Advertisers modelling GFC behaviour as Facebook ad costs tank and Google Ads rise

New Zealand advertisers and their customers are behaving in the same way they did during the Global Financial Crisis, according to Insight Online.

The digital marketing agency says companies are opting to sideline brand advertising in favour of performance advertising spend.

"Were seeing an overall decrease in Facebook spend, but not because local advertisers are participating in a Black Lives Matter boycott of the platform," says Kim Voon, CEO at Insight Online.

"Overall, we're seeing a retreat from broad awareness type media and a huge focus on performance and direct marketing, such as search, sales emails, point-of-purchase marketing and discounts," she says.

"Marketers are looking to prove return on investment by spending on what is measurable and targeting customers who are already searching and already in the click and buy cycle."

Voon says one reason why Facebook is struggling locally is because it is a medium that works best in the consideration and awareness stages of the buying decision process. It is push advertising that is strong on brand awareness.

"But in the current market of tight budgets and cost cutting, marketing, rightly or wrongly, needs to show returns. Every dollar counts. Performance media is designed to reach existing demand, people that are ready to buy," she says.

The result is that a lot of advertising channels are cheaper than ever.

"YouTube is ridiculously cheap in New Zealand. With a $500 budget, you can get 5,000 views of your advertisement because our local advertising penetration is very low compared to consumer penetration. Kiwis are on YouTube, but our advertisers are not, says Voon.

"While YouTube is a broad-based media, you can be a lot more targeted. It is online, trackable and has very high consumer penetration."

Google Ads, on the other hand, is more demand and performance-driven and as a result is currently at least 10 per cent more expensive in terms of clicks.

"That's unlikely to change in the next six months. If anything, Google will get more competitive," Voon says.

"The irony is that marketers have tightened budgets but they're competing at higher prices in more competitive spaces."

Voon offers the following advice to marketers: 

1. Refine your targeting to your most valuable customers.

Invest media in really good creative, and then push out aggressively on YouTube and Facebook (both are super cheap) and other broad media platforms like mainstream media -- for example online magazines -- for the next six months because your competition just isn't there.

2. Be a sniper

Continue to invest in your most valuable target market by tracking, analysing and adapting your marketing until you get it right. Make every dollar count.

3. Zig when others zag

We know that competition will be focussed on performance marketing right now, and that brand awareness isn't cool, so do the opposite. Continue to build brand equity sustainably because it does produce results. If you want to win the long game, branding is how you do it.