FB Changes Algo, India Ad Rates Double
New Delhi: The cost of advertising on Facebook in India has doubled since the social media platform changed its news feed algorithm this year to prioritise posts from family and friends over promotional content, digital media agencies and advertisers said.
Prior to the algorithm change in January, the average cost per thousand impressions, also called cost per mile (CPM) — which refers to the price of 1,000 advertising impressions on a webpage — on Facebook was around .₹ 150. Now, it is touching .₹ 300, making advertising on the platform significantly expensive for small businesses that rely heavily on digital platforms for promoting their businesses, media agency insiders said.
This is mainly because Facebook has reduced the space available for ads as a large chunk of people’s news feed is now focused on posts from their family and friends, said Varun Duggirala, content chief of The Glitch, an agency acquired by WPP recently.
Vinayak Katkar, founder of Pune-based digital marketing agency Amura Marketing Technologies, explained: “If Facebook was showing, say, 10 ad slots initially till January, now they are showing only five. The supply (of advertising inventory) has reduced and advertisers are increasing. So the rate for the same slot has gone up.”
Faced with criticism from users, Facebook founder Mark Zuckerberg had in January announced the change in its news feed algorithm to prioritise content from “friends, family and groups” instead of brands and advertisers. “As we roll this out, you'll see less public content like posts from businesses, brands, and media,” he had said in a Facebook post.
“Now, I want to be clear: by making these changes, I expect the time people spend on Facebook and some measures of engagement will go down,” Zuckerberg had said. “But I also expect the time you do spend on Facebook will be more valuable.”
Some small businesses that rely on social media to reach out to their target audiences said the increased rates have made advertising on Facebook too expensive for them. “Facebook has become very expensive,” said Ayushi Gudwani, founder of online apparel retailer FableStreet. “The ability to reach more people has reduced by almost 40%. Earlier if I spent .₹ 100 and get a reach of 1,000 people, now the same .₹ 100 gets me just 300-400 people,” he said.
FableStreet has been spending more than 70% of its marketing budget on Facebook.
Online furniture rental startup CityFurnish, which too has been heavily dependent on Facebook advertising, is now looking at other social networking sites such as Instagram. “The conversion (on Facebook) has dropped significantly and the cost has increased,” said Neeraj Jain, cofounder of the Gurugram-based firm.
Facebook, however, said the change in CPMs in last one year for the industry is minimal and mostly in line with the trend across digital channels. A company spokesperson also claimed the number of people advertising on Facebook is growing, in line with a growth in internet users and increased data consumption.