Facebook has been ineffective as much as it’s just poor planning,” said the executive.

Adidas has already stopped buying video ads on Facebook and has not ruled out other cuts, said another executive, whom Adidas briefed on the matter. Decisions won’t happen until the advertiser concludes a media review, after which it will work with its chosen agency to decide how much to spend on Facebook. Advertising on Facebook isn’t getting any cheaper — in the first quarter of the year, the average price per ad on Facebook jumped 49 percent, according to Facebook’s latest results. If people share less data with Facebook after GDPR and the social network limits what personal data it shares with advertisers, targeting would be harder and more expensive.

“It’s been a long time coming that Facebook would be in the crosshairs of marketers,” said John Broughton, a consultant and former head of performance marketing at price comparison site Confused.com. “A lot what is done on Facebook is about branding and engagements rather than trying to sell products straight off a page as it were. The problem with that is there are very few studies that show the effect of that spend because the kind of brands that are spending big on Facebook are spending even bigger on TV, so it was hard to show the differential between the channels. Now, spend on platforms like Facebook is simply too big to ignore.”

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This article was published on Digiday.com.  A full link to the original piece is after the story. www.digiday.com
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