Following the news last week about Google and Facebook’s ad sales declining, LT Partners connected with New Engen and Mark Bietz, CMO of Fun.com, to share some trends and holistic recommendations for paid growth budget allocation.
It is pretty common that we hear something to this effect:
“We need to diversify away from Google and Facebook so we are not so reliant on them at such a high CAC (customer acquisition cost).”
It’s no surprise that ad sales are declining on Google and Facebook based on news shared over the last two years (for example). Although performance visibility has declined, marketers tend to agree that it’s likely actual performance hasn’t changed. In the constantly moving paid media space, the key is understanding trends and reacting in a way that optimizes spend across channels.
Smart marketers are not completely pulling out of Google and Facebook, but they’re focusing on gaining efficiencies and deploying more strategic campaigns.
One example of this is social whitelisting through the partnerships channel. We know that a lot of people are spending a lot of time on social media. What people enjoy about social media is content engagement. Consumers love reading articles or watching videos about what other people say about brands and products, rather than being smacked by ads from brands. impact.com has an ebook that digs deeper into this.
When designing a social whitelisting campaign, the key comparison to be made is whether social spend plus partner commissions is effectively less than social spend from the brand social handles. Typically, the conversion rates on partner content are much stronger than conversion rates on brand handle ads, and these partner campaigns perform more efficiently. An imperative step in this process is ensuring the right attribution and crediting logic are in place to measure results effectively.
Within the search and social channels, Adam Telian of New Engen states that they are “seeing some clients prioritize profitability over revenue/growth.” For example, some brands have decreased investment in lower ROI/longer payback tactics that are normally intended for driving top-line growth. Within brand search for a few clients, we’ve explored cutting phrase match investment to focus dollars on more-performant exact match terms. The cost savings can be substantial in some cases, and can either be funneled back into your bottom line or into other higher ROI channels and initiatives.
Brands are diversifying to other channels that are more efficient
Brands are allocating budget to other channels, including partner marketing. Within the partner marketing ecosystem, we’re seeing a much larger appetite to experiment with out-of-the-box partnership models, such as CTV (Connected TV) on a CPA, Podcasts, B2B partnerships, Live Shopping, etc.
To validate this hypothesis, New Engen confirmed two key areas where brands are allocating more dollars: Amazon and TikTok.
“TikTok is absolutely stealing marginal dollars that may have previously gone to Facebook, and in some cases, is actually stealing existing dollars from those channels,” New Engen’s Kevin Goodwin said. “This is likely more so Meta ad budget steal than Google, just based on how brands bucket spend; however, Tiktok is also stealing Google’s search dominance.”
Regarding Amazon, this has also been validated by eMarketer: “Advertising revenues grew by 25% YoY to $9.55 billion, above StreetAccount’s estimate of $9.48 billion.”
There are a few other channels experiencing this growth rate as well such as CTV, which is growing 30-40% YOY in investment. Mark Beitz states: “I think most marketers are taking a second look at their investments and making decisions on where to reallocate as acquisition costs have risen across the board. CTV has proven to be an efficient growth driver for us in a time where top of funnel awareness campaigns need to be more accountable for driving sales. We chose to partner with NeonPixel due to their deep knowledge of performance marketing and focus on conservative attribution and incrementality. We started our campaigns in September focused on smart prospecting audience selection with a remarketing layer to close sales. The results were much better than expected and verified by both GA (Google Analytics) and our 3rd party attribution partner by being able to confirm direct traffic and lift within other channels. CTV is now a substantial part of our mix moving forward as we continue to drive efficiencies by evolving our spends.”
While we’re entering the busiest shopping season of the year, it’s never too late to evaluate your channel mix and work toward a more diversified approach with the goal of being less reliant on one or two channels and gaining spend efficiency. Depending on your brand, there are likely interesting new avenues to tap into. It’s always a great time to perform a comprehensive review of your channels and all sub-segments — audience, campaign type, etc. — to identify potential areas to save money with little impact to your overall biz. Both LT Partners and New Engen offer this evaluation at no cost.