Facebook Ad Rates Falling Fast
Advertisers can reach more users per dollar—or save money for whatever is ahead
excerpted from https://www.wsj.com/articles/faceboo...ng-11586530801
Facebook Inc.’s ad business is feeling the impact of the new coronavirus.
Even as people stuck in their homes spend more time on social media, advertisers are pulling back during the economic shock now under way.
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.
Prices in Facebook’s ad auctions nonetheless plunged between February and March, according to executives at several companies that do business on the platform.
The cost to put an ad in front of Facebook users 1,000 times in March dropped 15% to 20% from February, according to a recent analysis by one advertising holding company’s buying group.
Such rates fell about 25% in the same time frame for the digital marketing agency Wpromote LLC, which said it manages more than $130 million in annual ad spending on Facebook.
The decline was 20% at 4C Insights Inc., a marketing technology company that helped brands manage $350 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,” said Aaron Goldman, chief marketing officer at 4C.
While prices were down, total ad spending on Facebook and Instagram through 4C was up 2% in March compared with February, Mr. Goldman added. Absent the pandemic, he said he would have expected month-to-month growth of at least 10%.
March ad spending on Facebook and Instagram through 4C was down 5% from March 2019, Mr. Goldman said. Without the coronavirus, he said he would have expected a 30% increase.
“This is the impact of the pandemic: It has slowed Facebook’s growth,” he said.
Facebook isn’t alone: The cost of 1,000 impressions fell 22% on Facebook sibling Instagram from February to March, Mr. Goldman said. YouTube, part of Alphabet Inc.’s Google, also saw a 15% to 20% drop in prices from February to March, according to the ad-holding buying group.
And advertisers are pulling back in all sorts of media.
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.
Facebook declined to comment, but said on March 24 that rising use of its apps and services wouldn’t protect it from expected declines in digital advertising across the globe. The company plans to report its next quarterly earnings on April 29.