Founder and CEO of Mason Interactive, an award-winning performance marketing agency with locations in New York and Charlotte, NC.
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In 2014, I wrote a blog post about “peak Google.” One journal article calls peak oil, “The point in time when the maximum rate of petroleum extraction is reached, after which the rate of production is expected to enter terminal decline.” The gist of my thinking was that we’d reached Peak Google. Still important, still the biggest, but not getting bigger. Being supplanted by the digital equivalent of “cleaner energy.” And for a short time, I was right: Enter Facebook and the rise of D2C brands. Casper, Figs, All Birds and Vuori were all formed right around then. All of them flourished in part via aggressive Facebook/Instagram marketing programs.
The logic then was “Google is for searching things you already know exist, and FB/IG is how you introduce yourself to people who don’t know you exist.” And that’s still true, but it’s changing. Fred Wilson, a leading VC, agreed, writing: “The 2010s were a decade in which startups mastered marketing and channels like Facebook and Instagram emerged to satisfy their demand.”
Shifting Budgets
From 2014 on, our book of FB/IG grew steadily. This would suggest that my original thesis around “Peak Google” was correct. But in the last 12 months, this trend has reversed. Let’s consider some data points.
As of 2020, for our D2C brand clients, roughly 70% of every dollar was spent on FB/IG, and roughly 30% was on Google. For our higher education clients, it was reversed: Roughly 30% of every dollar was spent on FB/IG, and roughly 70% was on Google.
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As of 2021 going into 2022, for our D2C brand clients, roughly 60% of every dollar is spent on FB/IG, roughly 30% is on Google, and roughly 10% of every dollar is on another platform. For our higher education clients, roughly 10% of every dollar is spent on FB/IG, roughly 80% is on Google, and another 10% on another platform.
So the share of Google has either stayed the same or increased over time, specifically in the last year, while Facebook’s share has decreased. The total amount spent on FB/IG may be up, but the share is down. And, at least for our higher education clients, that share is going back to Google.
Increasing Marketing Dollars For Google/Alphabet
Why is Google’s/Alphabet’s share of marketing advertising dollars increasing? A few reasons, I believe. First, it is my opinion that people are just tired of giving their money to Facebook. I’ll leave a lot more there unsaid.
Second, because of changes to the online ecosystem, specifically iOS 14, Facebook advertising is changing rapidly, to be generally less effective. Audiences are broader and targeting options are decreasing.
Third, as much as we push our clients to new platforms, they want immediate returns, and new platforms take more time than simply shifting budgets to Alphabet.
Fourth, and this is really key: Alphabet is the company best positioned to deal with the upcoming cookieless world. It has search (Google), email (Gmail), display (YouTube) and this is a closed loop. It doesn’t matter if third-party cookies are going away on Google because the whole ecosystem operates on a closed loop. It’s all first-party data to Alphabet.
What Other Agencies Can Learn From This
At our agency, we’re pushing our clients to diversify hard out of Facebook. YouTube is an easy next step (if you have the video assets). Beyond that, we are working on 2022 plans that leverage more out of Reddit, TikTok, programmatic and more. It will be interesting to see what percentage of our portfolio shifts to this “other” column by this time next year; I sincerely hope it’s north of 25%.
My key takeaways for other business leaders are to understand that Facebook, a leader in online advertising for the last 10 years, is still a leader, but is less effective. Therefore, you need to diversify your media mix into other platforms. I recommend testing one new platform a quarter, and understand that these platforms might have their own unique, separate goals and targets. It’s important you have clear, quantifiable, measurable goals. Look relentlessly at these numbers, understand that you need to invest in new customers, and adjust your media mix to focus on where the new customers are.
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Author: Brook Shepard, Forbes Councils Member
