Facebook Advertising Trends Report: 2021 off to a tough start but with opportunity for the right strategies

To kick off 2021, ecommerce advertisers weathered a tough quarter, with digital and consumer trends from 2020 continuing into the new year.

With increased competition on Facebook and CPMs continuing to climb to record highs as the quarter progressed, it was challenging for ecommerce businesses to hit their desired results.

However, the insights from our portfolio of ecommerce clients demonstrate that, despite a crowded auction, there were opportunities for advertisers that responded quickly to trends throughout the quarter. 

In this analysis we benchmark critical Facebook performance metrics for retailers, from CPMs and CTRs, through to CPC across different global markets. We also identify the key trends that ecommerce advertisers encountered in the auction.

Facebook Platform Metrics

Many of the trends around platform metrics from Q4 continued into Q1 2021 as physical shops in many parts of the world remained shut. 

Increased competition in all markets caused CPMs to rise 50% YoY with the QoQ CPM increases in UK and ROW markets outsizing the CPM rises seen in Q4 2020. However, the US saw a decrease in CPM – where physical retail has remained open – indicated that there’s an end in sight to rising advertising costs when physical retail reopens elsewhere.

Meanwhile, 15% YoY drops to clickthrough rates in Q1 drove up CPC in all markets, largely driven by advertisers’ changing approach to Facebook throughout the pandemic and a highly saturated marketplace.

Overall, the UK was the most competitive market, with a 71% increase to CPC YoY and a 3% increase QoQ, while all other markets saw CPC reduce QoQ.

More competition is driving up CPMs

Competition on Facebook is at an all-time high as advertisers focus on driving revenue through online channels while physical stores in many countries remain closed.

Product catalog-based ads are increasingly expensive

Product catalog-based ads have surged in popularity over the past year as advertisers try to drive direct response sales from Facebook.

Stories spend has increased significantly

More advertisers are taking advantage of Facebook Stories placements, which has driven spend on Story-based formats up 328% YoY.

Catalog-based activity drives most efficient performance

Catalog-based ads drove 46% higher CTR and 43% lower CPC than conversion campaigns that use standard ad formats.

Looking to the rest of 2021, conditions on Facebook are likely change as physical retail shops open and Apple releases its iOS 14.5 update. 

However, the strategies, tools and creative that drove efficient performance in Q1 should all have an important place in advertisers’ approach to the rest of 2021.

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