Pandemic, protests disrupt Q2 ad spending on social media, study says

Brief:

The coronavirus pandemic and protests against racism led to a tumultuous period for social media advertising with various metrics seesawing in Q2. The average cost-per-click (CPC) among industries and social media platforms plunged 38% last quarter from a year earlier, per a study that social media marketing firm Socialbakers shared with Mobile Marketer.
While metrics like CPC showed weakness, ad spending on social media rebounded from the end of March as many cities and states began to lift lockdowns. Ad spend in North America surged 92% from the end of Q1 until mid-June, but fell 32% in the final two weeks of the quarter as many advertisers participated in a boycott of Facebook to protest its policies on hate speech. The Blackout Tuesday protest on June 2 also led to a brief pullback in ad spending as marketers suspended social media activity, per Socialbakers.
Facebook's News Feed experienced a 2.6% decline in ad spending in Q2 from a year earlier, while Instagram's feed fell 4.2%. Facebook's News Feed saw its share of total social media ad spend slip to 58% by the end of Q2 from 64% in January 2019, while Instagram's share for its feed fell to 19% in May from a peak of 21% in July 2019. Facebook News Feed captured an average of 60% of ad spend in Q2, while Instagram's feed and Instagram Stories received a combined 28%, Socialbakers found.

Insight:

The second quarter saw several cross-currents for social media advertising, with several metrics indicating weaker demand even as ad spending gradually rebounded as Q2 progressed. CPC slid to a low of $0.075 in April before rising 43% to $0.107 by the end of Q2 but was 24% less than a year earlier. Slightly fewer social media users clicked on ads in Q2, with click-through rates (CTRs) slipping 2.3% from a year earlier to end the quarter at about 1%, per Socialbakers.

Facebook's in-stream video experienced the biggest improvement in metrics with CPC rising 21% and cost per mille (CPM) up 19% in Q2 from a year earlier. Ads on Facebook's News Feed had the highest CTRs at 1.9%, followed by Facebook video feeds at 0.8%, Facebook in-stream video at 0.6%, Instagram feed at 0.3% and Instagram Stories at 0.2%. CPC for ads on Facebook's News Feed and Instagram's feed both fell 37% from a year earlier. The CPM for Facebook's News Feed and Instagram Stories both fell 28% from a year earlier.

Socialbakers released its Q2 report as Facebook prepares to announce Q2 results on July 30, providing more insight into how the pandemic and protests affected ad revenue. The "Stop Hate for Profit" boycott of Facebook backed by several civil rights groups officially began this month, leading advertisers such as Adidas, Colgate-Palmolive and Verizon to join the movement. However, the announcement of the boycott in mid-June had a chilling effect on Facebook advertising late in the quarter, Socialbakers' study indicates.

Twitter and Snap already have reported Q2 results that indicate ad spending either slowed or declined as the pandemic weighed on the economy, even as social media usage surged. Twitter last week said advertising revenue dropped 23% from a year earlier, while total revenue fell 19%. Its user base expanded by 12% from the prior quarter to hit 186 million. Snap, which is a younger company than Twitter, saw its yearly revenue growth slow to 17% in Q2 from 44% in Q1. The user base for its Snapchat photo-messaging app expanded by 4% from the prior quarter to reach 238 million.