The Q4 2018 Megaphone Report investigated paid Facebook & Instagram ads for 35 brands and retailers, which ran a total of 2,920 different ads between Black Friday and Cyber Monday.

This Megaphone Report is available to all members. Future Megaphone Reports will be exclusively available to Plus, Team and Premier Members.

Our research calculates and classifies marketing via two different channels: email marketing and paid digital marketing, which includes Facebook and Instagram. Our analysis of these channels gives you an inside look at how consumer brands and retailers are navigating the marketing landscape, while allowing you to benchmark your own company’s marketing efficiency.

Surveyed companies are identified by Origin (Traditional, meaning it started either offline or both offline and online; or Digital, meaning it started online only) and Type (Brand or Retailer). When relevant, brands and retailers are analyzed separately.

Facebook and Instagram advertising

Loose Threads surveys all active paid Facebook & Instagram advertisements during the middle of each quarter. For special reports, data is captured during the pertinent week, such as during the Black Friday long weekend.

As Facebook and Instagram ads run on the same ad manager, they are surveyed together.

Email marketing

Loose Threads receives emails from each brand and retailer in the Megaphone roster. Our current approach is grounded in surveying how these brands market to a potential customer, versus an existing one.

Nike ran the highest number of paid Facebook and Instagram ads at 778, followed by Revolve and Peloton.

While the exact marketing budget of each brand is unknown, the Nike, Revolve and Peloton’s high number of paid digital ads during Q4 2018 suggest that these companies are making a massive investment in the platform, since managing this many Facebook and Instagram ads requires a sizeable team. Nike, for example, has more than 1,880 marketers on its global team, including 183 marketers specifically devoted to digital channels, according to LinkedIn.

A larger number of paid ads likely equates to a more complex marketing approach—one that is able to target various demographics with more personalized visuals and messaging to appeal to different customer cohorts (this can be seen tangibly when a brand maintains duplicate ads, as Nike did).  

These investments make sense for Nike, which saw $34.5 billion in 2017 revenue. But such a sizeable ad presence is less expected from Revolve (which did an estimated $1 billion in 2018 sales) and Peloton (which expects $700 million in revenue by the end of its fiscal year in February 2019). Both are much smaller, digitally-native brands, unlike Nike. However, Nike has over 34 times the revenue of these two other companies and less than two times the number of ads—outlining how ad complexity can work at scale and providing a foil to Revolve and Peloton. Still, the size of all three companies affords a larger advertising presence on social media relative to many others in the consumer space. Even as digital acquisitions costs rise—something partially caused by these very large brand budgets—these companies can still outbid smaller brands in the market.  

Playbook

  • How does the size of your digital marketing team compare to your traditional marketing team? Would it be worthwhile to shift resources from one to the other? How well does this ratio mirror your marketing goals and where you are investing your marketing budget?
  • How many paid digital ads is too many from a management perspective? How can you better balance personalizing your message with the complexity that comes from managing all of these variants?
  • With a larger paid digital ad presence, what amount of specific demographic targeting, from age to location to income to behavior, has the highest value?

Kylie Cosmetics, which ran only one paid digital ad during the survey period, had the smallest Facebook & Instagram presence—a luxury afforded by the reach of its celebrity founder.

* This table excludes Comme des Garçons, J.Crew, Rimowa, Supreme and Zara, each of which ran zero Facebook & Instagram ads during the survey period.

Because Kylie Cosmetics, Matches Fashion and Net-a-Porter have yet to venture into owned retail offline (Kylie Cosmetics began wholesaling at Ulta Beauty in Q4 2018, but lacks stores of its own), digital marketing is one of their main tools to communicate with customers. Minimal paid Facebook & Instagram outreach for the latter two is surprising, particularly for Matches Fashion, which is going after a young, digitally-fluent audience. Kylie Cosmetics, on the other hand, is safeguarded by a unique benefit: Its founder, Kylie Jenner, can use her personal social media presence as a distribution channel, marketing the brand as long as she remains at its helm. This not only cuts advertising costs for the cosmetics company, but also establishes greater trust between Kylie Cosmetics and consumers, who hear directly from Jenner themselves.

Rimowa invested in traditional marketing rather than paid digital outreach, despite its desire to attract younger consumers.

Premium brands such as Comme des Garçons and Rimowa avoided running paid ads on Facebook & Instagram altogether. In Rimowa’s case, the company stuck to its traditional marketing approach—which it has also amplified—preferring to invest in magazine, billboard and influencer marketing, despite the company’s quest to gain relevance among younger audiences living on social media. Rimowa has less than a handful of dedicated digital marketers globally, according to LinkedIn, versus close to two dozen working in general and brand marketing. On the other hand, Comme des Garçons is notorious for its avoidance of digital marketing, and this anti-Facebook and Instagram strategy reflects its reputation—the same goes for Supreme.

Playbook

  • If you cut your digital ad spend in half, where would you pour the extra marketing resources? If you cut out digital advertising altogether, where would this surplus budget go?
  • If your brand has a face, how do you use this face to market products? How wide-reaching is this person’s distribution channel and what is its longevity? Can you use this distribution channel to market your brand and in turn, reduce your digital ad spend?  
  • What is your reasoning behind a mostly-digital or mostly-email marketing strategy? Could you be missing out on traction with your target demographic on a channel where you have a smaller presence? Which channels are favored by your competitors that you aren’t investing in?
  • If a brand or retailer without a face, how can you employ influencer marketing to bring personality to your advertising in a long-lasting way? Might there be a benefit to having a face even if you have avoided it in the past?

The most common type of paid digital ads were general brand ads, followed closely by ads featuring a specific product or promotion.

While it makes sense that brands use the highly-trackable Facebook & Instagram channels for direct-response advertising that pushes a single product, the growth of more general brand advertising marks a shift in the consumer landscape. Especially during Q4, when the focus is getting customers to convert, this development reflects the need for differentiation among the mass of brands selling similar products. It may also be related to the potentially cheaper cost of general brand ads. (Facebook, for instance, can charge a premium on product-specific ads, with which brands can track sales conversions—something that general brand ads don’t allow). The more a brand can hone a personality and/or purpose—whether in terms of voice, advocacy, visuals or something else—the more likely it will win over customers. Yet because it is harder to attribute sales to general advertising—and the less attribution, the less efficient advertising spend can be—this shift may also be contributing to the rising cost of digital acquisition.

Playbook

  • Imagine you abolished any form of discounting during the holiday season from your marketing strategy. How would you speak to customers and get their attention? What would you focus your advertising campaigns on? How could you win them over without a promotion?
  • How do you define the trade off between trackable ads and brand-building ones? What if you inverted your approach—how would your results differ?
  • If a digital-only brand or retailer, how can you take advantage of Facebook & Instagram to provide a space where you talk about your brand and its values, as opposed to just pushing out promos? How can you establish a dialogue and a personality without an offline presence in which you can interact with consumers face-to-face?

On digital channels, brands and retailers rely on corporate rhetoric but could do more to integrate the consumer voice into their messaging.

Looking at the main purpose behind Facebook & Instagram ads illustrates brands’ discomfort with integrating consumer voices into their marketing. The top three categories all feature corporate messaging about brand, product and discount opportunities. Despite the aspiration among consumer brands and retailers to cultivate community, none of the top three ad types surveyed attempt to do so; Retail and events, testimonials and media references remain low priority. While the holiday quarter will naturally see less activity in areas outside of gift giving and promotions, brands and retailers that are talking the talk should start walking the walk as engagement online can lead to more customer conversions.

Playbook

  • How can you decrease your corporate messaging to promote your brand with the language of shoppers? How can you cultivate a marketing strategy built around non-corporate voices in order to foster a community around your brand?
  • What if you launched a marketing campaign that only used customers’ images and rhetoric? What would that look like and how might the results differ?

Nearly 11% of paid Facebook & Instagram ads included a Black Friday promotion—nearly 95% of paid digital ads from Glossier were Black Friday-specific discounts.

Brands and retailers ran a total of 250 Black Friday-specific promotional ads—nearly 11% of all paid ads—during the survey period. Four brands, including The Honest Company and Rent the Runway, promoted sales holiday-specific discounts in 100% of their active Facebook & Instagram ads, and Glossier also relied heavily on Black Friday-specific discounts. Though Glossier has been lauded for an innovative marketing strategy that the founder has claimed is 70% peer-to-peer, 94.5% of Glossier ads featured promos during the survey period, rather than messaging that highlights the words of its customers or influencers—or ads that seek to engage with them. This was also mirrored in the brand’s email marketing strategy, discussed below, even if its down-to-earth rhetoric managed to stand out.

It makes sense to feature discounts in the run up to and during sales holidays like Black Friday and Cyber Monday, but a marketing strategy that leans too heavily on promotions counters efforts to build a sustainable, year-round business. The risk of holiday discounting is especially high for brands that rarely offer promotions as it can upset the balance of distribution of sales otherwise met throughout the year. Brands that run only promotions during sales holidays may actually discourage shoppers from making purchases once the holiday is over—especially when many other brands are using the same strategy. For a company like Glossier, which announced it reached $100 million in 2018 sales by the end of the year, the discount-friendly and counterintuitive advertising approach may have been done to achieve this goal as it ponders an IPO.

41% of Peloton’s total paid digital ads were promotional, but the brand ran zero ads featuring Black Friday discounts.

Some brands and retailers did not run Black Friday-specific promotional ads, even if they ran other promotional ads during this time. For other brands, Black Friday-specific ads outnumbered the amount of regular promotional ads.

Running year-round promotional ads during a specific sales holiday is an odd choice. Despite the risks of relying heavily on Black Friday-specific promotions mentioned above, brands are better off deciding whether to participate in the sales holiday or not—running year-round promotions during this period blunts the impact of the sales holiday, while also hindering the company’s ability to track the real impact of the holiday. Brands like Revolve are worse off for maintaining a steady flow of promotional ads at all times than using Black Friday as rationale for offering discounts. Especially for digitally-native and digital-only brands, which customers cannot confront IRL, Facebook & Instagram ads are one of the few ways to interact with new shoppers. A consistently promotional-heavy ad presence will thus degrade the brand over time as it will be associated with discounts over all else.

Playbook

  • What is your company’s policy on year-round promotions versus holiday-specific promotions? Does it align with your long-term goals or focus more on your short-term goals?
  • How can you partake in a way that doesn’t associate your company with discounts year-round or discourage shoppers from buying your products once the holiday is over?

Testimonials comprised 2.2% of total ads—the vast majority featuring text, as opposed to videos.

While video increasingly populates Facebook and Instagram newsfeeds—Facebook launched Facebook Watch internationally and debuted IGTV in 2018, with plans to further prioritize the medium in 2019—only a meager portion of brand and retailer paid ads on the platforms featured video testimonials. More importantly, testimonials comprise a small percentage of brand and retailer ads overall—a missed opportunity for these companies to build trustworthiness with consumers online.

With so many consumer products competing on the market, recommendations and endorsements hold great persuasive power, particularly in inundated product categories like cosmetics and wellness. Again, while Glossier’s digital marketing strategy did not rise to the occasion during the holiday quarter, founder Emily Weiss has stated that 70% of online sales and traffic stem from peer-to-peer referrals—a claim that should be triggering more companies to embrace customer voices. Dirty Lemon has also employed word-of-mouth marketing that uses or mimics the language of both its customers and skeptics to grow mystique around its beverages, with the vast majority of its Facebook & Instagram ads featuring what appear to be customer testimonials.

Playbook

  • Facebook & Instagram newsfeeds are increasingly populated with video. How can you balance static images with GIFs and videos in your marketing strategy? What is more likely to stand out?

45.9% of brands and retailers with owned retail used Facebook & Instagram to advertise their stores, but these ads comprised only 7.6% of their paid digital outreach.

Peloton was in top place with 36.1% of active Facebook & Instagram ads promoting retail stores—a move tied to its growing footprint (it has soon-to-be 70 showroom locations as of January 2019, up from approximately 30 in July 2018) and its likely preparation for an IPO. Digitally-native brands are increasingly moving offline and can strengthen their multi-channel retail strategy with complementary digital marketing, which Peloton is embracing. The company is also ramping up its advertising strategy on all channels, including two TV spots for the 2018 holiday season, which were featured during NFL games.

Surprisingly, Casper, which similarly poured massive resources into opening 19 stores in 2018, with a planned 200 by 2021, did not use the digital channel to market its owned retail at all. This could be a blunder for the company, or perhaps enough traffic is streaming into its current locations that it feels retail-specific ads are unnecessary. Michael Kors also rejected retail-centric Facebook & Instagram ads, despite its wide-reaching presence. This is surprising considering that after growing its retail presence drastically in the 2010s, Michael Kors announced in 2017 that it would close 125 stores because of low sales. As the Michael Kors brand corrodes—a symptom that grew in part out of this overexposure—the company can tap into its digital marketing channel to help boost foot traffic.

Playbook

  • If your company has a brick-and-mortar retail presence, how can you use digital marketing to bridge the internet world with the offline world, inciting consumers to visit your store(s)? How else can you use online advertising to supplement your rent in prime locations?
  • How can you advertise this offline presence beyond new store openings, instead focusing on consistently driving traffic year round?