DAN Interviews

Opinion|e4m: Dentsu Webchutney's Harsh Shah speaks on the steady rise in the cost of Facebook advertising

27 Dec 2019

Is Facebook advertising cost making marketers rethink strategies?

While some experts say that rising costs can prove detrimental for Facebook, others believe that the platform has been evolving into a part of brands' digital and social hygiene


In today’s marketing scenario Facebook has become one of the indispensable mediums for marketers, a major reason for this being the immense reach that the platform offers. This enables brands to effectively target customers based on demography and purchasing power.


With such impact at its disposal, Facebook commands a premium price when it comes to advertising on this platform. While it merits the price it demands, the worry for marketers is the steady rise in the cost of advertising.


A recent study has revealed that the cost of advertising on this world’s largest social media platform is witnessing a steady rise YoY. This has become a cause of concern for marketers and has already made the platform out of bounds for smaller brands.


In our quest to understand the implications of this rise in advertising cost on the platform, we spoke to some experts to get their perspectives. Here’s what they had to say:


Anita Nayyar, CEO, India and South East Asia, Havas Media Group, does agree that increase in pricing could become a deterrent for advertisers. “I think increase in Facebook pricing in spite of its delivery is getting expensive, especially when the market is slow and advertising being seen as an expenditure is facing lower spends. In such a situation when brands look to digital for getting their message to the audiences efficiently, increase in pricing becomes a deterrent.”


According to Harish Bijoor, Brand Expert and Founder Harish Bijoor Consults Inc, this steady increase in price may force brands to diversify their ad spends and turn elsewhere. “Facebook is an expensive medium. As social media vehicles splinter audiences, a bouquet of other options open up to brands. Yes, you might have to use the multiplier effect of other digital vehicles, but you get a better bang for the buck when you do.”


Some brand experts already see a shift taking place when it comes to advertising on social platforms like Facebook. Although Facebook might be the most influential platform, but rising costs could eventually prove detrimental.


“While Facebook is getting expensive, it's also getting ineffective. It takes a lot more resources to create an impact and engage with consumers. Also with new media like TikTok and Share Chat and Snapchat taking over the Gen Zs, spends are spreading across more than one social platforms,” says Saisangeeta Israni, GM Marketing, Spykar Lifestyles Pvt Ltd.

But there are others who believe that brands don’t mind spending as long as they get the bang for the buck.


According to Samyukta Ganesh Iyer, Head of Marketing, Baskin Robbins, “Facebook, Instagram, YouTube are all part of brand hygiene. Has there been a hike in prices on FB since 2018? Absolutely. We have especially seen a surge during festivals. Have they changed the ratio between ad spends and organic posts? Yes. However, despite these fluxes, in my opinion brands agnostic of industry or TG haven't stopped advertising on the platform. Facebook still has great reach, tells your story and connects well with your audience with your narrative. Sure, it's not a disruptor anymore like say a Tik Tok. But it has evolved into becoming a part of the brand's digital and social hygiene.”


“In the era of precision marketing, costs depend on which audience segments we go after. Valuable audience segments are much sought after and demand does create inflationary pressures. This is where skill and understanding of the platform come into play. Every platform’s inclusion in media mix is dependent on its efficiency and efficacy to deliver the objective. If Facebook delivers on these metrics it will continue to be included and if advertisers see the platform out pricing itself, rationalisation will happen,” said Jyoti Kumar Bansal, CEO, PHD India.


There is no doubt that Facebook is a necessity for any brand looking to grow its business followed by search and display. But the growing and steady rising costs of advertising on the platform is making the advertisers to rethink on their digital marketing strategies. Some marketers think that the bigger worry is— while Facebook is betting on quality, can the company continue to deliver?


“They are reaching out to other ad platforms, diversifying their ad spends to reach new and incremental audiences and inventory, which provide similar benefits what Facebook advertising used to does for us – reaching out to highly targeted logged-in audience and ROI driven measurable campaigns The underlying fact is, that if the costs continue to rise, 47% of marketers think they could be priced out of Facebook advertising”, stated Gauri Awasthi, Head of Digital Marketing, Fabindia.


Speaking about how the rising ad cost on Facebook will affect ad spends in the long run, Harsh Shah - Senior Vice President- Account Management, Dentsu Webchutney, said: “The most affected are the smaller businesses who were using Facebook as their primary reach medium. Now, for the same share of the audience pie, they are against other brands who can stretch their pockets. While the brands and businesses know Facebook still remains as one of the most effective platforms and most accurate in terms of audience segments, they are looking at spending more and reaching a limited audience as opposed to earlier. There is also rise of other platforms and avenues like content marketing, which seem like a cheaper option relatively.


According Prajakta Deshpande, Senior Manager, Digital Marketing, Raymond Ltd , “Since Facebook declared to be an ad platform, they never claimed that they would be cheaper than any other. Brands / advertisers found great value in advertising with Facebook and hence the prices or their price patterns never mattered. The added advantage was the database and the layers of targeting possible. The information that Facebook was readily sharing with the advertiser was way more important and hence ad costs did not pain as much.

She also stated that since Facebook has changed their policies regarding data sharing, it is but obvious that advertisers are looking at other options available. And hence advertising via Facebook is no longer as cost effective, in comparison with these other options.


“But here is the other side too - there are advertisers who still haven't changed their spends on Facebook. The only thing that has changed is their strategy to make the best that the platform still offers. That's a smart way to adopt. I think with changing times, inflation ad costs overall have increased and no social ad platform is / can be an exception. Make the best choice for your business requirement and this should be ok,” she added.