Social media has found itself at an interesting point as a channel. What was once a tactical, bottom-of-funnel medium has started to become expensive.
Driven by high demand and the amount of users on platforms, social media advertising has ballooned in pricing. It may not be as cheap as it once was, but due to it being a performance marketing channel, many still deem it cost efficient.
In Meta’s recent Q2 results, for instance, the number of ad impressions it serves across its apps —Facebook, Instagram, WhatsApp and Messenger—grew by 11 per cent. The average price advertisers are paying per ad increased by 9 per cent. Meta is serving more ads and charging advertisers on average more for every impression. This pattern repeated across its previous earnings, too.
“The perception that social is the cheap option simply doesn’t hold up against the numbers anymore, particularly in the Australian market,” Patrick Blacker, founder of independent media agency Campaignifi, told B&T.
“Local CPCs on Meta have jumped 12 per cent year on year, the steepest rise since the post-iOS14 recovery, and average cost per lead has surged over 20 per cent in the same period. Advertisers are paying more and more for less on walled garden social platforms.”
But the argument around social being cheaper goes beyond CPCs and performance. Chris Walton, MD of Nunn Media pointed to the structural cost differences between social platforms and legacy media as a key reason for the pricing disparity.
“Two key factors are that social media platforms haven’t had to support expensive sales teams like legacy media, which is a significant cost for media owners. They also haven’t been taxed in the same way by governments because of existing loopholes. These are two major costs that legacy media has had to carry, creating a disparity in pricing and having a significant knock-on effect on how much money they have,” he said.
According to Statista, ad spend in the social media advertising market worldwide is projected to reach US$338.75bn in 2026. And in just April, May and June Meta raked in US $59.37 billion of this ad spend.
This poses a problem for agencies and brands who are being asked to deliver more reach, engagement and conversions without necessarily receiving more budget.
It’s a particular problem if, as Publicis Groupe’s Maurice Riley explained last week, social media trends — often a quick way to gain an outsized audience for cheap — only have a three-day shelf life. A further 55 per cent disappear within five days.
Despite this, Jenni Smit, Influential Australia’s creative director, believes social is still “one of the smartest investments a brand can make”.
“There’s a misconception that social is either the cheap option or becoming as expensive as traditional advertising, and it probably sits somewhere in the middle,” she said.
She expressed this is because “when you consider the reach, engagement and ability to optimise content in real time, social often delivers a strong return on investment. The real value isn’t just in producing content, it’s in building an audience and creating work that fuels real time conversations.”
Jet2 is one brand which has benefitted greatly from leaning into social. Just this year the airline blew up on social media, specifically TikTok, thanks to a viral meme using the audio from its adverts — though it must be said, the trend was originally poking fun at the discount package holiday firm.
What started out as a couple of fun, chaotic, disastrous, travel fails and funny everyday mishaps, turned into 80 billion posts on TikTok alone.
The brand did not shy away from the meme, and it leant into the conversation, created videos of its own and even got the voice actor to do radio interviews. Speaking at TikTok and Influential’s Enter The Group Chat event, Smit said that the meme played a role in increasing Jet2’s global sales by £5.8 billion (AUD $11.1 billion).
On Aussie soil, the hiking shoe brand Salomon has become increasingly popular mainly among Gen Z. This is through creating a community that lives on and off social media.
Originally designed to be hiking and outdoor sporting shoes, Salomon has grown massive influence with Gen Z over recent years. Now, you can’t go to a music festival or a rave without seeing numerous pairs of them.
Salomon has played into its popularity that grew on social media by activating at live music events, which transpired all over social media.
Recently, with the help of the Live Nation crew, Salomon created a 1000 person gig with American DJ Disco Lines. Keeping the brand front of mind, the first 100 people to rock up to the Sydney concert in Salomon shoes were rewarded with express entry. This led to numerous organic social posts, keeping the brand front of mind.
Even though the cost has increased for social media spots, and the likelihood of it going “viral” isn’t high, Blacker argues price was never social’s real advantage point anyways.
“The ability to track and justify conversions in an incredibly simple manner inside the platform made it the easy line item to defend in a budget meeting. But that advantage has evaporated,” he said.
“DSPs and publishers have seriously lifted their game with universal pixels, cross-channel attribution and independent verification, and it has levelled the playing field entirely. When every channel can demonstrate its contribution to conversion, social has to compete on actual performance, and that’s an increasingly hard case to make.”
Social still offers an ability to reach audiences, spark conversations and optimise campaigns in real time that few other channels can match. But as costs rise and trends become increasingly short-lived, relying on social as the entire media strategy becomes a risk.
