As in marketing and advertising agency, you must have seen, the cost of social media advertising has been increased too much in the last two years (when COVID started), and the ROI constantly decreasing, ever wonder why?
In this article, we are going to discuss Facebook & Instagram advertising. All this started in the back early 2020 when COVID was spreading. But COVID is not only the reason for increasing costs. It’s all started long before.
My First Social Media Advertising Experience:
Let me share my experience with advertising. Back in 2016, when I was in college, I used to run a page on Instagram. I was writing some motivational quotes daily, and that time the Instagram reach was good. My page was growing in a better way but I wanted to make it more popular, so I decided to boost my post to get more engagement. And the difference in ROI is in comparison with today’s advertising is too big. That time the minimum budget was 40 INR daily so I started with the minimum amount. In just 40 INR I got 200+ followers, 2000+ engagement and 22,000+ reach. The result was so good. But then as traffic increased, the cost of advertising also increased.
How things started getting worse:
A few years back, Facebook was more popular than Instagram in India. People started seeing Facebook as a potential platform for business. Social media advertising was cheap and effective than others. With time, the number of advertisers also increased. And here things started changing for Facebook (in India). Facebook users were started getting more ads than organic posts. The reach of organic posts was decreasing day by day. User experience was getting worse and people started shifting to Instagram because Instagram is more easy and secure and the experience was better than Facebook.
Why cost increased exponentially in the last two years?
When COVID started, it directly attack all offline businesses. A lot of businesses got shut down, then people start moving into online business. And this time, Instagram was a better platform than Facebook. People start advertising on Instagram with a good budget but this time company care about user experience. So instead of showing your result multiple times, they increased the cost of reach. This way the user will not see too much advertising like Facebook and that increased the cost of advertising.
Here is why your ROI is decreased:
If we consider, 2 years back 100 advertisers were running ads with a daily budget of 1000 INR and the cost per lead was 10 INR. So every advertiser generates 100 leads on daily basis. (taxes are not included)
Here is the interesting part:
If we consider, the rate of lead generation is 1% (minimum) in terms of reach, which means in every 100 reach one lead is generated. So 100 advertisers were getting 100 leads every day means all ads were presented 10,00,000 times in a day to users.
Now Instagram doesn’t want to increase this number because of user experience. And that’s the real reason for increasing advertising costs. The advertisers keep increasing but Instagram is not increasing the number of reaches. That’s why buying one reach is getting costly day by day.
