Social media platforms have become the core marketing channel for most direct-to-consumer startups, connecting businesses with potential customers worldwide. Among these platforms, Meta, formerly known as Facebook, stands out for its exceptional ability to monetize its vast user base. This has created a challenging environment for startups, even those armed with the best growth experts.
Meta’s Monetization Strategy
Meta’s success in monetizing its audience lies in its sophisticated advertising model. It leverages user data to provide targeted advertising, ensuring businesses reach their desired audience. Their algorithm knows the most desirable audience, and they have systematically priced those users at a premium. This effectiveness comes with a downside for startups. There is little room to identify mispriced users and find pockets of segments that would drive an outsized upside. Through rigorous testing, you might land on an audience segment with effective CTR, but Facebook can manipulate their CPMs, so the ROI impact is canceled out. If advertisers continue to spend on the platform, Meta will continue to have robust pricing control over its inventory.
The Challenge of Differentiation
Another challenge startups face on Meta is differentiation. Meta’s platform encourages consolidation of campaign structure. This leads to a homogenization of bidding on the demand side, leaving little leverage for startups and growth marketers. Campaigns will get penalized if audience targets are too refined and campaigns need to exit the learning phase. This requires higher budgets and little room for out-of-the-box testing.
Solution for Startups
While Meta’s platform offers unprecedented access to potential customers, we have to accept that individual businesses have little control over audience pricing. Launch the campaigns according to best practices and use this as the normalized ROAs as a data point when building your financial model. It is also currently the best tool for agile message testing for new products and message positioning, so it might be time to shift the purpose of this channel within your marketing stack.
At AX10, we audit Meta campaigns and can accurately provide ROA baselines after implementing campaign execution best practices.
Please submit your interest if you want to work with us or need an audit on your existing marketing growth tactics.
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