# An URGENT Message To All Facebook Advertisers

Channel: Ben Heath
Video: https://www.youtube.com/watch?v=ARoIcV_B8kM
Duration: 15 min
Language: English
Words: 3194
Transcript page: https://viewrankai.com/tools/youtube-transcript/ARoIcV_B8kM

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[0:00] so we're either in an economic session right now or it looks like we very much will be in the near future and i'm no economist but i am a digital advertising expert and i want to talk about what's likely to happen to facebook and instagram advertising and the businesses that rely on those ad platforms to generate customers to reactivate new customers and all that sort of stuff because digital advertising has been around long enough now where it's been through previous economic difficulties and we we can see what happens there's a pattern to the things that are likely to take place and of course you can go

[0:29] further and study other forms of advertising and see that the trends very very much continue and i think this is a really important discussion to have for businesses many of which were watching this and be in my audience that use facebook and instagram ads a lot and their business is reliant to some extent on those ad platforms so there's sort of two sides to this there's the what are the users the facebook and instagram users going to do how is their behavior going to change and then there's also what are advertisers going to do how are their behaviors going to change because changing behaviors of both categories

[1:00] both camps there is going to impact your results and what you see on the platform so let's start with the users first how impacted are your campaigns going to be by an economic downturn are you going to see fewer sales are you going to see lower return on ad spend numbers i think it massively depends on what you sell how much of a luxury or potentially an unnecessary item is your product you could apply the same thing to services or is it something people are going to buy no matter what because it's really important to them or really important to the running of their business or

[1:32] something like that those that are on the more sort of luxury not seen as necessary end of the spectrum are probably going to be hit harder it's natural reaction there's going to be lots of information about this on the news people are going to be hearing about economic issues they're going to think where can i save where can i cut back does your product or service fall into that category is that something where people could go uh you know what let's not buy that or let's cancel that or let's not use that service for for six months just see where the delay of the land is going to be if people get made

[2:00] redundant or lose their jobs and things like that is what you offer what you're advertising on the platform something that could be cut fairly early in which case this is likely to hurt you more from a user standpoint if you're selling things that are staple as a set of businesses that people are going to buy anyway that they need perhaps one of the big selling points of your product or service is its cost that you're less competitive you're less expensive than your competitors for example well then you're going to be affected much less by any economic issue so you really have to factor that in when thinking about what a user's going

[2:35] to do it is likely that across the board if we were to average it out there is going to be less purchases your sort of click to conversion ratio is going to go down if people don't feel like they've got as much disposable income and if there are layoffs and things like that that's likely to happen so that's the first thing to be aware of from the user standpoint even if someone isn't directly economically impacted like they've still got their job they still have the same level of income if they're hearing about it on their news and someone brings up rumors of companies potentially laying people off

[3:04] people do change their behaviors just because of that so something to certainly be aware of obviously it's not going to last forever but just keep that in mind and think about that in relation to what you sell then we have to look at the business side of things what are other advertisers going to do in response to a recession now partly because user activity will change you know potential customer activity will change they will scale back their budgets but also just because that's what people do again business owners marketing departments are going to hear about this stuff and they're going to be worried and they're going to think how

[3:36] is it going to affect us and if you're a business looking to cut costs one of the easiest places one of the first places to do it is your advertising budgets that's one of the first things to go it's far easier to do that than laying off a whole load of stuff if you want to cut advertising budgets and just wait out a 6 12 18 month period and bring them back up you can quite quickly and easily do it so it's one of the first places for businesses to go often as well particularly larger businesses if they do cut their advertising budgets they might not see the impact of it

[4:04] immediately particularly if they're doing more sort of branding advertising as a small business owner you might see a huge impact if you cut your advertising budget in half tomorrow for example that might directly lead to a massive result and an immediate loss of new customers coming in you might see a proportional loss in customers for example whereas larger businesses that tends to not be the case at least not initially it can be a big deal for them over the long run but not initially so budgets are going to be scaled back now of course because facebook is advertising operates within an auction system so the price is set by

[4:36] demand and supply when the demand for advertising space which is people's budgets when that gets brought down the cost of advertising on the platform should come down so it's very likely that we will see a reduction in the cost of facebook advertising across the board again you're going to see it probably more in certain locations that are hit harder economically than others and all that sort of stuff but across the board we're likely to see a reduction in the term we usually use to refer to how expensive facebook and instagram advertising is is cpms cost per thousand impressions is like a good general metric to work out how expensive it is

[5:10] to advertise because of course things like cost per conversion cost per click etc those are so determined by the quality of your campaign and the offer and what it is you're selling and all that but whereas cpms cost per thousand impressions it's a good benchmark for how expensive it is in general and we're likely to see a reduction in cpx and we've seen this before we all know what happened sort of the first half of 2020 lots of businesses were forced local businesses anything in person was forced to close why are you close a lot of other businesses scaled back their budgets understandably so or even stopped

[5:43] advertising all together because there was so much uncertainty around the future and what are people still going to buy our stuff and all that sort of thing and that did lead to significant reductions in the cost of advertising on facebook and instagram we'll talk about the sort of subsequent effect of that um in a minute but we have seen cpm's decrease so definitely something to be aware of that across the board the cost of facebook instagram advertising is almost certainly going to get cheaper more in certain locations as i said but that is something to watch out for now in terms of when that happens i think

[6:14] this is a really important point it might not be felt immediately so whilst companies might scale budgets back some will stop advertising altogether some will probably go bust and therefore obviously won't be advertising that reduces the demand for ad real estate reduces the price a lot of companies if it's a particularly bad economic recession will be firing a lot of people laying them off making them redundant etc and what a lot of people do nowadays and you see this all the time i'm sure you know people that do this if they get made redundant the first six months that redundancy they might not try and look

[6:46] for another job they might instead try and set up their own business and this happens all the time now and when people do set up their own business they start with things that are easy to set up there's a lot of drop shipping for example a lot of print on demand business to set up a lot of e-commerce businesses online things like that and where do they put say you know they've got a bit of savings they want to invest in their new little business where does that go well it's very likely to end up in facebook and instagram advertising so for that first three six months to be a lot of people

[7:16] likely doing that trying to find other ways to generate extra income putting that money in now i know you know that a lot of those people are not going to succeed they don't have the skills but if they spend a couple thousand in facebook instagram ads and there's enough people doing that that might keep the price up high for a while so let's say we start seeing it passed all over the news that were in a recession and companies start cutting their budgets really quickly don't expect the price to come down immediately that might be a sort of six month delay in part well come larger companies take a while to

[7:48] work out budgets and things like that so things take a little bit time to come through but also because if people are being made redundant are being led then a lot of those people will start new businesses they'll try that for a while they'll put money into the into the platform that'll keep the cost up high it's after that that we're likely to see the cost come down so just keep an eye on that there might be a bit of a delay factor because of the sort of dynamics that we're likely to see now once cpm's do actually come down which is almost certainly going to happen we saw this as

[8:17] i said in the first half of 2020 certain advertisers will undoubtedly see their best results ever that are sort of completely unreplicable in other scenarios now we saw this again i i speak to advertisers all the time that from say may 2020 or april 2020 to june or july where people were stuck at home couldn't go anywhere spending lots of time on on facebook and instagram but also the cost of advertising was much cheaper because of the fact that we talked about big businesses cut their budgets a lot of businesses aren't advertising they got just incredible results cpms came right down and they were getting ros numbers that they can't

[8:52] even get close to uh anymore no matter how good the campaigns are it's just not replicable so some advertisers will certainly see that those that aren't as badly affected themselves but the overall reduction in cost there may be a time period where they see fantastic results and that's something to be really aware of because it may be that you want if you do see that if you can see that in your data you want to scale and take advantage of what for you might be a fantastic time to advertise it's not going to be a negative for everyone if you're on the more positive side of things and you

[9:23] come out of this well you might really want to take advantage of that so don't always go into this and think about this from a really pessimistic mindset it might be the best time for your business and customer acquisition efforts in particular if this indeed does happen is as bad as most people think it's going to be okay so what can you do to prepare now as a facebook instagram advertiser how should you get ready well firstly keep a very close eye on your numbers it tends to be these things the big changes on the ad platforms do follow the news cycle so once we start seeing recession

[9:53] and all that sort of stuff plus all over the news which we've seen a little bit of but not massively i think it's going to be more significant then we'll likely start seeing these things happen so keep a close eye on your numbers if all of a sudden your um click to purchase ratio that's one of the things that's likely to decrease because people become a bit more um savvy about things they shop around more try and compare prices of different things so they might just be clicking through on your ads to your landing page to check them out but just might not purchase because they might check out other

[10:20] options and things like that they do more research if that decreases your click to purchase ratio decreases which is going to be felt in your cost per conversion will go up and your return on ad spend will go down you may well need to scale back your budget you might need to pause your campaigns for a while so just keep a very close eye on that that if it starts to happen all of a sudden you need to be prepared as a business owner strongly recommend that you get some you know rainy day funds set up if you plan for worst case scenario it may well never happen and for a lot of

[10:48] businesses it won't but if you're just prepared okay well we might only be able to acquire you know half or 70 of the customers that we currently do are we prepared for that can we cope with that put some systems in place and get some things ready to make that viable you may also want to look to change up how you advertise so if you know that your target audience is now more concerned about the cost saving elements of the things that they buy or perhaps you can focus on that so if there are a number of benefits associated with buying your product or service and right now you mainly focus

[11:20] on the fact that it's got this extra feature or it's better than alternative options something like that which is absolutely fine perhaps you want to test using both in copy and in your creative more cost saving focus elements so this is 30 um cheaper than the the alternatives on average when customers switch to us they save x um get your 40 discount off now maybe that could just come to the fore and that should be something that you should test if it's more important to your users it's going to help you get better results if you make it a main focus of your ad copy and of your ad creative

[11:52] another thing advertisers should be thinking about many of you will be business owners entrepreneurs etc is that there might be some cheap talent available if there are redundancies and layoffs and things like that now we saw this again in 2020 where all of a sudden there were lots of media buyers lots of facebook advertising experts instagram advertising experts but also on the creative side of things graphic designers etc that no longer had employment they lost the contract if they're working for themselves so there might be some cheaper talent available to help you get better results on the creative side of things on the copywriting side of things just running

[12:27] your ads for you it's just worth keeping in mind that if that's going on these people might that might have been really expensive to hire or reach before might now be available and if you're still going to be advertising which i imagine the vast majority will and you're still going to be spending good budgets then that might be something that can really help you out you go okay well that quality graphic design or video editor that was probably out of our budget range before well actually because of market conditions etc we they might be happy to work for us for what we can afford to pay now and

[12:59] that sort of thing so so keep that in mind that there might be some real high quality talent out there that's now cheaper than it was before and you can grab that and use that and that's you know certainly something that business owners can take advantage of and make a positive out of something that might be a bit negative and i've already mentioned it but if you do see lower cpms and you are still seeing good uh return on ad spend numbers good cost per conversion numbers it's absolutely fine to scale and take advantage of that some advertisers will see their best ever results during tough economic times not

[13:30] just because they're advertising something that that really suits uh poor economic times but also because a lot of the other advertisers are scared off there's less competition the price comes down but there's still going to be people using facebook instagram etc um so certainly something to keep in mind and potentially take advantage of it again that's why it's so important that you really closely monitor your numbers and in terms of getting prepared now it's really important that you keep an eye on the long term when it comes to your facebook instagram advertising that you have campaigns in place and strategies that you're using that take care of the

[14:04] long term that build a relationship between you and your prospects that's going to make them less cost sensitive if they feel like they know like and trust you and they care about your business and want to buy from you because you've put in work i show you my favorite long-term facebook advertising strategy in this video here strongly recommend you go and check it out it walks you through the entire process it's actually quite an inexpensive way to advertise and as i said can help build a relationship between you and your prospects which can make them less cost sensitive go and check it out

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