Quit Google and Facebook?
Online advertising is the new billboard
Will Google and Facebook stay relevant for advertisers in the coming years? When we ask ourselves a question at Brandhome, we like having it answered. So … we asked our peers! These are the results of our research.
Dangerous gap between types of advertisers
56% of the respondents’ brands advertise on Google and/or Facebook. Within this group, 7 out of 10 advertise continuously or launch seasonal campaigns. This reveals a big gap: brands advertise on these channels on a structural basis, or not at all. Reason enough for Google and Facebook to worry. If the number of frequent advertisers starts to erode, they can only upsell to a small community for more frequent campaigning. The non-advertisers, on the other hand, won’t be easy to convert.
Price-performance ratio is biggest driver to quit
Social media advertising started out as “lifestyle targeting,” based on interests and personality traits. Today, Google and Facebook have become mainstream advertising channels. Eyeballs are less qualitative and therefore these channels are losing their differentiating factor. This is confirmed by our research: effectiveness is the main reason to quit social advertising. As a consequence, companies see price from another perspective: Is a cheap contact truly cheap if it is not effective? How many cheap eyeballs do you have to buy to get to the right customers? In short: Have Google and Facebook become the new billboard?
Being cheap means being more important to social advertisers
There is a surprising difference in price sensitivity between those who advertise on Facebook and Google and those who don’t. Companies that do advertise are more price sensitive, meaning an increase in price could trigger many brands to quit Google and Facebook. Companies that don’t advertise online can’t be persuaded by lower prices because their decision not to advertise on social media is usually driven by its real or perceived lack of effectiveness and/or concerns about the privacy of their data. So, unless Google and Facebook boost their relevance, increasing their customer base will be a mission impossible.
Big Brother will stop watching your customers
1 out of 5 companies do not advertise online because they do not trust Google and Facebook with their data. But the law is about to change. The new European data protection rules, or GDPR, that are due to go into effect in May 2018, will force Google and Facebook to change their approach. This is a serious challenge, since both companies will no longer be able to use personal data for advertising purposes without user permission. Instead of increasing their relevance, these changes will make reinventing themselves as lifestyle media harder than ever. Will Google and Facebook be able to regain the trust of advertisers while playing by the rules? Only the future will tell, but if you ask us (and our peers), the challenges ahead require radical choices.
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