I want to clear the air on a very common misconception we’ve received from several direct-to-consumer (DTC) brands. Many brands today are under the impression that digital prospecting on Facebook still works in the same way it did in 2015 or 2016. It does not, and here’s why.
Many brands are concerned about rising cost per mille (CPM) and plummeting sales from cold traffic. These brands will likely end up blaming their ad agency or in-house marketing team without understanding the root cause of the issue.
Facebook today is very different from Facebook in 2015, but countless companies are still using the same strategies and expecting the same results.
To illustrate this idea, let’s use an example of an acquaintance at an unnamed company -- let’s call them Widgetero. Widgetero sells dishwashing soap, and their marketing strategy largely revolves around a mix of brand-focused Facebook prospection ads and out-of-home (OOH) advertising.
As a quick recap, brand-focused ads are ads in which the creative largely focuses on aligning a company’s brand with a generic idea. For example, “Clean dishes. Clean life. Widgetero.” Out-of-home advertising, or outdoor media, is advertising that hits potential consumers when they’re outside of their homes (or off of their smartphones), such as subway ads or billboards.
In 2015, Widgetero was raking in money hand over fist. Cold traffic, or people who had never seen or interacted with Widgetero, started pouring in. People were seeing Widgetero ads seemingly everywhere -- the subway on the way to work, on Facebook when they were procrastinating at work, on the subway ride home, etc. The next time someone needed dish soap, they ended up with Widgetero soap in three to five business days.
Fast forward four years, and something was different. Facebook fundamentally changed as a platform, leading to higher CPMs and drops in sales. Impulse buys started to become rarer, and buying cycles started to increase.
Cold traffic that would otherwise convert instantly or in a few days started taking weeks or months to finally turn into a sale, and Widgetero’s margins suffered. Of course, their ad agency was first on the chopping block, and they took to hiring an in-house Facebook ad manager, only to get an even worse result than before.
How to navigate this change
Brands need to find a way to navigate the increased noise in the advertising landscape, and brand-focused ads and OOH advertising is no longer an effective primary tool to convert cold traffic into purchases. The top of the funnel must be warmed up. There are too many brands focused on getting in front of eyeballs instead of educating their audience on the value of their product.
The shotgun approach of blasting a generic brand-friendly message to a random blob of people no longer works for two reasons: Facebook’s algorithm changed to favor conversion rather than audience development, and users who have been bombarded by general shotgun ads for years are simply having difficulty differentiating brands in a saturated DTC marketplace. Facebook also gives brands a much larger canvas to work with than OOH advertising.
Brand-focused ads are much less effective because something vague like “Clean minds start with clean dishes. Widgetero” simply doesn’t do as much for cold traffic anymore, especially on a direct-response-focused channel like Facebook. An ad that helps a brand tell a story to a specific subgroup of people might end up in front of fewer people, but those people will be much more likely to convert.
Today, it’s necessary to do things like take existing customer bases and databases to feed into Facebook’s machine learning algorithm to build lookalike audiences. The algorithm crunches the data and spits out an audience of people who are highly likely to convert and who you’re able to target based on a series of interests or perceived intents. Your ads should tell a story to these lookalike audiences rather than yet another ad about dishwashing soap or whatever the product is.
Solely relying on brand-related messaging to drive sales is a massive mistake brands make, and it shows improper use of Facebook as a channel. It’s 2019. Facebook has quarterly reports it needs to release to stay in Wall Street’s good graces. It wants conversion, not brand-building.
Brands building up their audiences on Facebook and reaching them for free cuts into Facebook’s margins and cannibalizes its sales -- likely an underlying reason for the algorithm tweaks to favor brands that convert better straight from the ads (as well as help foster a better user experience with targeted ads).
Facebook has become a lot more competitive, and basic digital prospecting simply isn’t cutting it. If you own a DTC brand and have been seeing a slump in your conversions, try a paradigm shift in your ad strategy. Start experimenting with more targeted audiences and making full use of Facebook’s powerful machine learning algorithm to find the highest-converting type of cold traffic, and craft messages for each specific lookalike audience.
However, warming up the top of the funnel is only a start. It’s critical you think of creative ways to keep your warmed-up traffic and customers engaged with your brand while exploring unique angles of data to build lookalike audiences. You may uncover a gold mine of future audiences while nurturing your existing customer base to become repeat customers.