Facebook Advertising Trends Report Q1 2022

Q1 2022 FACEBOOK ADVERTISING TRENDS REPORT Q1 Global Ecommerce Advertising Trends across Facebook and Instagram

INTRODUCTION

ABOUT THIS REPORT This report draws on Facebook and Instagram data from the Nest Index, our

Q1 has been competitive for ecommerce businesses, with CPMs continuing to rise in many regions, reaching Black Friday levels by the end of the quarter.

Competition increased most significantly in the UK despite the removal of remaining Covid restrictions, suggesting a strong resilience in online shopping habits with CPMs no longer closely following Covid trends.

Increased competition was offset markedly by higher engagement, with CTR rising both YoY and QoQ. This is the metric marketers should be focused on to improve CPC, as we expect CPMs to remain high in Q2.

portfolio of ecommerce clients, most of which work in the fashion and beauty sectors. Each advertiser sampled in this report has an annual online advertising budget between £1m and £30m and most have purchase or value as an objective.

These advertisers use a range of conversion and catalog-based campaigns, and most run campaigns in several markets. They also skew towards prospecting campaigns, rather than retargeting campaigns, with 75% of total spend in Q1 assigned to prospecting campaigns.

75%

OF TOTAL SPEND ASSIGNED TO PROSPECTING CAMPAIGNS

In terms of ad creative, ads using ‘sale’ and ‘discount’ USPs continued to perform well. ‘Social proof’ ads also rose in popularity with consistently high engagement.

As 2022 unfolds, ecommerce businesses should focus on improving their performance with leading ad creative, as this quarter has clearly shown that this is the leading contributor to ad performance.

ABOUT NEST PERFORMANCE Nest Performance is the paid social and creative agency for ecommerce at scale. Founded by ex-Facebook and Google employees, Nest provides best-in-class paid social services for ecommerce brands including Ted Baker, ME+EM and Seraphine.

WILL ASHTON CEO at Nest Performance

2

KEY TRENDS Competition reaches new heights CPM 2021

CPM 2020

CPM 2022

Rise in engagement provides opportunity Engagement increased significantly -

environment, it is clear that having a

and we have seen QoQ rises in CTR

strategy for improving CTR is crucial

globally, with the US leading the

for ecommerce brands to succeed.

way with a 45% increase in Q1.

+45%

This had the effect of significantly softening the impact of CPM rise on

CTR QoQ in US

CPC. This means that CPC is down QoQ in all regions. In the current JAN

FEB

MAR

CTR 2021

CTR 2020

CPM remained high in Q1 and rose

that competition no longer closely

in all regions YoY. This trend is

follows Covid trends.

CTR 2022

particularly acute in the UK and US which have even seen CPM increase

So what is causing the surge? Meta

QoQ.

experienced increased competition from emerging platforms, specifically

There was further relaxation of

TikTok. In response, Meta introduced

Covid-19 restrictions in Q1, which

Reels, but this shift has resulted in less

has previously led to CPM decreases

inventory for advertisers.

but not in this quarter. This suggests that the rebound in the high street seen in 2021 may have lagged and

JAN

FEB

MAR

+39% CPM YoY in UK

To compare your performance to your peers and discuss the findings with a paid social expert, get in touch at info@nestperformance.com

3

KEY TRENDS: TARGETING STRATEGIES Dynamic ads resilient to privacy initiatives

Lower CPMs with demographic and interest-based targeting

CTR

Demographic and interest-based

However, AOV was 31% lower

targeting provided lower competition

which indicates LAL-targeting still

with a 49% lower CPM compared to

drives value in terms of purchase

lookalike (LAL) targeting. Meanwhile,

volume.

CTR is only 11% higher with LAL

-49%

targeting, which results in much Q1

Q2

Q3

Q4

2021

Q1 2022

lower traffic costs for demographic and interest-based targeting.

CPM for broad demographic and interest-based targeting

Interest-based targeting also drove a Dynamic product ads were driving

higher CTR and 16% lower CPM on

much of the rise in engagement - and

carousel compared to video. This is

CTR increased 13% YoY and 7%

mainly due to the reach of dynamic

QoQ in this channel. In-platform

ads for broad audiences (DABA)

events are proving resilient as the

resulting in lower CPM and

impact of privacy initiatives on CVR is

leveraging onsite signals to target

reduced here. Discovery Commerce

more effectively despite privacy

will be increasingly important to

initiatives reducing visibility.

Meta in a landscape that is becoming more privacy-conscious.

Carousel and collection ads drove the most efficient traffic with a 23%

39% higher CVR compared to LAL.

Demographic CPC

Interest CPC

LAL CPC

+13% CTR YoY for dynamic ads

To compare your performance to your peers and discuss the findings with a paid social expert, get in touch at info@nestperformance.com

4

KEY TRENDS: AD CREATIVE Q1 USPs: Strong performance for ‘social proof’ ads Sale CTR

Social Proof CTR

Average CTR

Leveraging the best creative reduced traffic costs In a quarter of rising CPMs, Nest

This clearly demonstrates how critical

Studio creative achieved much lower

creative is to combat the effects of

traffic costs with a 41% lower CPM

rising CPMs.

and 12% higher CTR resulting in 52% lower CPC, when compared to brand-produced creative.

-41%

CPM for Nest Studio creative

Brand-supplied creative CPC

Creative emerged as the primary

consistently responded to these

optimisation lever for paid social in

adverts, lending authority to customer

recent years. Similar to last year, in

reviews. One simple iteration to test

Q1 the top-performing messaging in

in your creative today is to turn one

creative continued to be ‘sale’ and

top-performing ad concept into a

‘discount’ messaging, which consist-

social proof concept by overlaying

ently achieved higher engagement.

some positive reviews.

‘Social proof’ ads also performed well with 11% higher than average CTR. In a crowded marketplace, consumers

Nest Studio creative CPC

Social proof had 11% higher CTR

To compare your performance to your peers and discuss the findings with a paid social expert, get in touch at info@nestperformance.com

5

EFFECTS ON PERFORMANCE METRICS +26% YoY

MARKET BREAKDOWN

CPM

-1% QoQ

CPM increased across all regions YoY with the UK experiencing the largest increase at 39%. The UK and US also saw CPM increase QoQ whilst ROW saw a small decrease,

Q1

Q2

Q3

Q4

2021

Q1 2022

+12% YoY

showing that rising demand has become a consistent trend.

CTR

+15% QoQ

CTR increased QoQ and YoY in all regions with the US leading the way with a 45% increase. ROW also saw increased CTR Q1

Q2

Q3

Q4

2021

Q1 2022

+15% YoY

reinforcing the opportunity to expand outside of core markets such as UK and US.

CPC

-19% QoQ

CPC decreased QoQ but increased YoY. This shows that improvement in CTR is softening the impact of rising CPMs, showing how Q1 2021

Q2

Q3

Q4

Q1

important focus on performance is.

US

UK

ROW

CPM

CPM

CPM

+23% YoY

+39% YoY

+25% YoY

+22% QoQ

+14% QoQ

-1% QoQ

CTR

CTR

CTR

-12% YoY

+5% YoY

+12% YoY

+45% QoQ

+19% QoQ

+15% QoQ

CPC

CPC

CPC

+31% YoY

+35% YoY

+15% YoY

-41% QoQ

-7% QoQ

-18% QoQ

2022

6

LOOKING TO 2022 AND BEYOND Increasing CTR with creative is the key to success

Approaching one year since iOS 14 Reduced visibility led to lower CVR throughout 2021, however some clear

Brand-supplied creative CTR

Nest Studio creative CTR

strategies for success emerged over time. Formats that leverage in-platform activity are clear winners, and we expect Meta to continue to invest in Discovery Commerce.

Continued improvements to ad performance & measurement Meta has improved their measurement greatly since the update, and Despite a competitive first quarter, the

advertisers should ensure they have a

we expect them to continue to invest

consistent rise in CTR - and its impact

best-in-class set-up in place to be

here. Whilst ads in Reels are still in

on CPC - shows that there is still much

prepared.

beta, eventually Meta will release

that ecommerce brands can influence

more inventory which should have a

to achieve strong results in this

Producing high performing creative is

positive influence on CPMs. It is

environment.

the most important lever to pull in

crucial for ecommerce firms to watch

order to win customers during

closely for changes.

With some uncertainty in the

competitive periods, as demonstrated

economy expected this year,

by Nest Studio’s Q1 results.

To compare your performance to your peers and discuss the findings with a paid social expert, get in touch at info@nestperformance.com

7

WANT TO SEE HOW YOUR METRICS MEASURE UP? To compare your performance to your peers and discuss the findings with a paid social expert, get in touch at info@nestperformance.com

NEST PERFORMANCE IS THE PAID SOCIAL + CREATIVE AGENCY FOR ECOMMERCE AT SCALE