New data highlights the gradual decline of traditional performance-only marketing and points instead to a rising preference for effective brand-building within the digital realm. A new report from Nest Commerce highlighted the importance and usability of 'full funnel performance' in creating brand awareness and securing customers across several increasingly video-focused platforms such as Google, TikTok, and Meta.
The Readout, a quarterly trends report utilising global advertising data from Nest Commerce's expansive portfolio, inclusive of over 40 e-commerce brands and greater than 100 million in media spend, substantiated this industry shift.
The report’s findings showed that brands which utilised dual-faceted marketing strategies combining awareness or traffic campaigns with performance campaigns experienced a remarkable 31% Year on Year (YoY) Return on Ad Spend (ROAS) boost in Q1 2024. In contrast, those who exclusively focused on performance reported a 32% YoY ROAS decrease.
Interestingly, while Meta's overall performance has escalated YoY, the trend varies heavily based on brand utilisation of upper-funnel elements. Remarkably, 9% of Meta spend is presently being directed towards upper-funnel investment, specifically in awareness and traffic activity. This represents an impressive YoY increase of 356% and 30%, respectively, echoing the growing trend of brands prioritising long-term growth strategies.
The perspective certainly seems to validate the significance of a full-funnel performance strategy in emerging victorious in the digital sphere. It emphasises the need for a long-term investment strategy largely focusing on brand awareness to usher in future demand among new customers while simultaneously driving immediate sales. Performance-only strategies that have been preeminent for the past decade and a half now appear to be increasingly dormant.
The report underlines a key driver for brand awareness and identification in this new climate: video-first platforms, namely Instagram Reel and TikTok. Among these platforms, TikTok proved particularly effective in Q1 2024, recording a 37% higher Conversion Rate (CVR) quarter-on-quarter (QoQ), catering well to premium and younger demographics, and proving substantially powerful as a platform for discovery.
In a similar vein, Instagram Reels has significantly grown in importance as younger audiences spend more time on the platform and Meta invests more heavily. This has resulted in an astonishing 217% YoY increase in spending, marking the platform’s transition to mainstream status.
While advertisers currently enjoy a 6% reduction in Cost Per Thousand Impressions (CPM) on Meta compared to 2023, the UK's economic recovery strides imply a potential increase. Therefore, it's essential for brands to cement their market presence ahead of a costlier and notably busier peak season as summer approaches.
Will Ashton, CEO of Nest, commented on this pivotal transition, “There are some big opportunities out there for more progressive retailers, who take a community-first, full-funnel approach. Many brands initially reacted to the slowdown by cutting brand investment. These brands will be paying sorely for this mistake now… building a brand right now is crucial, and this is a good time to invest while CPMs on Meta and TikTok remain low.”
Ashton added, “We are hearing feedback from the market that Meta is struggling, but this is not reflected in the data of this report… we are in fact, seeing a divergence between brands with the right and wrong approach to paid social, with performance-heavy brands suffering unsustainable acquisition costs. If you had a poor Q4, you can still fix things for this year. But you need to act now, waiting until late Q3 is too late.”