Advertising on the social media giant Facebook is now much affordable as the rates have fallen by about 20% due to businesses halting and reducing their ad spending
COVID-19 has impacted the advertising industry in the most unexpected ways, as giant platforms like Facebook also witness a fall in demand. This is a novel experience for businesses, as the companies that were always considered secured from all the market volatility are also feeling the brunt of it.
Social media and other related internet stocks depend on selling ad space to ensure business profit as the greenest revenue streams. In this pandemic, ad spending on Facebook has taken a big hit, compelling the company to cut its ad rates to ensure that ads are flowing. Unlike the other industries, social media platforms are experiencing a sudden shoot in the time spent by users every day – indicating it to be the best time for businesses to advertise online. But that’s clearly not happening. The unpredictability of the situation has spread fear across industries who are bearing huge sales losses in this situation. Due to such fear, confusion, and anxiety regarding business continuity – firms have decided to cut down substantially on their marketing budget.
The abundant entertainment and travel ads suddenly disappeared from Google search. This was one of the mainstream revenue generation scopes for social media platforms. Such sudden changes in demand have resulted in Facebook advertisements hitting record lows.
The Wall Street Journal, citing companies that usually run ads on Facebook, confirmed that an advertisement that is going across to 1,000 Facebook users costs around 15% to 20% less in March as compared to February. A digital marketing agency, Wpromote that handles $130 million yearly ad spending on Facebook, also confirmed to The Wall Street Journal about Facebook’s rates being cut to 25% from February to March.
Meanwhile, 4C Insights, a marketing company, confirmed that the ad spending on Facebook and Instagram was up by only 2% month-over-month in March as compared to their expected 10% month-over-month increase.
Facebook is enjoying a huge uptick in engagement and usage as millions of people turn to the social media giant during the pandemic – for entertainment as well as the latest information. But, it has not at all translated into a rise in ad spending. Facebook warned that it’s witnessing a weakening ad business in the nations that have taken aggressive actions to mitigate the spread of COVID-19.
To counter some of the weaknesses, Facebook is reportedly focusing on ad budgets that had previously been reserved for televised sporting events. As per The Wall Street Journal, the social media giant is pitching its video ads as the ideal place to spend the ad dollars that would have otherwise gone for sponsor sporting events.
All social media platforms are struggling in the current pandemic situation to get ads. And, if the circumstances don’t get better soon, the 25% cut in the ad cost could just be the beginning.