Peak performance: Meta’s advertising rates plummet and spending on Reels soar

As ecommerce brands prepare for peak season, digital advertising on Meta has seen a three-year record performance, having strongly recovered from the ‘double recession’ caused by Apple’s ATT update and consumers reverting to pre-Covid behaviours.

This is a key finding from Nest Commerce’s latest quarterly Readout report, based on 1.5 billion+ Meta impressions from global campaigns across Meta, 40+ ecommerce clients, with 70% prospecting campaigns.

The report reveals two years on from Apple’s ATT roll out that saw advertising costs spike, Meta has achieved a three year record low in CPM, 37% lower year-over-year (YoY). This decrease in CPM has led to a 43% reduction in CPA, bolstered by a 22% increase in conversion rates and a 31% lower CPC (Cost Per Click) YoY.

The improvement in Meta is down to reduced advertising costs and enhancements in targeting and performance in the more privacy-focused landscape.

Meanwhile, Meta’s strategic shift towards Reels means it is becoming even more cost-effective, and CPM is now 63% lower YoY. Meta continues to increase the impressions available for the format, while it remains undervalued by many advertisers. Additionally, ad spend on Reels has increased for the fifth consecutive quarter – and is up 27% QoQ and 124% YoY. This aligns with changing consumer behavior.

TikTok has emerged as a formidable competitor, with an 18% higher ROAS according to test data from Nest using measurement solution Fospha. In further encouraging news for retailers, AOV was 16% higher YoY in Q3, with purchases holding steady despite the continuing challenges of the macro-economic landscape. However profitability remains a challenge for retailers with rising costs, necessitating a focus on upper-funnel objectives and a sophisticated approach amid data limitations.

According to Nest Commerce CEO Will Ashton: “Last year, many retailers and D2Cs scaled back ad spend as their budgets were slashed, only to pile back into the auction in Q4. This year is more positive. The mist has finally cleared from the ATT update and there is a clearer rulebook of what works, and what doesn’t. The combination of sharply reduced advertising costs on Meta and improvements made to targeting and performance, is driving significantly improved results on ad investment. Brands that have adapted should be well prepared for peak.”

He continues: “A reduction in data and fewer customers in market has forced marketers to become more sophisticated in their paid media strategies. This has led to an embrace of upper-funnel objectives to drive performance.”

The report also features a guide to 2024 planning and how advertisers can take control in an evolving landscape.

Source: Nest Commerce

  Digital Advertising, Marketing, Nest Commerce, Report, The Readout