On social media, direct-to-consumer marketers have been repeating similar words over the past month. “The meta is broken.”
“We hear a lot of terrible stories in DTC,” says independent media buyer David Herman. tweeted Early this month. “When agency people finally start talking about the meta, you know it's broken. They never want to admit that they're underperforming,” says Meredith, founder of gift and accessories company Boredwalk.・Erin says tweeted. “This doesn't seem like iOS 14 is going to be of any use.”
If you're a marketer, the “meta is broken” complaint is a common complaint you hear at least once a month. In some cases, this is related to a bug in Ads Manager and may be fixed within a week. Alternatively, meta may be solving the problem of overspending with refunds. Still, direct-to-consumer brands rely on Meta for customer acquisition. Meta allows startups to reach more customers at a lower cost than virtually any other advertising platform.
But marketers say this time is different. There's something about this that feels unique and more lasting than previous times when the meta was “broken.”
No one knows exactly what went wrong with Meta, and different accounts are experiencing different issues. I haven't had any issues with other brands at all. According to marketers, one of the most common issues reported is that advertisers are experiencing instability in the distribution of where their ads appear, often in Reels or Video. This will occur in the form of an increase in the number of posting locations. Meanwhile, since February, brands using cost caps have reported wild fluctuations in spending from day to day, with examples of consumers spending nearly half of their daily budget in just a few hours. Meanwhile, brands are reporting other issues, such as higher CPMs and lower conversion rates, and are wondering whether fluctuations in ad placement or cost cap issues are to blame.
“Our advertising system is working as expected for the vast majority of advertisers,” a Meta spokesperson said in an emailed statement. We are investigating a small number of additional reports.”
There are several other factors that make this scenario different from what most marketers have experienced in the past. First, the strategy that many marketers have used in the past to solve similar problems (switching media buying strategies) is not working yet. Moreover, this problem has been going on for longer than most marketers are accustomed to. These issues have been occurring since February, whereas previously similar issues were resolved within a few days to two weeks.
“If this continues for another quarter, brands will have to either lower their growth targets or come up with other ways to acquire customers,” said Alex Greifeld, an e-commerce growth advisor. Greifeld writes about this issue in his newsletter, No Best Practices.
Greifeld said issues reported in conversations with brands range from “higher CPMs than we've seen in the past, to lower conversion rates than we've seen in the past.” Cost Cap He says that for brands running campaigns, “there have been many times where campaigns have overspent or exceeded their CPA targets.”
Matt Breuer, senior vice president of portfolio and growth strategy at e-commerce holding company Austerley, agreed. Cost caps allow advertisers to set a maximum cost for each optimization event. “Rather than being guaranteed to spend your budget every day at the best performance Facebook can achieve, you can set a specific spending goal for each event and Facebook’s algorithm determines that you can achieve that goal with a particular ad campaign. We will only spend the budget if that day.'' Breuer said.
Conversely, Breuer said, people who use cost caps sometimes set a higher budget than they would like to spend each day. That's because if Facebook is confident that it can meet certain cost targets per event, marketers will want to take advantage of that cost cap. that.
But for the past six weeks, that hasn't been the case for some people using cost caps. “Platform instability is the most painful within this group,” Breuer said. If there's algorithmic variation, Facebook “may spend more aggressively on these new placements…so people who set up their ad accounts with the idea that they'll only spend if they can 'guarantee' performance.” You're now spending much faster with far worse performance than normal.''
Herman said in an email that while this was a “significant issue” at the end of February, the cost cap campaign and overspending issues have been resolved since early March.
Breuer said the challenge when trying to diagnose and fix problems like this is that Meta is “nearly silent” on whether it changes anything in its ad auctions. The best example of this happening in the past was in 2019, when “Meta started gradually introducing more ad inventory within Instagram Stories,” he said.
Eventually, brands figured out how to succeed more effectively with Instagram Stories. Now, the question is whether there will be a conclusion this time.
Meanwhile, Meta referred Modern Retail to several advertisers who said they were experiencing little to no issues. Brian Tate, CEO of Oats Overnight, said he had seen “no difference” in his brand's performance over the past six weeks. He said Reels has been “one of the most successful advertising destinations” for Oats Overnight, with the company's ad placements more than doubling in the past six weeks.
Scott Futterman, CEO of skincare brand Drmtlgy, said his brand's performance started to decline in mid-February. His brand has teamed up with his Facebook to test new strategies, including experimenting with anniversary sales and promoting new products more prominently. As a result, results improved and Drmtlgy had a “record” quarter, he said.
Typically, in situations where meta ads aren't working as expected, one of the first changes media buyers make is to simply switch tactics, Greifeld said. If you're running an Advantage+ Shopping campaign, many settings are determined automatically or by Facebook's algorithms, but you might want to try running more campaign budget optimization ads that have more manual settings.
But so far, these pivots haven't solved the problem. At least among the marketers Greifeld spoke to, the only thing that improved performance was “cutting spending, which no one wants to do.” Herman agreed, saying, “We've rebuilt the campaign, turned off optimization…nothing seems to be moving the needle.”
Greifeld said brands can take some low-level steps to diversify their customer acquisition efforts. Run your best vertical video ads as YouTube Shorts on Meta. They can look for “non-brand customer acquisition growth opportunities within Google.” This could include running more text or search campaigns depending on your brand.
If the problem continues for another quarter, Greifeld said, at that point marketers may need to consider making longer-term changes to their customer acquisition strategies. But it's not everyone's first choice.
“[Things like this] It definitely happens multiple times a year,” Greifeld said. “But nothing as persistent as this.”
what i am reading
- spin drift The company is reportedly considering a sale after generating more than $300 million in revenue last year, according to Bloomberg.
- Venture capital deal activity in e-commerce fell by a total of 47.5% year-over-year, according to Pitchbook data.
- Retail Brew has a breakdown of the biggest moves in retail executives since March.
What we covered
- brands like bombas and natural life Scammers are increasingly posting fake ads for their products on apps like Facebook and TikTok.
- What startups like teco bus IV fluid More music festivals will be held this year.
- canada goose, Levi and Nike is stuck in its quest to build a bigger DTC business.
