Updated: Mar 5, 2020
By Tom Hirst
With the Easter holidays rapidly approaching, marketing teams across the country will be starting to plan their digital strategy and in particular how best to utilise paid social during a key period in the retail calendar.
Whilst a lot of the focus will be on internal decisions - Which creative should we use? What should our offer be? Should we create an Easter bunny Snapchat filter? - The importance of what others are doing should not be overlooked.
As with most forms of digital media, paid social is underpinned by an auction-based system whereby an algorithm dynamically selects in real time which ad is best to run based on a combination of bid and ad performance.
With purchase intent expected to rocket over seasonal periods such as Easter and Black Friday, paid media auctions become flooded with advertisers hoping to capture a piece of the pie and maximise their sales and acquisition.
Auctions are extremely sensitive to competition and it is not unusual for core metrics to become volatile during competitive periods. It is therefore crucial for marketers to consider external factors when planning their digital activity and how auction competition will shape advertising performance and ultimately impact on ROI.
Impact of Auction Competition
We have taken a look at how three core metrics performed in a recent client Black Friday campaign – CPC, CTR and conversion rate.
Cost Per Click
Unlike platforms such as Google or Pinterest where competition tends to be industry-based, on Facebook and Instagram you are competing with all other marketers targeting that same audience. This can result in a huge amount of competition and highly inflated CPCs.
In our case study, from the Monday preceding Black Friday to Black Friday itself, our average CPC increased by a whopping 289% from £0.29 to £1.13. This of course had a massive impact on click volumes, CPA and ROI.
Click Through Rate
CTR can act as a good indicator of the quality of your ad but can also be readily influenced by external factors such as competition. You may expect to see CTR rise over seasonal periods but here we show that this is not always the case. With the market saturated with advertisers pushing their own promotions, it can be easy for your ads to be overlooked as “just another Black Friday offer”. In our case study we saw CTR fall by 62% on Black Friday.
So far we have seen that traffic is more expensive and challenging to generate, but what about the quality of traffic? How does the user behave post-click? We saw a noticeable uplift in traffic quality in regards to click-sale% which increased 88% from 2.5% to 4.7%. The question to ask is does the uplift in conversion rate compensate for the premium price paid to generate the traffic. This will vary by campaign but is a point that deserves a lot of consideration.
Armed with the knowledge of how markets react to elevated competition, new questions and challenges become paramount to planning and executing a successful digital media campaign.
Some of the key points to consider are:
Audience and placements – can you avoid some of the competition by targeting niches in your audience or by exploiting lesser used / upcoming placements.
Quality score – working on the quality and relevance of your ad may offset some of premium paid for clicks.
Ad objective – is Traffic / Conversions the best objective selection for your campaign? Awareness and Reach campaigns are paid for on a CPM and could be a more cost-efficient strategy for raising awareness of your promotion.
Budget phasing – could your budget be better spent by avoiding competitive periods all together?
Here at M.i. Media we approach our campaigns with a holistic view and consider all variables, both internal and external, that impact on performance. We have a wealth of experience to provide our client’s with the best advice on when and how to utilise paid social in order to maximise return and generate the most cost-efficient results.