Economic uncertainty has been impossible to ignore recently. If you find yourself unsure of whether or not to invest in ads, you may find some solutions in the memo we just released to our current partners.
To Primer Friends and Partners:
As marketers, we find ourselves again in uncertain times. The recent tumult of the financial markets, increased inflation, and a long road ahead to economic recovery have many of us reconsidering our marketing strategies.
Sequoia Capital called this a “Crucible Moment” in their recent “Adapting to Endure” presentation. “We must recognize the changing environment and shift our mindset to respond with intention rather than regret.”
At Primer, we have a close eye on these macroeconomic impacts across our entire portfolio of partners – spending $10s of millions across Facebook, TikTok, Snap, Google, Pinterest, YouTube, and more.
We have seen some partners adjust their budgets and others double down. If you’re not sure which changes to implement, you’re not alone. As your partner in growth, we would like to share what we’re seeing in the media marketplace today.
Here’s some good news: it’s encouraging.
Reduced competition is driving low CPAs
The brands that have pulled back are leaving opportunities for those that choose to invest in ads and marketing right now.
The first five months of 2022 were more expensive in paid social than 2021, but that trend has recently reversed.
Blended CPAs across our partners have decreased 45% since January. For the month of July, CPAs are 27% lower than in 2021.
CPAs are the lowest of the year
CPMs are also down — 25% lower since January 2022 and 21% down in July, compared to July 2021.
CPMs lower year over year
This is a great time to test and learn
These lower costs can make up for any drop in conversion you may be seeing as a result of reduced demand. With lower costs, learnings are more affordable, and you can emerge from this economic downturn with winning ads that are ready to scale when you are.
Our advice is to consistently run tests to find new winners that can be easily scaled when demand returns. You’ll be there for an incredible intersection of cheap CPAs and a spike in demand (similar to the surge in 2020).
Stay agile. Stay connected. You will succeed.
Similar to our advice at the very beginning of the pandemic, we still believe these keys to success will guide you through these times.
- Have empathy for your customers. Show them you care and understand their needs by speaking directly to their most important questions about your product.
- CPAs are the lowest they’ve been since early pandemic days. Utilize opportunity.
- Demand for home delivery and digital experiences has held strong. Acquire a huge generation of lifelong customers who remember you for making their lives easier during tumultuous times.
- UGC is what users are responding to these days. Test native-style ads featuring “real people” showing how they can benefit from your product.
- Stay informed. Stay agile.
We’re here to help
We believe that thoughtful testing, rich ad creative, and intentional investments will lead to growth that will endure these ever-changing times. It worked for our partners through the pandemic, and we’re here to help you through whatever comes our way next.
Whether that’s through full-service, hands-on management of your paid media or by providing high-quality ad creative on-demand, our team is ready to help you find ways to test more and win more.