Contributed by nScreenMedia
The rise and rise of digital ad spend
This year digital advertising overtook television ad spending for the first time. Most of that digital spend is going to two companies: Google and Facebook. The two companies exceeded eMarketer’s expectations by raking in 63.1% of US digital ad spending in 2017. They also gobble up half of all worldwide spending. In the US no other digital platform makes up more the 5% of the digital ad market share.
2017 will be the first year that Facebook captures more than one in five US digital ad dollars. Its growth is also staggering, with ad revenue increasing 40.4% this year and 90.7% at its subsidiary Instagram.
Facebook’s ability to accommodate new advertisers is one of the reasons the company has seen such massive growth. However, in 2016 the company stated it was “running out of places on its News Feed to show people ads.” Although this did little to stop its growth, it meant that Facebook needed to start getting creative about the content that it showed.
Algorithm changes and effects
The crowding of the News Feed was not a significant problem for selling more ads, but it was responsible for decreasing reach. Ever since the News Feed started to promote brands back in 2012 reach has declined. The social media giant, who at first pushed brands to the front and center of users’ News Feeds, began to change tactics.
Starting in 2015, it began to make changes to its News Feed algorithm in an attempt to reduce the number branded pages displayed. First, Facebook reduced promotional page posts and hoax links. Then, in April 2015, it began to prioritize content from friends over pages from brands. Within one month of making this change, Facebook saw a 3% rise in user engagement.
Unfortunately, not everyone was satisfied with the results. Since users were seeing more posts from friends and family, they saw fewer posts from non-human accounts. Brands like Buzzfeed and the New York Times, who heavily rely on traffic from Facebook, also saw fewer views.
Facebook made further changes to the algorithm over the last couple of years by eliminating clickbait, launching reactions,* starting live videos, penalizing fake news and much more. These changes had mixed results, but most did nothing to arrest the gradual decline in user posting and engagement. The changes also didn’t do much to help brands, but there was one silver lining.
User-generated content is the way to go
According to Mary Meeker’s 2017 Trends Report, Facebook users are increasingly engaging with original, user-generated branded content (UGC). UGC containing a brand earned 6.9x higher engagement than brand-generated posts. So-called micro-influencers were also shown to boost engagement rate.
Typically, published posts from a brand or a paid post reach between 1-2% of the target audience. However, if a user publishes a post about a brand, it can reach 35%+ of the target audience and their friends and family. Additionally, posts by the most connected Facebook users (those with over 500+ friends) can boost brand engagement 3.5x. Reaching these so-called “micro-influencers” has a marked effect on post engagement.
The greatest opportunity for generating consumer engagement lies in harnessing the power and influence of everyday users. Moreover, targeting the users who drive high News Feed engagement among their friends could be the most effective way for brands to reach the desired audience.
Why it matters
Facebook is one of the two digital ad giants controlling the market
The company has made changes to appeal to users and brands, but these efforts have had mixed results.
The most successful brands find ways to leverage regular posts by Facebook users to reach the intended audience.
*reactions allow users to state their emotional reaction to a post in an emoji rather than simply a “like”