Navigating the Uncertain: Ad-Free Social Media Tiers and Their Potential Impact
2023 US digital ad spending has grown at its slowest rate since 2009, as expected from many financial analysts after post-pandemic record growth, but is showing promising signs of recovery with increases in Q4 and into 2024 expected. While some channels remain flat, social has helped drive ad revenue quarter-over-quarter. Social media formats grew by 12% in Q2, compared to a 7% increase in Q1 (it was almost flat in the previous two quarters – Digiday). Search and commerce grew by 9%, funded largely by retail media activity. While the growth and outlook paint a more positive picture compared to projections made in early 2022, a new wave of uncertainty has risen as industry giants Meta and TikTok have started exploring the possibility of ad-free subscription tiers in response to tightened EU data privacy regulations.
Meta has proposed a paid, ad-free monthly subscription option for European users of Facebook and Instagram, while TikTok is testing a similar offering outside the US. X also just announced two new subscription tiers that will be available to all users: one that will be lower in cost but provide access to new features with no reduction in ads, while the other is planned to be more expensive but will not support ads. Snapchat has their Snapchat+ subscription that offers users a collection of exclusive, experimental, and pre-release features but doesn’t affect ads in any way.
Adoption of ad-free social media tiers is a global conversation. There’s not been an official confirmation whether the Meta and TikTok ad-free subscriptions will roll out in the US and the success of these models will likely be evaluated in the coming months.
From an advertiser’s perspective, the introduction of ad-free subscription tiers by Meta and TikTok poses both challenges and opportunities. The impact remains uncertain, with consumer adoption being a key factor. While price and privacy concerns might influence users to opt for ad-free experiences, research has indicated that younger generations don’t mind advertisements so long as they’re relevant. There will likely be concerns about reduced reach due to fewer ad placements available if users adopt paid subscription models, so the effectiveness of the remaining ads will be a crucial consideration. Advertisers might be willing to sacrifice some reach if the remaining advertisements continue to perform well.
Most platforms have adapted their ad formats to feel more native to the platform, making a seamless integration of ads into the user experience. Advertisers should closely monitor user behavior and engagement metrics to adapt their strategies accordingly. Flexibility and adaptability are key as the digital landscape evolves, and marketers should be prepared to fine-tune their approaches based on consumer preferences and platform dynamics.
Meta Reels Upgrade: Empowering Advertisers with Safety and Creativity
Meta has unveiled significant updates to Reels by introducing brand suitability controls and creative tools. This expands on the success of similar controls that rolled out for Facebook and Instagram feeds earlier in the year and these updates cater to the ever-growing Reels audience, which boasts over 200 billion daily views.
Meta’s brand suitability updates for Reels include the introduction of an AI-powered inventory filter, allowing advertisers to categorize content according to Global Alliance for Responsible Media (GARM) suitability standards. Advertisers can choose content classification levels, such as expanded or limited, to control where their ads appear.
On the creative front, Meta has announced the extension of features to Reels that were also previously available on Facebook and Instagram ads. These features are aimed at streamlining campaign creation for advertisers and improving the user experience for consumers:
- Collection ads: A swipeable format that allows users to browse through images for detailed product information.
- Multi-destination carousels: Provide users with an easier path to multiple product pages, simplifying the shopping process.
- Swipe left functionality: Enables users to explore products with a simple gesture, enhancing the overall shopping experience.
- Advantage+ Creative Suite: Access to AI-powered optimizations like template conversion, 3D motion, and color enhancement.
- Music Selections: Ability to add music to single-image Reels ads for improved engagement.
These new functionalities aim to streamline campaign creation, save time, and improve ad quality, ultimately enhancing the user experience. The company noted that ads designed for Reels, especially those with vertical sound on video creative, showed lower costs per action, higher click-through rates, and increased conversion rates compared to other video formats.
The introduction of brand suitability controls and creative tools for Reels significantly enhances the capacity to create precise and impactful ad campaigns. These brand suitability controls offer essential peace of mind, ensuring that ads remain aligned with brand values and reputation by avoiding association with unsuitable content.
The newly introduced creative tools increase the value of Reels, providing fresh avenues to engage audiences and drive better campaign outcomes. Additionally, the automatic creative optimizations streamline the creative process and enable the development of visually captivating ads that resonate with the target audience.
In a world where video content is king, the Reels updates enhance Meta’s video offering that is already a compelling channel for advertisers. This combination of creative freedom and brand security is bound to attract more brands to invest in Reels, especially as 9×16 content has become the new standard for video and an effective attention-grabbing strategy in the ever-evolving advertising landscape. While some placements and enhancements over the years have felt like replicates that can be found on other platforms, these Reels updates feel a little more native to the Facebook and Instagram Feed + Stories placements.
Meta’s Generative AI Boosts Ad Creativity: A Promising Tool for Advertisers
Meta, after testing its generative AI features with selected brand partners for the past five months, has expanded the launch of these features for all advertisers. The generative AI elements include text variations, background generation, and image expansion tools, offering more creative customization options for ad creation. According to Meta, advertisers estimate that generative AI could save them significant time and enable quicker development of ad creative variations at scale. In fact, a survey conducted by Meta of advertisers that participated in early testing indicated:
“Most advertisers expect saving time and half of them estimate that generative AI will save them five or more hours a week – the equivalent of one month per year – noting they’ll be able to create multiple asset variations with the click of a button, reducing time spent between creative and media teams on time-consuming editing tasks and allowing for more strategic work.”
Meta is also working on additional background generation options, aiming to provide tailored themes for different brands. Additionally, Meta is developing AI tools for business messaging on Messenger and WhatsApp.
This innovative technology has the potential to revolutionize our creative process. Time, the one resource we all wish we had more of, will be the critical metric in measuring AI’s efficacy. With the expanded rollout of AI features, there’s likely conversations to be had around who takes ownership of maximizing the value of these capabilities. Agencies that are leading social strategy and execution may find themselves in situations to take lead on creative recommendations and exploration. We recommend having upfront discussions with clients around their appetite to test into these options and agencies should do their diligence in ensuring options presented are in line with your brand’s identity.
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