7 Reasons We’re Not Freaking Out about Facebook’s Maxed Out Ad Load

If you follow Facebook’s investor calls, you’ll know that during the past few Facebook CFO David Wehner discussed their plans to begin slowing down the ad load’s growth rate. Facebook’s ad load is the ratio of ads to News Feed posts that a user sees. Because ad load has steadily increased since the dawn of Facebook advertising, it’s little surprise that they have finally reached a point where a slowdown is necessary to manage their capacity.

Some advertisers have worried that this means costs will spike, citing basic supply and demand reasoning that, with the number of advertisers growing by the day and with the existing advertisers scaling their spend with Facebook, all of this competition will push prices sky high.

Thankfully, any such panic is unfounded. Facebook still is and will remain, one of the best platforms for direct response advertising for almost every vertical and business.

The ability to target your potential consumers combined with the sheer number of people who use it means that continued growth will always be a good thing for your brand.

But just in case you’re still worried, here’s a breakdown of the seven reasons that you shouldn’t stress over the slowdown.

THE SEVEN REASONS FACEBOOK AD LOAD’S SLOWDOWN WON’T INCREASE COSTS:

(1) Ad Load Basics

For there to be a decrease in ad load, that would mean a decrease in supply. A slowdown of ad load doesn’t change the supply, merely the amount seen. And since there continues to be an increase in demand from advertisers year over year, a decrease in supply is a non-issue.

(2) Time On Site

When it comes to the average time a user spends on its site, Facebook has seen a consistent increase of 10% or more year-over-year (YOY).

This means that even if the ratio of ads consumers see starts to slow, the total number of ads they see will eventually increase as the total number of posts increase (since more time on the site usually equals more posts).

(3) User Growth

Facebook’s user growth remains strong with the total number of worldwide Daily Active Users (DAU) continuing to see double-digit growth.

In the US alone, DAU was up more than 5% YoY for the first quarter of 2017. More users mean more ad supply and increased targeting abilities as more of your niche customers become available.

Therefore, continuing increases in user growth will maintain a steady need for more ads.

(4) Instagram

For our own clients, we’ve seen their share of spend for Instagram double from the first quarter of 2016 to the first quarter of 2017. There’s additional opportunity for growth with current data showing around 2 billion Monthly Active Users (MAU) on Facebook and 700 million MAU on Instagram with no doubt that those numbers will only continue to rise.

(5) Facebook Ad Network (FAN)

There has also been an increase in the volume on Facebook’s native advertising in-app placements (otherwise known as FAN). This volume has more than tripled YoY and we fully expect it to keep rising.

This means FAN is a great testing ground if you’re concerned about Facebook’s ad load slowdown. Since CPC’s here are roughly 90% cheaper than for Mobile News Feed, the more publishers that join FAN, the more supply will grow and the lower the CPCs will get.

Even better, despite a lower conversion rate than the Mobile News Feed, you still get a comparable CPA and the price of customer acquisition should remain unchanged even as FAN continues to grow.

(6) Ad Targeting Accuracy

Facebook has been pushing advertisers to enable more broad targeting settings and allow their ever-improving algorithms to go after your best customers.

Many of our clients have seen significant success when targeting across news feeds, Instagram, and FAN as part of one single campaign.

And as targeting continues to improve, even with some increase in costs, companies will be able to afford any additional spend because their ads will be reaching more high-intent consumers.

With more narrowly tailored targeting bringing your brand more consumers that are more likely to convert, the ad load slowdown won’t hurt your overall customer acquisition costs.

(7) Ad Changes

Each new ad unit introduced by Facebook continues to have a more organic feel. This is important because users are more likely to engage with posts when they look less like ads. Some of the latest ad units released have done just that.

• Collection Ads – These ads allow Facebook to use your product feed to immerse your potential consumer with a shopping experience that allows for showcasing up to 50 products at once. If a customer taps on a product, it will take them to a product detail page on your site so they can purchase it. It’s the evolution of the Dynamic Product Ads that have been very successful for our clients and brands throughout Facebook.

• Video Ads – Our clients have also seen phenomenal results using videos longer than the traditional 15-30 second Direct Response focused ones. In fact, the best performing videos show the value of the brand rather than pushing value props. This shift in video messaging gives the user more context on their product or service. In turn, this benefits a brand because if the consumer does click through to the website, they already know some basic information and end up spending less time on site researching and more time converting.

SO WHAT’S THE POINT OF ALL OF THIS?

Facebook advertising has become increasingly more competitive simply because it’s been so successful for a wide swath of businesses across a variety of verticals. And Facebook recognizes that they will have to slow down the ad load to make sure that there remains enough capacity for everyone.

But this slowdown shouldn’t cause you to lose sleep. While some costs may rise, it won’t be a massive increase. And based on the seven reasons listed above, it’s not worth any panic and will hopefully bring your brand better quality consumers in the long run. And who doesn’t want that?