TikTok is being prioritised for new investment by e-commerce brands during 2023, with 85% of brands saying they will hike spend on advertising on the platform.
By contrast, 39% of brands are planning to increase their spend on Meta, but almost a third (31%) are planning to spend less on Meta next year.
The findings come from a survey of e-commerce industry experts by e-commerce social creative agency Nest. Its CEO Will Ashton commented: “This will be an interesting quarter for TikTok.
Experimental ad spend is also the first hit when the economy becomes challenging. However, the channel is increasingly a mainstay in paid social strategies, as evidence emerges that it works for older demographics and brands with ‘higher than average’ average order values (AOVs).”
Reels spend growing but CTRs lag
Nest’s quarterly research on Meta ad trends found that ad spend on Reels has soared quarter-on-quarter, by 754% between Q2 and Q3 this year, as the tech giant powers up to take on TikTok. Cost per thousand impressions (CTM) was also up 31% on Reels – with Nest pointing out that Meta will continue to push impressions to Reels.
However, engagement for Reels has been slow to catch up, according to the analysis, which found that average click-through rates (CTR) were 387% lower for Reels placements than non-Reels placements.
US outliers on Meta ada metrics
The analysis found CPM on Meta to have increased 45% year-on-year (YOY) in Q3 2022, but across the world was down 11% over the quarter.
The US was an exception here, with quarter-on-quarter CPM up 18%. The region also saw inflated CTRs, with a quarterly growth in Q3 of 48% and annual growth of 68%, pointing to a stronger consumer appetite.
Creative remains the most effective tool for driving down cost per click (CPC), said Nest, with a YOY rise of 5%, while dropping 9% between Q2 and Q3 2022.
Quality for higher ad returns, sustainability for conversion
Messaging surrounding ‘quality’ delivered the highest return on ad spend (ROAS) and average order value in Q3, indicating that consumers are willing to spend more for longevity. Ahead of the Black Friday shopping period, ‘sale’ messaging also delivered higher ROAS, but the highest conversion rates came from messaging surrounding ‘sustainability’.
Across format, video ads saw a 9% lower conversion rate on average compared to static ads in Q3, though the gap is much smaller than the 33% recorded for Q2. Meanwhile the research also found that dynamic ads for broad audiences saw on average a 44% higher CTR than and 9% higher conversion than standard ads.
Ashton said: “Companies win during recessions when they don’t retreat. It is a difficult environment for planning but results during Q4 will inform strategies for next year as consumer behaviour becomes clearer.”