Nest Commerce’s latest Readout report reveals that successful performance marketing strategies are shifting to become social-first as Search becomes less efficient amidst soaring cost-per-click.
The report uses global ad data from 40+ ecommerce brands, managing over £100 million of media spend annually.
Against a backdrop of rising consumer confidence, the report reveals there has been a significant 57% year-over-year increase in average ad spend on Meta platforms. This is even 5% up from peak season, Q4 2023. Overall Meta CPMs are rising by 6% year-over-year, due to increased competition within the platform with advertiser activity hotting up in response to a more positive outlook.
Nest Commerce’s research spotlights a strategic shift in channel mix towards paid social to drive growth across all stages of the customer journey. The growing use of upper-funnel marketing strategies on social platforms is evidenced by a significant 4.2x year-over-year increase in awareness campaigns on Meta.
This shift is driven by factors such as rising customer acquisition costs and a decline in brand search visibility, making it crucial for brands to target new audiences and build brand preference on paid social. Brands just focusing on bottom of the funnel are predicted to fall further behind in this new landscape.
Rising costs for Search and growing effectiveness of YouTube
While Search remains an important channel, the report finds that it’s becoming more expensive. Cost-per-click has risen by 49% year-over-year, putting pressure on lower-funnel strategies reliant on this platform. However, the report suggests that investing in full funnel performance across Meta combined with search can help mitigate these rising costs.
The report acknowledges the continued effectiveness of Performance Max campaigns on Google, with a 72% year-over-year increase in return on ad spend. Nest Commerce recommends using PMax alongside other channels and excluding brand terms from these campaigns for optimal results.
Within the Google ecosystem, YouTube offers a big opportunity at the top of the funnel. CPMs are 20% lower than Meta awareness ads, making it an effective channel as part of a video-first full-funnel strategy.
Short-form video content crucial for driving sales
The report emphasises the importance of data-driven creative optimisation for achieving success in paid social. Conversion rates for Reels conversion objective ads are 150% higher than those for standard campaigns, underlining the effectiveness of captivating short-form video content in driving sales.
Overall ad spend on Reels has seen a dramatic 2.4x year-over-year increase. This growth is accompanied by improvements in engagement and a 23% year-over-year decrease in traffic costs.
Nest Commerce’s research also highlights the growing potential of TikTok for driving sales. Conversion objective ad CVR on TikTok has seen a significant 51% increase for two consecutive quarters, suggesting a promising avenue for brands looking to leverage this platform for ecommerce success.
According to Will Ashton, Nest Commerce CEO: “Online retail conditions are much more favourable than this time last year. However brands looking to scale will find that performance works very differently than in 2021. As our report highlights, winning online marketing today means a full-funnel, social-first approach that requires continuously rotating creative. This maximises efficiency and fuels growth.”
He continues: “The truth is many brands haven’t adapted, clinging to outdated strategies and that are failing to deliver. Retailer confidence needs to catch up to consumer confidence – the time for excuses is over. Q4 is fast approaching, and those who haven’t adapted risk falling behind.”
