Insights by Sam Sprague, Founder of Sprague Media leveraging Varos’ platform & data.

Let's dive head-first into the data and see what happened this past month!

Facebook & Instagram: Lower Ad Spend, Higher ROAS

Ad spend across Facebook and Instagram dropped by -11% YoY, leading to a -25% decrease in CPM!

This lowered competition also reduced Cost-Per-Purchase (CPP) by -22% and boosted Return On Ad Spend (ROAS) by a fantastic +37% YoY

️ Average Order Value (AOV) increased by +6% YoY.

Interestingly, brands with products under $50 cut their ad spend by a minor -1% YoY, while brands with AOV between $50 - $100 upped their ad spend by +10% YoY

Prospecting Sales Campaigns saw a whopping 244% YoY increase in ad spend.

Meanwhile, Lookalike campaigns lagged behind, up +45% YoY, and only attributing a minor portion of of total spend on Facebook

Google: ROAS Down, CPM Up

Conversely, Google Ads experienced a +8% increase in CPM, and ROAS declined by -6% YoY.

However, Performance Max (PMax) CPM’s dropped by -9% YoY, while their ROAS changed by a nominal -1% YoY

Combined with…

PMax ad spend surging by +47.9% YoY, contributing to a major % of total spend this April

It’s clearly becoming the official Campaign Type to represent Google, especially in Search (-13% ad spend YoY) where we’ve seen dramatic decline since 2021

What Does This All Mean?

For the first time since before 2017, CPM on Facebook has declined YoY in the first four months of the year.

Why?

Brands are focusing on cash flow and profit margins, and lower-priced product brands being pushed out of the market

Brands with an AOV between $50 - $100 have increased spend by +10% YoY, while brands with AOV pricing in conjunction with them have been in decline YoY, indicating that brands have been forced to increase their perceived value, by bundling or hiking prices, or lose market share.

Sales-focused Prospecting campaigns are outperforming Lookalikes and are attributing to the shifting dynamic of spend being allocated toward more Cold audiences vs retargeting audiences.

Advantage+ campaigns combined with FB & IG Shops have shown a massive performance increase, especially in terms of driving Sales from Cold traffic

AI-focused ad automation is on the rise with both Facebook's Advantage+ and Google's PMax campaigns.

They simplify ad creation and use machine learning to improve performance and drive sales

Interestingly enough, instead of nullifying the -25% decrease in CPM with a simultaneous increase in Cost-Per-Purchase or decrease in Revenue, like we might see under normal circumstances…

The opposite is true:

• ROAS +37%
• Conversion Rates +6%
• Cost-Per-Purchase -22%
• Revenue +22%

Making it a perfect storm of opportunity has arisen as brands are being more conservative, making now the perfect time to be aggressive on Facebook.

How to Leverage This Data in May?

Embrace Sales-focused Adv+ campaigns on Facebook: As these campaigns have shown impressive results, utilize them to drive traffic to your FB & IG shops.

By taking advantage of low CPMs and reduced competition, scaling is now that much more easy & effective.

Tag-Team with Paid Social & Paid Search campaigns: To optimize performance, run your Paid Social campaigns alongside Google's PMax campaigns.

This strategy will allow you to identify the best-performing campaigns and enable you to allocate your budget efficiently.

Focus on higher-priced products or bundles: With perceived value and product pricing on the chopping block, consider offering higher-priced items or bundling your products to increase perceived value.

This strategy will allow you to stay competitive and maintain a healthy AOV. ️

Optimize your Prospecting & Retargeting campaigns: As these campaigns outperform Lookalike campaigns, invest more resources in optimizing them.

Ensure that you have a clear target audience and develop creative content that resonates with potential customers.

Lastly, stay ahead of the curve and remember, all these strategies are supported through Varos.

Insights by Sam Sprague, Founder of Sprague Media leveraging Varos’ platform & data.