Social Distortion: Despite Heavy Spending On Social Media, More Advertisers Seeing Diminishing Returns (New Report)

Even as social media advertising spend is projected to reach $239 billion this year and $273 billion next year, new Taboola research has nearly three-quarters of performance marketers seeing diminished returns in their investments.

“Ad fatigue, competition, and platform changes are making it harder to sustain performance over time,” says “The Pulse of Performance Advertising: Diminishing Returns” report. “In performance advertising, spending more doesn’t always mean better results — CPA rises as spend increases. For example, the first $1K might get 100 conversions, but the next $1K only 80, and so on.”

More than 300 marketers from an array of small to large advertisers were surveyed, with 32.8% saying they start seeing diminishing returns at some point less than 50% of their budget and another 44.8% pinpointing their percentage between 50% and 70%. As for the causes, most believe target audience saturation is to blame, with 59% pointing to user fatigue.

What do marketers believe to be the reasons for diminishing returns in their paid social advertising? (Photo Source: Taboola)

“Performance marketers are actively seeking solutions through diversification and experimentation,” the report says. “Over 80% of respondents are using multiple tactics, with more than 50% expanding into additional digital channels beyond social media.”

Of those tactics, 70% said they’re testing new ad formats and 67% said they’re changing audience targeting strategies.