Why Instagram and Facebook Are the Most Preferred Channels for Advertising This Year
Discover the opportunities and challenges for companies in digital advertising this year and how they are using capabilities like automation.
Digital advertising remains a crucial channel for B2C businesses to reach, engage, and acquire customers. So, what are the opportunities and challenges for companies in digital advertising this year? And how are they using capabilities like automation and campaign optimizations? Smartly.io and Insights conducted a study to find out the answers.
As we enter a new year, digital advertising remains a crucial channel for B2C businesses to drive customer awareness, engagement, and revenues. Further, consumer purchasing behavior has shifted toward digital buying over the last few years, and more so since the pandemic. And this behavior doesn’t seem to be slowing down. As such, businesses that can produce masterful creatives, targeted ads, and personalized offers are in a position to capture a larger market share and command customer loyalty.
So, what opportunities and challenges do B2C companies face this year regarding digital advertising? What channels are these companies using, and how are they using capabilities such as automation, ad creation, and campaign optimization? Smartly.io and Insights conducted a study to find the answers. The following are a few key findings.
See more: 5 Advertising Predictions for 2023 That B2B Marketers Should Know
YouTube and Instagram Are the Most Popular Advertising Platforms
B2C companies spend a significant amount of their marketing budgets on digital advertising. And much of the advertising is done on social media. About 37% of respondents spend 26-49% of their marketing budgets on social media advertising. Another 9% spend about 50% of their budget on social media advertising.
With the new and changing popularity of platforms, which are the popular platforms for advertising this year? According to the study, Instagram (94%) and Facebook (92%) are the most preferred platforms. That said, most respondents are also advertising on other platforms, including Google Ads (87%), YouTube (83%), TikTok (68%), CTV (65%), and DOOH (63%). A few also buy ads on LinkedIn (25%) and Pinterest (23%).
The results from this study almost align with last year’s report, where 98% of respondents were buying ads on Facebook, and 94% were buying ads on Instagram. There is also a 25% increase in people buying ads on TikTok this year.
The key takeaway is that Facebook and Instagram remain the most popular platforms for advertising. Simultaneously, TikTok is becoming more popular as companies realize the platform’s popularity among younger consumers. Other platforms, like CTV and DOOH (Digital Out-of-Home), are also growing in popularity.
Companies Have Witnessed a Significant Shift in ROAS
Besides platforms, there has been a significant shift in the return on ad spend (ROAS) across the platforms compared to last year. Last year, about 46% said they got the best ROAS from Instagram. This year, 48% said they received the best ROAS from YouTube, while only 35% received the best ROAS from Instagram. This has led 79% of respondents to plan to increase their spending on YouTube advertising. Respondents are also investing more in platforms that have proven promising, such as Instagram (75%) and Google Ads (66%).
Which channels/platforms do companies plan to increase/decrease spending this year?
Source: Digital Advertising Trends in 2023
Digital Advertising Is Becoming More Automated and Streamlined
Creative and digital advertising teams should align and develop promising ad creatives and optimize campaigns across various channels. This has been challenging for consumer-facing companies for a long time, especially when the teams were separated by departments or companies since many companies rely on external agencies.
Collaboration and alignment can be achieved using technology, but companies should implement the necessary solutions and achieve buy-in from all stakeholders to be effective.
Visual assets are usually the most challenging to create. It involves multiple teams working in tandem. About 33% of respondents say they intend to increase using motion creatives this year. Achieving this requires new processes and tools that enable teams to collaborate more effectively.
Fortunately, compared to last year, there is a significant increase in the collaborative effectiveness between companies between the creative and advertising teams. In last year’s study, 55% said their creative and advertising teams collaborated effectively. This year, 77% said the same.
There has also been an increase in the number of respondents saying they rely on manual processes for ad creation. Last year, only 27% said their ad creation process didn’t involve manual processes. This year, 68% said the same.
About 74% also say they don’t contend with manual processes in the campaign delivery processes. However, 26% say this process involves time-consuming manual processes. This may be due to the possibility that some tasks may be challenging to automate. However, with the right platform, these companies can automatically generate insights from their campaigns. They can also automate a few processes related to campaign generation.
Based on these results, it is not surprising that most respondents use automation for campaign creation and optimization. In fact, 31% use automation for this purpose, and 55% automate at least part of their process but need to make improvements. Further, 35% use automation for digital ad creation, while 54% automate at least part of the process but need to make improvements.
Companies Will Use Technology To Overcome Advertising Challenges
The study found that most companies will invest heavily in digital advertising. This year, B2C companies should take steps to mitigate advertising and creative development inefficiencies if they intend to stay competitive. This means overcoming the challenges they struggled with last year. While some of these challenges can be overcome with technology and process changes, some are out of organizations’ control.
One of the biggest pain points of digital advertising facing companies this year is the economy (50%). Macroeconomic factors can significantly affect campaign effectiveness. Inflation has affected consumer spending, implying less ROAS for individual campaigns.
A few other pain points include increased competition (49%), maximizing efficiency and ROI (48%), producing enough creatives (48%), and measurement and attribution (47%). Respondents are split on the most pressing challenges regarding producing creative assets. However, there are a few noteworthy trends. For example, 38% say personalizing creatives and ensuring each variation adheres to each platform is challenging.
The biggest pain points for digital advertising this year
Source: Digital Advertising Trends in 2023
Automation can help speed up a few processes considerably. Personalization can be achieved by feeding demographic and firmographic data to a digital advertising platform.
A few challenges brands face in asset generation are directly related to data. Using data this way is often tricky because brands use multiple platforms to post and report on ads. They may not have a centralized location to monitor ad performance across various channels. Platformization may be crucial in this respect.
Ad testing can also considerably improve ROAS for specific campaigns while making them more cost-effective. While brands will likely continue to test their creatives only as much as they deem necessary, automation is important to their processes. This could help companies gain more effective means to maintain quality and consistency across campaigns.
Indeed, 60% of companies plan to invest more in digital advertising technology this year, and 44% plan to invest more in creative automation. About 49% also plan to spend more on programmatic advertising.
See more: The Year Ahead: Why Marketers Should Embrace Virtuous Advertising
The Year of Technology Enablement
It can be seen from the study that most B2C companies plan to invest in digital advertising tools and technologies this year to streamline creative development and campaign optimization. This will be crucial to bridging the gaps between teams and delivering effective creatives at scale. Further, many companies are struggling with a lack of collaboration and manual processes. The new investments will be essential to make the most of their advertising budgets.
Brands are also investing in advertising across several social media platforms. This type of strategy cannot be conducted through disparate technologies. By utilizing a digital advertising platform, companies can create and deliver ads more effectively, align their teams, gain better attribution, and obtain clearer insights about their customers.
What opportunities and challenges do you expect to see in digital advertising this year? Share with us on Facebook, Twitter, and LinkedIn.
Image source: Shutterstock
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