The new reality of marketing under COVID-19 has entered week five. It’s time for our fifth edition of “What’s Going On Out There?”

Executive Summary (Full Details Below)

Last week, we saw an increase in many metrics. Overall, we are seeing that CPMs, CPCs, and CTRs have risen, yet onsite conversion has gone flat. This is a result of brands prospecting for new audiences and also Facebook users are spending less time on social media. We recommend for our clients to test large lookalike audiences since they are very strong performers half of the time. In addition, we are telling our customers to adjust their offering to provide goods and services that can help their audience during the crisis. 

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Summary of Changes

  • CPMs are rising about 5% per week, CPMs have hit a bottom and are now rising.
  • CTRs are rising 2% per week, this increase has been roughly even across all campaign types. 
  • CPCs are rising 3% this week, CTRs are rising less than the rise in CPMs allowing CPCs to rise.
  • Conversion rates are flat, continuing the trend for the last 4 weeks.
  • Cost per Purchase is rising gently. 

What Does it Mean?

  • CPM has bottomed and is now rising steadily. People are slightly decreasing the amount of time on Facebook and ad budgets for brands are becoming stable.
  • We’ve seen a very significant increase in prospecting costs, and a noticeable drop in retention costs.

What Will Happen Next? 

  • Performance continues to become less jumpy each week.
  • CPMs will continue to rise since people are spending less time on social media.
  • Overall, we expect costs to continue to increase gently over time.
  • We expect the recent trend in prospecting to continue as many brands plan to retarget and retain this new audience.

Strategies to Adapt: 

  • Try adding products to your stores that customers might need during this crisis. 
    • We have seen great success with a clothing client switching gears and selling face masks.
  • In previous weeks, we advised clients to expand prospecting and add new audiences as prospecting was having a honeymoon. 
    • The relative performance of prospecting, retargeting, and retention is back to normal. 
    • So now is the time to consider bringing your budgets back to equilibrium.
  • Consider testing large lookalikes (3% through 10%) audiences since they are very strong performers half of the time, and your customers may not be the same this month as last month.

Detail: What is ad performance like right now? 

Cost Per 1k Impressions (CPM):

Facebook CPMs have hit bottom and are increasing 5% each week.

  • What are we seeing?
    • CPMs had been dropping 20% each week.
    • Recently CPMs have bottomed. CPMs have been rising 5% per week starting the week of 3/22. 

Click Through Rate (CTR):

Overall, Facebook CTR has grown by about 0.1% per week during the crisis.

  • What are we seeing?
    • The average CTR has risen from 3.6% to 4.1% over the crisis.
    • This rise has been roughly even across all campaign types.

Cost Per Click (CPC):

CPMs have been rising 5% weekly, and CTR rising ~1% weekly, therefore CPC is rising at 4% per week.

  • What are we seeing?
    • CPC had been dropping steadily on falling CPM.
    • The rise in CTR was less than the rise in CPM, so CPC has been rising since the week of 3/22.

On-Site Conversion: 

Conversion rates fell aggressively during the beginning of the crisis but have been flat for the last 4 weeks.

  • What are we seeing?
    • Conversion rates fell aggressively early in the month.
    • In the last 4 weeks, conversion rates have been broadly flat.

Cost per Purchase: 

In recent weeks, the overall Cost per Purchase has been steady, though prospecting is getting more expensive. Cost per Purchase is up 3%.

  • What are we seeing?
    • Cost of Acquisition had been dropping until 3/29 but recently has been roughly flat.
    • The gap between Prospecting and Retention narrowed in mid March with prospecting’s cost premium narrowing, but now the prospecting honeymoon is over
    • The cost gap to prospecting (vs retargeting and retention) has returned back to its normal gap.

How can we improve performance?

Strategy #1: Change your products to match the crisis.  We had one client add masks to their site, and their Cost per Purchase dropped >75%.

  • One of our clients is a clothing company that didn’t originally sell masks. This client decided to start selling masks on their website. 
  • Their CTR more than tripled, and on-site conversion doubled.
  • As always, try to sell your customers what they want to buy.

Strategy #2: Start to re-allocate campaign budgets back towards retargeting & retention, as the strange “Prospecting Honeymoon” is over.

  • In late March, Prospecting became cheap relative to retargeting & retention.
  • At the time, we suggested an aggressive budget move towards Prospecting.
  • The honeymoon is now over, and the relative performance of prospecting, retargeting, and retention is back to normal.
  • So now is the time to consider bringing your budgets back to equilibrium.

Strategy #3: Test large Lookalikes (3% through 10%) in prospecting in case your understanding of the customer is out of date. 

We Normally Suggest:

  • We use lookalikes aggressively in prospecting in most of our accounts.
  • We don’t normally see useful performance with lookalikes larger than 2%.

In Light of COVID-19, We Recommend:

  • We have tested large lookalikes (3% through 10%) for a number of clients.
  • About half of the time they have been very strong performers.
  • We think they are doing well now because your customers today may be somewhat different than your pre-crisis customers, so larger lookalikes pull in the newer group better.

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