More Marketers Are Moving to Facebook and Instagram, Should You?

Jan 22, 2018

Article ImageIn the world of digital ads, two names continue to dominate: Google and Facebook. The competition isn’t even close, with these online juggernauts now representing 73% of all U.S. digital advertising, a rise from 63% in the second quarter of 2015, per Pivotal's Brian Wieser in a recent note to clients.

Between the two, Google would appear to wear the crown; eMarketer estimates that Google will rake in $40.08 billion in U.S. digital ad revenue this year vs. $21.57 from Facebook.

But a recent report by investment firm Cowen, “Ad Buyer Survey VI,” suggests that Facebook may be poised to snatch that crown, due to the growth in video ads and Instagram. Based on responses from senior ad buyers polled:

  • Facebook and Instagram ad budgets will balloon this year and next, while Google ad budgets will slightly drop.
  • 41% regarded Facebook video as the best platform to initiate an ad campaign vs. TV (25%) and YouTube (10%).

The report also projected that Google’s compound annual growth rate will grow only 11% between 2018 and 2023 compared to 13% for the entire digital ad market.

Stacy Smollin Schwartz, marketing professor at Rutgers Business School, isn’t surprised by these findings. “Facebook provides an easier way for users to stumble upon content, making it ideal for marketers to launch a new product or campaign that the target audience wouldn’t know to proactively seek out. YouTube viewing is somewhat more deliberate, in that viewers subscribe to channels and follow their favorite programs,” says Schwartz.

Also, “due to its snack-sized, ‘what’s on your mind’ social media nature, Facebook and Instagram video is low commitment—fun, lower quality, shorter lifespan, shorter length,” she adds. “But ads on YouTube are typically higher quality, longer lifespan, and longer length. YouTube is used more like a search engine for archived video content, where videos are filed indefinitely and algorithmically rendered according to user searches.”

Martin Kihn, research vice president for Gartner, agrees with the report that Facebook and Instagram ads will continue to gain share over Google. “Brand marketers believe Facebook/Instagram is a low-risk and transparent platform that’s easy to optimize. It has great reach, and its flexibility is attractive to advertisers,” says Kihn. Also, Facebook’s ad buying tools are very easy to use—anyone can set up and run a campaign in minutes.”

Consider, too, that Facebook and Instagram accounts are seamlessly integrated, “making it easier to track and deliver ads to a specific person,” notes Mike Grandinetti, chief marketing and strategy officer with Reduxio and a professor at Hult International Business School.

“Instagram and Facebook Live are replacing the core added value of YouTube and Snapchat,” he says.

Don’t lose sleep over Google’s prospects, however. “I don’t think Google’s ad revenues will go down. We’re comparing a much bigger company to a bunch of social networks that weren’t selling ads seriously five years ago,” Kihn says. “But Google is driven by search, which is still growing but not the flavor of the moment.”

Marketers who are setting their ad budgets for 2018 and beyond don’t necessarily have to follow the herd migrating to Facebook/Instagram, however.

“Not every audience is on Facebook. There are a lot of people—especially men and younger people—who aren’t easy to reach at scale on the platform,” says Kihn. “The question to ask is, is your audience available on Facebook at a reasonable price, because over time I’d expect Facebook ad prices to go up as competition grows.”

Schwartz believes the ABCs of digital advertising still revolve around Alphabet. “I would not advise advertisers to divert existing budgets away from Google. Search is still the starting point for most web visits, and YouTube is so well integrated into Google’s search results,” she says. “Spend more time on the creative and look for native video advertising opportunities that more effectively communicate your message on YouTube."

Don’t overlook Snapchat in 2018, either, Kihn adds: “Snap has a lot of potential for really creative and innovative ad units. Things like Sponsored Filters and Lenses are literally brand new formats that provide a lot of potential for creative experiments and smart promotions.”

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