More ad impressions, less price per ad: Meta’s Insta play?

Tech giant Meta had a rather interesting Q2 in 2023. Daily active people saw an increase of 7% YoY and monthly active people increased by 6% YoY across its family of apps. Individually, if we look at Facebook, its daily active users and monthly active users too saw an increase by 5% and 3% YoY, respectively. However, the data that was a delight for brands and marketers was that in the second quarter of 2023, ad impressions delivered across Meta’s family of apps increased by 34% YoY and the average price per ad decreased by 16% YoY.

According to data by Sensor Tower, in Q3 2022 (in US), while Facebook continued to lead advertising trends, TikTok had the highest growth with ad spend climbing 29% QoQ. Amazon remained the No 1 advertiser on TikTok. Disney and Hulu’s ad spend on TikTok also kept growing steadily. Hulu was ranked as the no. 4 advertiser on TikTok, increasing its ad budget by 667% in the last two quarters.

Back home in India, marketers and digital marketing experts come with a mixed response to the low price per ad and whether TikTok played a role in the same.

Digital Marketing expert Jagadeesh J noticed that there was a recurring theme in the last few quarterly results of Facebook. This was the increase in ad impression & decrease in price per ad. He shared over a recent LinkedIn post, “This is happening because Meta is morphing its platforms to counter the dominance of TikTok. This led to quarter after quarter of stagnant growth in revenue & profit.”

He also pointed out that the platform will sustain as long as the ad impressions exceed the price per ad degrowth.

But how long?

It turns out that the growth in Instagram audience has played a role in the overall Meta’s family of apps’ decrease in price per ad.

Shradha Agarwal, co-founder and CEO, Grapes, agrees that Facebook’s overall ad inventory has indeed increased. “Because of this we are able to see a lot more ads in the overall universe that we are looking at. We have also seen a decline in prices, but that is not on Facebook but on Instagram,” she further pointed out.

The classic case of demand and supply is playing out here, experts believe.

Vishal Chinchankar, CEO of Madison Digital and Madison Alpha, breaks the concept down with a hypothetical example.

For example, if today the population of mobile phones is X million, these millions of people are surfing the platforms like Facebook, Google etc. creating a lot of ad inventory/impressions. “Now say because of the content, I want to watch it more frequently, consequently creating more and more impressions. This is thus leading to consumers increasing the supply. When the supply goes up, the price goes down,” he explains.

Agarwal mentioned that the Instagram audience has increased massively, from 100 million to close to 250-300 million today and hence the overall deflection in prices. “In fact, a lot of brands are now advertising only on Instagram than on Facebook and Instagram both, because they feel that the audience are all shifting from Facebook to Instagram,” she mentioned.

Both Agarwal and Chinchankar further added that because of this boom in the number of users, the ad inventory has gone up and the prices have thus come down overall for Meta.

Agarwal also explained that these impressions are not based on unique users, but are determined by the content. “So, if one person watches the content 10 times, it gives 10 impressions,” she said.

However, this apparently is not the only reason for the growth in ad inventory. Agarwal shared that one thing that probably nobody is talking about, is how Meta places a lot of ads on its network of apps and websites.

This is a case similar to Google Display Network (GDN), wherein Google Ads can appear over a group of several websites, apps, and videos. “Similarly, Meta also places a lot of ads on its network. For example, a lot of in-game ads you see are being served by Meta. This has also led to an increase in the inventory,” Agarwal added.

Shubit Rakshit, Business Director, FoxyMoron, Zoo Media, says that the phenomenon of Facebook's ad impressions outweighing the cost is shaped by a combination of factors. He believes that the competitive landscape prompts advertisers to adopt cost-effective tactics to stay ahead. “Secondly, shifts in user behavior, like increased scrolling and shorter attention spans, can lead to more impressions. Moreover, advancements in targeting and AI-driven placements likely contribute to this trend,” he added.

How are the brands then approaching this situation?

Rakshit further mentioned that Facebook's ad impressions often surpass the cost per ad, indicating a promising strategy centered around optimizing conversions from these impressions. “Brands are strategically approaching this by segmenting audiences - leveraging high impressions for broader reach and adopting a more cautious bidding approach for scenarios with higher conversion potential,” he added.

“While higher impressions indicate a vibrant ad ecosystem, Facebook must also ensure users don't suffer from ad fatigue. Balancing increased impressions with maintaining relevance is crucial for both user experience and Facebook's long-term viability. Striking this equilibrium will be pivotal in sustaining the platform's effectiveness in the years to come,” Rakshit also advised.

exchange4media has asked Meta for a comment. The story will be updated as soon as we hear from them.