The Readout October 2023

Peak is make or break for many brands. Last year, many retailers and D2Cs scaled back ad spend as their budgets were slashed, only to pile back into the auction in Q4.?

This year is more positive. There is a clearer rulebook of what works, and what doesn’t, and brands that have adapted should be well prepared for peak.?

Meta continues to deliver significantly improved results. The combination of sharply reduced advertising costs on the platform and improvements made by Meta to targeting and performance is driving significantly improved results on ad investment.

Contrary to last year’s ‘double recession’ for advertisers – where the economic downturn coincided with declining performance following Apple’s ATT update – ad performance has now decoupled from the wider economy. Online advertising is delivering growth again, and is the route out for retailers struggling to make a profit.

Discover the latest ecommerce marketing insights in The Readout – our quarterly review of the ecommerce marketing landscape, where we outline the key trends that advertisers encountered in Q3 2023 and explore opportunities for peak, as well as outline recommendations for 2024 planning.

Key trends in Q3

Meta CPM reaches another record low

CPM continues its dramatic decline – and is now 37% lower YoY.

Key to this is Meta’s revamped advertising tech and algorithm, as well as an increased adoption of Broad audiences, relaxing demand and driving down CPM.

Although there has been a 10% decrease in average click-through rates, the combination of lower CPM and a 22% increase in conversion rates is driving a 43% reduction in CPA.

Brands should be exploiting this discount in customer acquisition costs.

Average basket sizes are increasing

AOV rose by 16% YoY in Q3, with purchases holding steady despite a challenging economic landscape.

In an environment where customers are significantly cheaper to acquire, and on average buy more, platform-reported ROAS in Q3 has more than doubled YoY.

While AOV will dip in November when brands discount, the overall year-on-year trend is promising, and is evidence that a feared race-to-the-bottom in prices has not materialised.

Brand strategies are shifting up-the-funnel

Investment in awareness ads is up 859% YoY as strategies shift to upper-funnel activities.

These campaigns can be leveraged alongside performance campaigns to feed retargeting and reduce CPA.

However, they have merit in their own right, improving salience and brand resonance, which can be measured through brand lift tests.

In contrast, investment in standalone catalog activity has declined since the introduction of ASC, and spend is down 50% YoY.

Discover more ecommerce marketing strategy and insights in the full report: