Tuesday, May 28, 2024

Meta advertisers claim sales are down and costs are up

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Meta advertisers claim the cost of running campaigns across it platforms has surged due to ongoing issues with its algorithm.

Brands report that sales and return-on-ad-spend have both plummeted, while cost-per-click and cost per 1,000 impressions are up by a factor of three in recent months – with no explanation from Meta as to why.

Why we care. If the reported ongoing algorithm issues continue to impact ad performance, marketers will need to take action to reduce costs by exploring rival platforms like Google and TikTok.

Details. Meta is a global leader in digital advertising with its platforms accounting for approximately 22% of the market, according to Emarketer. Small businesses in particular have traditionally been reliant on Meta to reach their target audience thanks to the efficiency of its AI-powered targeting technology. However, many advertisers claim that the social media giant’s dependable advertising system is currently experiencing significant issues, prompting some to reallocate their budgets to rival platforms.

Impact. The potential impact of this reported system issue on ad revenue is expected to become apparent by the end of the month when Meta releases its first-quarter earnings. Experts are forecasting Meta to report $36.1 billion in ad revenue.

Reaction. Cody Plofker, chief marketing officer at brand Jones Road Beauty, said on the “Operators” podcast:

  • “It’s brutal out there. There is something just terribly broken about Meta right now.”

What Meta is saying. Meta admitted that there have been some technical issues impacting ads but denied that the problems were widespread. A spokesperson told Bloomberg:

  • “Our ads system is working as expected for the vast majority of advertisers.”
  • “We recently fixed a few technical issues and are researching a small amount of additional reports from advertisers to ensure the best possible results for businesses using our apps.”

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Deep dive. Read our coverage of the $7 billion class-action lawsuit Facebook and Instagram advertisers filed against Meta for more insights.



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