Facebook Advertising Trends Report: Competition rises in Q1 – but there is a silver lining in engagement

Q1 was challenging for ecommerce businesses advertising on Facebook, with competition continuing rise to throughout the quarter rise despite already record highs in Q4 – where it usually peaks before declining in the new year.

This did not happen this quarter, and competition was up YoY in all regions, even increasing QoQ in the UK and US. This was despite the removal of Covid restrictions on both sides of the Atlantic, suggesting a strong resilience in online shopping habits, with CPMs no longer closely following Covid trends.

There was some relief as increased competition was offset markedly by higher engagement, with CTR rising both YoY and QoQ. This is the metric marketers should be focused on improving to reduce CPC, as we expect CPMs to remain high into Q2.

In this quarter’s Facebook Advertising Trends Report, we identify the key trends that ecommerce advertisers encountered in Q1 and benchmark critical Facebook performance metrics for ecommerce brands across global markets.

Dynamic ads resilient to privacy initiatives

Dynamic product ads were driving much of the rise in engagement – and CTR increased both YoY and QoQ in this channel. Discovery Commerce will be increasingly important to Meta in a landscape that is becoming more privacy-conscious.

Lower CPMs for demographic and interest-based targeting

Demographic and interest-based targeting provided lower competition with significantly lower CPM compared to lookalike targeting.

Q1 USPs: Strong performance for ‘Social proof’ ads

‘Social proof’ ads performed well with higher than average CTR. In a crowded marketplace, consumers consistently responded to these adverts, lending authority to customer reviews.

Nest Studio creative reduced traffic costs

In a quarter of rising CPMs, Nest Studio creative achieved much lower traffic costs with a 41% lower CPM and 12% higher CTR which has resulted in a 52% lower CPC. This shows that good creative can help turn the tide against rising CPMs.

Looking to the rest of 2022

Despite a challenging first quarter due to rising competition across platforms, the consistent rise in CTR shows that there is much that ecommerce brands can do to perform well in this environment. This led to decreases in CPC QoQ in most regions.

With some uncertainty in the economy expected this year, advertisers need to ensure they have a best-in-class set up now to be prepared.

Find out more in our report:

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