Executive Summary

Facebook’s problems are mounting. Although ad revenues for the mammoth social network are still rising, advertisers are getting restless, and users are, too.

How much will Facebook’s ad revenues change?

Worldwide ad spending on Facebook and Instagram combined will rise 22.5% this year and reach nearly $95 billion in 2021. The youthful Instagram has more momentum—its ad revenues will nearly double by 2021. But core Facebook will still account for 71.5% of total ad revenues for the company in 2021.

Will advertisers stick with Facebook despite its many problems?

Precise targeting, abundant reach—and a heavy amount of inertia—will keep advertisers locked in for the next couple of years. However, they are paying more attention than ever to how the company is navigating its challenges, and their concerns are growing.

Are any consumer engagement red flags starting to surface?

Yes. There will be continued declines in the number of younger users of Facebook in developed markets. And privacy concerns and intense media scrutiny are damaging Facebook’s reputation with consumers.

What will happen to ad targeting?

More ad targeting options will go away. Regulatory action, such as the $5 billion fine approved by the Federal Trade Commission this month, may play a role. But Facebook will continue to make its own changes in an attempt to stay one step ahead of regulators.

How will messaging and commerce evolve?

The company will have difficulty fulfilling its WeChat-like ambitions, at least in the US, and we believe messaging advertising will remain at a slow burn. But we do expect momentum in social commerce and commerce-related advertising.

What about Stories, Groups and videos?

The company will double down on Story advertising as this popular feature gains even more traction. Facebook will remain a leading player in video advertising, but the future of Facebook Watch is still murky. Finally, advertising will come to Facebook Groups, likely with new ad formats.

WHAT’S IN THIS REPORT? This report details how marketers and consumers feel about Facebook now and predicts what will and won’t change about its ad business in the next two years.

KEY STAT: Ad revenues for Facebook and Instagram combined will reach nearly $95 billion in 2021.

Advertisers Are Still Engaged but Growing Restless

Facebook offers abundant reach, precise targeting, strong ad performance and an easy-to-use ad tool. That combination helped the company increase worldwide ad revenues to $55.01 billion last year.

Those revenues continue to grow, and marketers remain committed to the property, for better or worse. But scrutiny surrounding Facebook’s many problems, as well as its role in the Google-Facebook duopoly, continues to grow.

Ad Revenues Are Rising

We expect Facebook and Instagram together will generate more than $67 billion in worldwide ad revenues this year, up 22.5% from last year. However, growth is slowing dramatically, and this year it will be less than half of what it was in 2017.

Ad revenues for Facebook and Instagram in the US will rise 20.6% to $28.52 billion this year, a rate that is also less than half what it was in 2017.

Facebook’s growth is still ahead of digital advertising as a whole, however. We forecast that worldwide digital ad spending will rise 17.6% this year, while spending in the US will increase 19.1%.

Instagram’s ad revenues are rising much faster than the rest of those under Facebook’s umbrella. We expect Instagram’s US ad revenues will grow 46.8% this year, surpassing $9 billion. While that’s still less than a third of Facebook’s total US ad revenues, Instagram is growing much faster than Facebook’s non-Instagram segment, which will grow by just 11.2% this year.

Few advertisers have stopped using Facebook. Mozilla is one; as a company that supports openness and transparency, it pulled out over a year ago as the Cambridge Analytica saga was unfolding.

Mozilla decided to “take a vocal, public stance about the way we felt Facebook needed to treat its customers and their data,” Mozilla CMO Jascha Kaykas-Wolff said. “We chose at that time to remove our advertising.”

More recently, in May 2019, CrossFit said it pulled its Facebook and Instagram pages, citing concerns with security, privacy, data collection and censorship. The action came after the deletion (and subsequent reinstatement) of a Facebook group called the Banting 7 Day Meal Plans.

Still, the vast majority of advertisers remain committed, and Facebook’s 22.1% share of digital ad spending in the US this year (which includes Instagram’s 7.0%) will vastly overshadow Twitter, Snapchat and Pinterest, whose combined share will be just 2.3%.

Even more noteworthy is Facebook’s dominance of the so-called duopoly of digital display advertising. This year, Facebook and Google combined will control 52.1% of all digital display advertising in the US, according to our forecast. But Facebook will have more than three times the display ad revenues of Google.

There’s Still a Lot to Like About Facebook

What makes the Facebook social network such an important ad property? In the qualitative research we conducted over the past six months, we heard plenty of reasons why marketers continue using it:

“The targeting Facebook allows us to do makes our work more effective. If you turn on the television, the relevance of much of the work is just not there for you. But when you're on Facebook, because we are custom targeting, you are more likely to want that information and respond to it.” —Stacey Grier, CMO, The Clorox Company

“Scale and targeting are their two primary benefits. We use Facebook quite a bit. It's probably our No. 2 platform on ad spend across all channels [both traditional and digital; Google is No. 1].” —Brandon Rhoten, CMO, Potbelly Sandwich Works

“Three things drive budget allocation for performance advertisers. One is the ROAS [return on ad spending] of the channel. The second is the scale of the channel. And the third is the ease of use. What's been brilliant about Facebook is that it checks the box at being best at all three.” —Ben Tregoe, Senior Vice President, Business and Corporate Development, Nanigans

“Facebook, aside from Google, is probably the single largest source of volume that's available in one platform. The other benefit is the ability to do very, very precise targeting, whether it's matching back to our first-party data or incorporating third-party data.” —Allison Lowrie, CMO, ANGI Homeservices Inc.

“The Facebook algorithm, in terms of optimizing for conversions, is just so far ahead of Google, Snapchat, Twitter and the others. That's where the real competitive advantage is.” —Fabian Seelbach, CMO, Curology

Advertisers Have Plenty to Worry About, Too

Even as our interviewees voiced words of support for Facebook, they also gave plenty of reasons why they worry about the platform’s future.

Advertisers have always found plenty to complain about with Facebook—whether it’s the challenge of measuring return on investment, the cliff dive that organic reach took a few years back, or the constantly changing News Feed algorithm. But what we heard over the past few months makes worries about such things seem insubstantial.

“Facebook is not getting in trouble just because their targeting is too good. They are getting in trouble because they have not been careful stewards of their users’ information. They are getting in trouble because they have allowed hate and untruths to flourish on their platform. They are getting in trouble because they have not acted fast enough or believingly enough around the discovery of these issues. These challenges matter even if the ads keep driving results. Wariness of the platform has been established now with advertisers, media planners and buyers.” —Scott Symonds, Managing Director, AKQA

“The underlying issue on Facebook is basically their lack of trust.What will help [the social network] and our clients and the industry is if clients demand change using money. Demand with your money, cut your money; that's what they'll listen to. They do not listen to anything else, because every other criticism they believe is a public relations management issue and not a real criticism.” —Rishad Tobaccowala, Chief Growth Officer, Publicis Groupe

“The way that the industry and Facebook in particular have been treating customers' data isn't OK. We'd love to see Facebook offer real privacy-first options for engaging with its platform, but to do that, they'd have to transform their data practices significantly, and we have not seen concrete evidence of that so far.” —Kaykas-Wolff, Mozilla

Two Big Concerns: Loss of Engagement and Targeting

When asked what they were most worried about, or would cause them to spend less on Facebook, the executives we spoke to often had similar responses: a loss of engagement, a reduction in targeting capabilities, or both.

“As long as their ads continue to work in terms of efficiency, in terms of their performance, then I think we're OK. If there's a mass exodus of users out of Facebook, then obviously our ads would stop working, and we'd have to stop advertising there.” —Douglas Hoggatt, Vice President, Digital Marketing, Betabrand

“If we continue to see either a leveling out or a drop in user engagement across the Facebook ecosystem due to the erosion of trust—specifically on Instagram, which has been the growth engine for Facebook and has been extremely valuable in our strategy—that's when marketers like myself will have to re-evaluate. Is Facebook a Tier 1 platform? Or do we need to readjust?” —Ajay Kapoor, Global Vice President and General Manager, Digital Transformation and Strategy, SharkNinja

“Many, many advertisers view Facebook as an optimal performance marketing channel, and performance marketing is dependent upon the quality of the audience. If there are too many targeting capabilities and options taken away due to privacy concerns, I worry that the efficiency of marketing on Facebook will decline even if the total volume of opportunity does not.” —Lowrie, ANGI

“If consumers use the platform less, or they use the platform in different ways, or they view the platform differently, that does change our perception, because ultimately that's why we're there. We're there to reach and hopefully influence consumers in a positive way. So, if we see a demographic shift occur in the platform, if we see reach change, if we see efficiencies shift, those are things that give us direct pause to say, ‘hey, we're not so sure about this as the primary mechanism of advertising.’” —Rhoten, Potbelly

D2C Companies Are Broadening Their Ad Focus Beyond Facebook

D2C companies have been strong supporters of Facebook, with many of them historically spending nearly all of their marketing budget there. According to an April 2019 study of worldwide D2C brands by D2C content and loyalty marketing company Yotpo, 52% said their Facebook spending in 2019 had increased over 2018, while 49% had upped their Instagram expenditures. Google AdWords ranked third, with 47% increasing expenditures this year.

But the dedication to social has changed for some D2C firms. They are branching out into traditional TV in an effort to achieve additional scale beyond what the social platforms can offer and also to combat rising social CPMs.

Last year, D2C brands tracked by the Video Advertising Bureau spent $3.77 billion on traditional TV ads, up from $2.35 billion in 2017.

“Facebook is down from about 85% of our ad spend to about 30% or 35%,” said Kate Huyett, CMO of apparel retailer Bombas, in a June 2019 Wall Street Journal article. Bombas started reducing its Facebook spend two years ago, according to the article, amid worries about whether the company would be affected by changes in algorithm or policy at Facebook.

Skincare product retailer Curology said in June 2018 that it was reducing expenditures on Facebook (moving some of those dollars to Instagram). It is still advertising there, but it has had to make changes to compensate for some of Facebook’s drawbacks.

“While we've certainly shifted away from Facebook, the absolute numbers are still growing significantly,” Seelbach said. “We've been able to improve our effectiveness through optimizing our targeting and creative to overcome the reductions and limitations of Facebook. From an overall perspective, we're still very happy, and Facebook is still one of the most attractive channels to us.”

Clothing retailer Betabrand has also continued to use Facebook but is finding success by focusing more on broad reach than targeting.

“We basically just aim our products at women who are over 18 years old. We have a Facebook pixel on our site, and we tell Facebook to optimize people who look like those who are purchasing,” Hoggatt said. “That has allowed us to gain a lot more scale, and it has brought cost down quite a bit for us.”

How Are Smaller Businesses Reacting?

Facebook has more than 7 million active advertisers across its properties, and its client base is heavily weighted toward smaller and local businesses. As of Q1 2019, the company’s top 100 advertisers made up less than 20% of total ad revenues. That makes it important to pay attention to what smaller businesses think and do.

Generally speaking, the concerns for small businesses—which we define as independently owned and operated entities generally having 100 employees or less in the US (50 or less in the EU)—are similar to those who work for larger companies. While their goals may vary—small businesses might focus more on getting foot traffic or conversions than on brand image and awareness, for instance—they still rely on Facebook’s ad targeting and buying tools, and they need to know whether their target audience is using Facebook.

“Where Facebook is getting a lot of its success is from smaller businesses. The targeting that they are able to do locally is what matters more than anything else,” said Shiv Singh, a former brand marketing executive and founder and CEO of consultancy Savvy Matters.

As a result, small businesses, like their larger counterparts, have continued to advertise on Facebook despite its problems. A Q2 2019 poll by CNBC and SurveyMonkey found little difference in the percentage of small businesses that were buying ads on Facebook compared with Q2 2018. However, 60% of the surveyed small businesses weren’t advertising on Facebook at all as of Q2 2019.

In March 2019, GoodFirms, a research and review platform, surveyed 126 social media marketers and digital marketing experts, about 75% of whom represented small businesses. Respondents generally believed that Facebook’s data privacy issues over the past year had little impact on their organic post reach or engagement, and nearly 43% had increased their Facebook ad spending. Overall, more than 71% said they had not made any major changes to their Facebook marketing strategy since the Cambridge Analytica story broke.

The CNBC/SurveyMonkey poll did find some change in the percentage of respondents who thought that potential regulation of Facebook’s data practice would impact advertising on the platform. The percentage believing ads would become less effective grew from 26% in 2018 to 30% in 2019. The percentage believing ads would become more effective was much smaller, but it also grew, from 12% to 17%.

Consumers Are Also Restless

The number of people using Facebook is enormous, but as the social network matures, growth rates are slowing. In addition, consumer unrest about Facebook’s handling of privacy and other issues is growing in the US. And more important for advertisers to consider, consumers’ feelings about Facebook are starting to affect their attitudes toward advertising there.

In our newly revised forecast, we estimate there will be 1.75 billion worldwide monthly Facebook users in 2019, up 5.9% from last year. Facebook’s reported figures differ from ours because we factor out duplicate, fake, nonhuman and business accounts. It reported that it had 2.38 billion monthly active users (MAUs) in Q1 2019, up 8% year over year.

This year, we expect Facebook to lose users in Japan, South Korea, France and the Netherlands. In Germany, growth will plateau at 0.1% this year, before turning to a decline in 2021.

In the US, Facebook will grow 1.4%, to 171.5 million.

Middle-age and older people remain a stronghold for Facebook. This year, 53% of the US population ages 55 and up uses Facebook, according to findings from a study by Edison Research with Triton Digital, up from 49% in both 2018 and 2017. The percentage using Facebook in the 35-to-54 age group fell from 72% to 69% in 2018 but remained flat in 2019. However, usage among people ages 12 to 34 fell from 79% in 2017 to 62% in 2019.

US mothers are another group that has remained relatively strong in their support of Facebook. According to Edison and Triton data released in May 2019, 81% use it, down from 2017’s 84% but higher than the 79% in 2018.

Teens continue to gravitate away from Facebook; just 6% said it was their favorite social platform in spring 2019 polling by Piper Jaffray—up from 5% in fall 2018 but down from 15% three years prior. Instagram has grown in popularity; it was used by 35% of teens in spring 2019, up from 23% in spring 2016. Snapchat remains in the lead, 6 points ahead of Instagram, but the spread has narrowed considerably over the past couple of years.

This year, we expect Instagram’s worldwide user base to rise by 11.4% to 786.8 million. With 106.7 million monthly users in 2019, the US will remain Instagram’s No.1 market.

US Time Spent on Facebook Fell Last Year

The amount of time users spend on Facebook’s social platform and the frequency of their usage has also changed.

Last year, for the first time, the number of daily minutes US adult Facebook users spent on the property declined to 38 minutes from 41 minutes in 2017, according to our forecast. While usage will hold at 38 minutes this year, we expect time spent will decline again next year to 37 minutes.

For more on our latest forecasts for social media usage, see our upcoming report “Q2 2019 Social Trends.”

Even though Facebook users are spending less time on the platform, they visit more frequently than users of other social properties do. About half of Facebook users in a January/February 2019 study of US adults by Pew Research Center used it several times a day, compared with 46% for Snapchat, 42% for Instagram and even lower percentages for YouTube and Twitter.

Consumer Attitudes Are Worsening

Thanks to privacy concerns and media scrutiny, consumer attitudes toward Facebook have worsened.

More than eight in 10 US internet users surveyed by Clever Real Estate in March 2019 said they were concerned about how Facebook used their data. The level of concern was highest among those ages 55 and older and lowest (but still quite high) among those ages 18 to 34.

ID Experts’ March 2019 study of US internet users, conducted by Morning Consult, revealed that 68% of respondents were either very or somewhat concerned about privacy and security on Facebook, while 40% had that level of concern about Instagram.

Privacy was one of the top concerns for the respondents to Edison’s study who were using Facebook less often or not at all. The top reason, cited by 60%, was their dislike of rants or comments that were too personal, followed closely by negativity (59%), too many political posts (58%) and concerns about privacy (57%).

Public opinion about Facebook has fallen, thanks in large part to the intense media scrutiny. In an October 2018 survey of US adult internet users by The Harris Poll on behalf of Fortune, only 22% said they trusted Facebook with their personal data either “a lot” or “a fair amount.” By contrast, Amazon was trusted by 49%, while Google was trusted by 41%.

Other surveys found similarly negative attitudes toward Facebook relative to other properties. For example, one-third (33%) of US consumers surveyed in March 2019 by the Wall Street Journal and NBC News, conducted by Hart Research Associates, felt either somewhat or very negative toward Facebook, while 27% felt that way about Twitter (which is battling its own issues with bad actors and abuse). Only 4% reported negative feelings toward Google, 12% toward Amazon and 14% toward Apple.

Attitudes like these are clearly weighing on Facebook; it is beefing up its ad spending this year in an attempt to shift public opinion. According to a June 2019 Wall Street Journal article, ad spending could more than double in the next two to three years.

Whether these concerns are causing people to leave Facebook remains an open debate, however. On one hand, there are surveys such as one conducted by The Harris Poll for Symantec’s Norton Lifelock, a cybersecurity service. It found last October that 33% of US internet users ages 18 to 38 and 31% of those ages 39 to 53 had deleted a social media account due to privacy concerns in the past 12 months. (The survey didn’t ask which account, however.)

On the other hand, when Hub Research asked US TV viewers back in June 2018 whether the Cambridge Analytica saga had changed the way they interact with Facebook, only 20% said they had added or changed their privacy settings.

Consumers Put Social Media Advertisers on Watch

Consumers’ concerns about social media are starting to land on advertisers’ shoulders.

More than half of US internet users surveyed by the Economist and YouGov in April 2019 said they thought the government should regulate how social media companies safeguard users’ data, while 41% and 33%, respectively, wanted regulation of potentially discriminatory targeted advertising and of political advertising on social properties.

When ad targeting tools are used inappropriately, 53% of US internet users lay blame on both advertisers and social media companies, according to the Economist/YouGov study.

Consumers are also paying attention to the environment surrounding the ads they see. A June 2019 study of US adults by measurement software firm DoubleVerify and The Harris Poll found that 82% believed brand ads should appear “on content that is safe, accurate and trustworthy,” and 65% would stop using a brand if its ad appeared near “false, objectionable or inflammatory content.”

Consumers’ growing awareness of how companies use their data has also led them to be less willing to share with brands; 71% in the DoubleVerify poll said they were sharing less with brands than they were 12 months ago.

How Facebook Ads Will Evolve

Facing governmental investigations, declines in consumer attitude and increasingly restless advertisers, it’s clear that Facebook’s approach to advertising will need to change. As Peter Scherr, CMO of used-car retailer Vroom, put it to us: “They will be compelled to innovate and find ways to thread the needle to satisfy customer demands for transparency and fairness with respect to privacy, but also serve the needs of advertisers.”

Predicting the future has never been easy when it comes to Facebook, and that’s more true in mid-2019 than ever. But we feel confident that the viewpoints of the high-level ad execs we spoke to, combined with our decade-plus of researching Facebook’s ad business, give us a strong position from which to envisage what’s to come. But we also know that forecasting anything beyond the next two years is close to impossible.

What follows is our guide to how we expect various areas of Facebook’s ad business will evolve through 2021.

Regulation and Ad Targeting

YES: Regulators will force privacy-related changes to Facebook’s ad business.

Facebook faces a dizzying array of inquiries and investigations around the world. In the US, the FTC will enact a reported $5 billion fine on the company, and when everything is finalized by the US Justice Department in the coming weeks, it is possible there will be additional sanctions on how Facebook can use the consumer data it has gathered. That’s something watchers such as Mozilla’s Kaykas-Wolff are hoping for.

"The FTC case is a positive step toward enforcement in the US. But given how big Facebook is, a fine alone, no matter how much money, will not change the way Facebook does business,” he said.

Even if the FTC does not end up putting restrictions on Facebook’s business, other regulatory bodies might. There are currently multiple investigations into the company’s data practices in Europe and Canada.

Given all of this regulatory scrutiny, we feel comfortable predicting that Facebook will be forced to change at least some of its data practices—in some countries—in the future. And since consumer data is the lifeblood of Facebook’s ad business, those changes will affect advertisers.

“Any change will be government- or regulatory-oriented,” Singh of Savvy Matters said. “I do think it is needed; it's just a matter of time. When regulation happens, the question will be what data continues to be available to drive targeting and whether Facebook will perform as effectively as it did before.”

It’s important to remember that Facebook is not alone in this by any means. Other properties such as Google and Amazon are also the targets of privacy and data usage investigations.

For example, US state-led privacy legislation, such as the California Consumer Privacy Act (CCPA), would also restrict many other types of companies, including other tech platforms as well as marketers and data companies. Expected to go into effect in January 2020 (and be enforced beginning in July 2020), CCPA focuses on giving internet users in California more rights surrounding the collection, sale and use of their personal information.

As of June 2019, The New York Privacy Act, New York’s version of CCPA, was in senate committee. While The New York Privacy Act has many parallels to CCPA, it will also mandate further disclosure of how companies deidentify personal information and require companies put more security in place for data transfer and sharing.

Ad industry bodies, such as the Association of National Advertisers (ANA), are also raising their voices. In June, the ANA sent comments to the FTC supporting the idea of a federal privacy law that would give businesses a clear picture of what companies can and can’t do.

“We feel that we need to have a new paradigm of privacy that puts the consumer in a safe and in-control driver’s seat of their own data,” said Bill Tucker, group executive vice president of the organization. “We’re seeking some kind of balance between federal regulation and self-regulation.”

As the push for regulation continues, advertisers need to remain on top of the developments.

YES: Facebook will continue to ratchet back ad targeting.

While government regulators continue their investigations, we expect Facebook to make more changes to its ad targeting on its own.

We already saw this last year with the demise of Partner Categories, a targeting feature that used data from third-party data brokers. The company also earlier this year reduced targeting options for housing, employment and credit advertisers as part of a legal settlement over discriminatory targeting.

In fact, Facebook is now publicly downplaying the value of targeting—a change that we predicted would happen over a year ago. Speaking at the June 2019 Cannes Lions event, Carolyn Everson, vice president of Facebook’s global marketing solutions, said, “The targeting can be great; I'm not dismissing it,” according to a Business Insider article. "But there's also a ton of value in getting broad reach, and marketers are really starting to see that."

Amid the concern over the privacy issues related to targeting, some industry executives are also starting to strike a less sanguine chord about its value.

“One could argue that we've gotten so used to overtargeting that we’re missing out on reaching viable customers because they don't meet a specific criteria or fall outside of what we’ve narrowly defined as the right customer,” said Sarah Baehr, co-chief investment officer at Horizon Media.

“I don’t mind reduced targeting in exchange for a safer environment for users and advertisers,” Symonds of AKQA said.

However, less targeting will be a tough pill to swallow for the majority of advertisers. A March 2019 survey of media buying executives by Digiday ranked Facebook among the best for ad targeting. In Digiday’s research, respondents rated Facebook 3.76 out of 5 for ad targeting, behind only Google, which was rated 3.93.

YES: Popular targeting features including Custom Audiences,Lookalike Audiences and the Facebook pixel will come under new scrutiny.

Custom Audiences, Lookalike Audiences and the related Facebook pixel are tools that many advertisers, particularly performance advertisers and retailers, frequently use. They provide a large chunk of Facebook’s value to advertisers, and any changes to these features would strike a major blow. When advertisers say they are concerned about changes to Facebook’s targeting capabilities, they are basically talking about one or all of these.

The Facebook pixel is an analytics tool that helps advertiser track activity on their website, such as placing items in a shopping cart or completing a purchase. When buying ads on Facebook, the advertiser can use data from the pixel to target its ads.

A Custom Audience contains people who are an advertiser’s existing customers, such as email subscribers or people who have purchased from the advertiser.

A Lookalike Audience contains people similar to an advertiser’s existing customers. Advertisers create a Lookalike Audience by using data from the Facebook pixel, a Custom Audience, their mobile app data or fans of their Facebook page.

Several other digital properties offer a pixel, such as Snapchat, Pinterest and YouTube, and there are certainly other ways to track users across the web. But Facebook’s pixel gives advertisers valuable data. As a result, it has massive appeal.

So why are Custom Audiences, Lookalike Audiences and the pixel potentially at risk? They are already under scrutiny in Germany, where a data protection body in Bavaria ruled in 2018 that Custom Audiences takes users’ information without their consent and adds it to user profiles.

“In our opinion, usage of the pixel method also requires user consent in order to be permissible,” said Kristin Benedikt, head of the internet division of the Bavaria Data Protection Authority, in an April 2019 article in Netzpolitik.org, a publication covering digital rights and politics.

Also in Germany, the Federal Cartel Office, an antitrust group, ruled in February that Facebook obtains information about users and also nonusers without their consent, by using the pixel and other techniques. Thus far, there are no changes to the way businesses can use Facebook and Instagram; Facebook has appealed the decision and is working with the antitrust group to determine what implementation may look like.

In addition, Facebook directly referenced the pixel in a blogpost detailing its plans to roll out a privacy tool enabling users to clear the association of their off-Facebook activity with their profile. The tool has been dubbed “Clear History,” but it may not have that name when it launches.

“When someone disconnects their off-Facebook activity, we won't use the data they clear for targeting,” Facebook wrote. “This means that targeting options powered by Facebook's business tools, like the Facebook pixel, can't be used to reach someone with ads. This includes Custom Audiences built from visitors to websites or apps. Businesses should keep this in mind when developing strategies for these kinds of campaigns in the second half of the year and beyond.”

For more on CCPA and other privacy-related regulation, see the report:

Whether anything will actually change about these features is uncertain. But what is certain is that they’ll be looked into.

YES: “Clear History” won’t have as much impact as has been feared.

Although Facebook has publicly warned that the “Clear History” feature will negatively affect its ability to target advertising, it is possible that not enough users will use the tool to cause material changes.

“The discrepancy between people saying they care about privacy and doing anything about it is pretty large,” Nanigans’ Tregoe said.

Facebook, meanwhile, will most likely give the tool an initial publicity push but will probably place it in its dense and complicated privacy shortcuts section. That will make it even less likely that users will find it and take action.

And even for those who do use the tool, Facebook may still have enough data to build targeting buckets.

“They're still going to have data on what happens; all the behavioral aspects will be retained. It just won't be linked directly to the individual person,” the ANA’s Tucker said. He expects that Facebook will still be able to offer targeting capabilities by modeling the buckets based on that data.

YES: ‘Sign In with Apple’ will dent Facebook’s targeting.

Apple in June announced that it would begin offering its device owners an easy and more privacy-aware way to sign in to apps and websites by using their Apple ID. The sign-in process also lets users create a relay email address that hides their actual email address from the website or app.

These features, along with the fact that Sign In with Apple works with Touch ID and Face ID on iOS devices, may convince users to abandon Facebook Login, and that in turn would deny Facebook valuable off-Facebook data.

NO: There will be more contextually targeted ad options on Facebook.

Facebook’s secret sauce has been its ability to target ads to people based on the information Facebook has gleaned about them. This “people-based targeting”—a term Facebook often used in the past few years—will continue to be its focus, rather than contextual targeting.

Advertisers have asked Facebook for more contextual targeting—ads tied to the content surrounding them—but that has never been much of a focus for the company. The relatively new In-Stream Reserve Categories ad product, which lets advertisers place ads in video programming from verified publishers in categories such as news, food and sports, is about the extent of it.

Some place the blame on advertisers, which have been enticed by the idea of precision targeting. “The ability to target and segment an audience has become so seductive, and we've built such a massive infrastructure on it, that we've completely lost the idea of context,” said John Battelle, co-founder and CEO of Recount Media. “Advertisers seem to think that doesn’t work nearly as well as an audience stripped of context.”

But Facebook doesn’t see much of it in its future.

“When you start to think about things like Watch, targeting your ads based on the content may well become more relevant,” said David Fischer, chief revenue officer at Facebook. “But we generally take the audience- or people-based approach. I think that will continue to be a big part of our business.”

Messaging and Commerce

NO: Facebook becomes a US version of WeChat.

There’s been a lot of speculation that Facebook will become a one-stop shop for messaging, socializing and commerce, just as WeChat has become in China. But we just don’t see the momentum for that in the US, at least not by 2021. In an April 2019 survey from ad agency Hill Holliday, 55% of US smartphone users said they hate the idea of life without cash, and 45.3% don’t see any reason to use mobile payments.

It’s possible Facebook will have greater success in developing markets, where the payments infrastructure is less entrenched and access to credit cards is more limited. This is where its new cryptocurrency, Libra, will play a role. Facebook executives believe Libra will appeal to people who have limited access to banks and credit cards.

YES: Commerce ads will become more important.

Social commerce in general is finally starting to show real progress; 28% of respondents to Hootsuite’s 2018 Social Trends Survey said they had implemented social commerce or plan to in the next 12 months.

Social commerce “is an area that we're really enthusiastic about investing around,” Facebook’s Fischer said. “As we start to think about payments and the opportunity there, as well as thinking longer term about bringing augmented reality into the Feed, we think that this is an area that will grow and will become more powerful, both for discovery and all the way through to purchase.”

Ad formats that link more directly to purchases will also become more important. In a May 2019 Business Insider interview, Instagram’s head of business, Jim Squires, described a scenario where marketers might want to “bring shopping posts and content to new audiences that aren't following” an account.

Instagram’s recent launch of branded content ads—feed ads that promote creators’ branded content—is just one example of this; there are sure to be others in the near future.

Facebook execs have publicly said that having easy access to a digital wallet would enable users to quickly and seamlessly buy something they see in an ad. That would give commerce a boost on the platform, as well as entice more advertisers to use commerce-focused ad objectives.

“I think social commerce can be, and will be, a good portion of their business going forward,” said Zach Morrison, CEO of Elite SEM, a digital marketing agency.

Social commerce activity will also help feed valuable data about purchase activity back into Facebook’s ad engine.

“Amazon is a rising horse in the digital media space due to the amazing first-party data. I know you're going to be in the market for a vacuum based off of their first-party data that they're picking up across their closed-loop network,” Kapoor of SharkNinja said. “It is phenomenal, and it's something that the Googles and the Facebooks cannot compete with because they don’t have the transaction side. I think that's where Facebook's strategy of starting to build out a commerce solution, either through Marketplace or Instagram shopping, is going to be critical to their overall strategy for the next 36 months.”

YES: Facebook will struggle to gain advertiser support for Messenger.

Facebook is trying to make Messenger the centerpiece of its move toward private messaging, but in the US, a combination of slow usage gains and marketer apathy will keep it from gaining much traction as an ad platform in the next couple of years.

Messaging can be a powerful tactic for things like customer service or order processing. Even so, many businesses have been slow to adopt messaging platforms for this purpose.

“Businesses want to have relationships with people, whether it's acquiring new customers or managing an existing customer base, and messaging is a really powerful way to do that,” Fischer said. “But I think if you talk to a lot of businesses, particularly larger businesses, they're not necessarily engaged in a messaging strategy.”

In the US, 36.4% of the population will use Facebook Messenger in 2021, according to our forecast, up less than 1 percentage point from 2019’s 35.6%. In 2018, only 30% of the largest clients of ad buyers surveyed by Cowen and Company advertised on Messenger.

“Advertising is ubiquitous in messaging platforms in Asian markets,” said John Dobrowolski, general manager of social at digital ad tech company Kenshoo. “There is a possibility that Western consumers will be trained to go in that direction. But I'm skeptical.”

Stories, Video and Groups

YES: Facebook will double down on Story advertising, offering new ad formats, objectives and features.

Instagram Stories are still rising in popularity among advertisers, and the tools to create and distribute Story advertising will get only better in the next couple of years. Consumer usage of Stories is also holding strong on Instagram, and as long as Facebook keeps promoting them on the main app, they will eventually grow there as well.

As a percentage of spending, however, Stories are still quite small. In Q1 2019, 8% of the Instagram ad spend by clients of Kenshoo went toward Stories. And among clients of Nanigans, the figure was even lower, under 5%. Even as Stories and other more-private content and communications formats grow, Facebook does not anticipate that the News Feed will go away.

“One thing that's really important for people to understand is that both are important and both will continue to be important,” Fischer said. “Newsfeeds on Facebook and Instagram are growing surfaces, so we think those things will continue to grow in terms of being a business opportunity.”

YES: Advertisers will flock to video ads, in all forms.

There’s no end in sight to advertisers’ demand for video inventory in social media, so we expect Facebook to continue to mine for new ad opportunities with that medium.

Facebook and Instagram together will take in 85.8% of US social network video ad revenues and nearly one-quarter of all US video ad spending this year, according to our forecast. Video spending will reach $8.88 billion on Facebook and Instagram this year, amounting to 31.1% of all Facebook ad revenues in the US.

According to Kenshoo’s Q1 2019 trends report, video ads made up 44% of its clients’ worldwide social ad spending in Q1 2019. And in Q4 2018, video was an even bigger part—61%—of Nanigans’ clients Facebook ad spend.

Advertisers haven’t always been happy with the performance of in-feed video ads, however—a paradox considering their eagerness to buy them. They complain that it’s too easy for users to scroll right past them, and completion rates suffer as a result.

Expect Facebook to develop better ways to measure and value users’ attention to video ads—in addition to continuing to innovate on ways to display them.

“Video, messaging, Stories: those are the big ones advertisers should pay attention to,” Fischer said. “If you look at where people are spending time and focus your strategy there, that will lead a lot of marketers to pay more attention to those three areas.”

YES: Facebook will overhaul its streaming video strategy, including Watch and IGTV.

Video advertising may be tremendously popular on Facebook, but Facebook Watch and IGTV haven’t been a resounding success. Facebook said in June 2019 that worldwide, 720 million people monthly and 140 million people daily spend at least a minute on Watch. Daily users spend an average of 26 minutes. Those figures are all up from previously released stats, but a minute of viewing time isn’t much.

Instagram hasn’t revealed any stats about IGTV, its long-form video offering aimed at creators, since it launched a year ago. But news reports have described lackluster uptake among creators and low download counts for the standalone app (videos are also accessible from within Instagram itself). And Instagram recently started allowing users to upload horizontal videos after launching with a vertical-only format.

Both properties continue to invest in these video platforms; Facebook has developed new sports and news partnerships for Facebook Watch as well as original programming with creators.

Among monthly digital video viewers in North America, only 37.3% stream videos on Facebook, according to February 2019 research by Jacobs Media. Facebook Live was used by just 7.4% of respondents. The good news is that Facebook ranked close to Amazon Prime Video (38.1%) and higher than platforms like Hulu (22.5%), digital versions of premium pay TV (21.8%), CBS All Access (4.6%) and several others. But it was far behind Netflix (68.9%), YouTube (61.0%) and network TV sites (48.1%). The study didn’t ask about video usage on Instagram.

Estimates of Watch’s ad potential are high; Deutsche Bank said it expects ad revenues to reach $5 billion annually in a few years, according to a June 2019 article in TheStreet. IGTV has yet to start taking advertising more than a year after its launch. Instagram says that’s because it’s still figuring out what sort of payment structure will work best for creators.

But both Watch and IGTV feel like they are still experimental. Where Stories are a bona fide hit (at least on Instagram), these are not. We predict that Facebook will eventually stop positioning Watch as a separate place to watch video and will instead find more ways to incorporate them into the News Feed or its messaging environments.

As for IGTV, allowing creators to use Instagram as one of many distribution sources for their videos makes a lot of sense. A standalone app ultimately does not.

YES: Ads will come to Groups.

If you believe Facebook CEO Mark Zuckerberg, Groups are a big part of Facebook’s future. He first started hyping Groups a few years ago, and gave them a bigger splash at the recent F8 conference. The company is also running a major TV ad campaign promoting Groups.

Groups don’t contain ads, but we believe they will within the next two years, possibly as soon as 2020. Facebook’s strategy has been to build consumer behavior first, then allow marketers to use a feature organically, and eventually launch a monetization strategy. The first two steps in that path have already happened, leaving only ads as the final step.

What form might the ads take? We’re placing bets on a gentle approach, with minimal targeting. Using Instagram’s Explore ad rollout strategy as a guide, where ads will not appear until a user has tapped on a tile to see a post and then continues to scroll, we think subtlety will be key in Groups ads.

“If I see myself as a nefarious advertiser with client growth as my only goal, then being able to target individuals in specialized groups is highly valuable,” said Greg Allum, vice president of social and display at LQ Digital. “But I believe we are at an inflection point with social media and digital advertising,” he said, a time when it will be more important to value what is appropriate over what is possible.

Branded experiences is another approach. Instead of using typical targeted ads, marketers could incorporate their brand messaging into group activity more organically, Marshall of Wunderman Thompson said. “What if we're able to work with one of our clients to help make sure that families who are looking to go to Maui for spring break can manage, plan and communicate within that group setting? It goes from ad serving to brand utility, and it's not fighting for eyeballs, but it's helping tap into people's passions.”

Ad Revenues

YES: More advertisers will feel comfortable voting with their dollars.

At this year’s Cannes Lions advertising festival, Interpublic (IPG) CEO Michael Roth voiced what has been on the minds of many marketers.

“Everyone talks about government regulation breaking [Google and Facebook] up. But what really will happen is our clients will start not spending with them. And that will be the biggest effect eventually if it doesn’t get corrected,” he said in an interview with CNBC.

Entities such as Mozilla are publicly discussing their rationale for pulling advertising from Facebook in hopes of creating change.

“We are hopeful that Facebook and other technology companies can make it very clear about how consumer data is being used, and what consumers have the ability to opt in and opt out of. We're not in a position yet where it's actually happened,” Kaykas-Wolff said.

While we don’t expect many advertisers to follow the lead of Mozilla and pull all of their Facebook ad spending, we think that over the next couple of years more advertisers will become less complacent and will take a harder look.

“I see Facebook being a fundamental part of our marketing plan going forward,” Lowrie of ANGI said. “But I also think that there will be other ways to reach audiences, whether they be new technologies, new platforms or just whether we start to see a shift in user behavior to other places. I don't think Facebook becomes significantly bigger than it is now without pretty major intervention to their advertising model.”

“The wonderful thing about the ecosystem we work within in marketing is that when a property starts to slip, another one takes up the slack,” Potbelly’s CMO Rhoten said. “I'm not worried about losing the reach on Facebook because either they'll figure out a way and we'll keep working with them and even expand our relationship, or they'll start to slip and we'll go somewhere else.”

The challenge of finding a viable alternative to dominant players like Facebook is evident in findings from a spring 2019 study of marketers and agencies by Factual, a location-based advertising platform. Nearly two-thirds of respondents (65%) said they were seeking alternatives to Facebook or Google to improve their ad outcomes. But when Factual asked them to name other properties they were considering, many cited YouTube (owned by Alphabet) and Instagram (owned by Facebook). What’s important for advertisers to remember is that they have options.

“Most people will say ‘Without Facebook or Google we can't do anything.’ But they've got many, many options,” Publicis Groupe’s Tobaccowala said. “You can't just get lazy and be reliant on one platform or two. Think broader, think deeper, play one against the other, and let your money do the talking. Because what people understand is money.”

NO: One single platform will benefit if ad dollars do move.

We asked many of our interviewees where their (or their clients’) ad dollars would go if they were to decide to shift away from Facebook/Instagram. There was no clear winner; we got multiple and wide-ranging responses including Amazon, addressable TV, ad networks, email marketing, Google search, YouTube and even offline events. And very few said they’d move dollars to other social properties such as Snapchat or Twitter.

Among these, addressable TV offers a compelling value proposition relative to Facebook, given its ability to offer the branding environment TV advertisers are used to, along with some of the targeting capabilities like they get from Facebook. We define addressable TV as targeted TV ads delivered on a home-by-home basis via cable, satellite and telco boxes.

The business is not growing as quickly as we had predicted, however. In our updated forecast published in June, we estimated the US market to reach $2.00 billion this year, down from our previous forecast of $2.54 billion.

Amazon is another often-cited potential beneficiary of Facebook dollars, but it’s a very different platform from Facebook. Most of its ad inventory is focused on search, while Facebook’s is display.

“Amazon is gaining more and more interest, but that data and the creative canvas is exponentially different from what brands expect on Facebook,” said Justin Marshall, president of Wunderman Thompson Seattle.

Amazon is chipping away at the share of the US digital ad market held by Google and Facebook, but its impact is being felt more strongly on Google than on Facebook, due to Amazon’s strong search ad business.

NO: Instagram will be a buffer if there are ad losses at Facebook.

Sure, Instagram has the youth audience, the creativity and the buzz. It’s popular and growing faster than Facebook. But it isn’t designed to support a massive ad business like Facebook is.

Even though Instagram is growing fast—we expect that worldwide ad revenues will rise 58.4% this year to $14.41 billion—it will make up just 21.4% of total ad revenues for the company this year and 28.5% in 2021, based on our forecast. Facebook remains the key source of ad revenues for the company overall.

Instagram is steadily adding new types of advertising, such as the upcoming launch of ads in the Explore feed, but there are still fewer ad placement options than on Facebook, and ad load is lower. In addition, Instagram’s monthly user base is less than two-thirds of Facebook’s in the US (106.7 million this year vs.171.5 million for Facebook), and the share of US users who are ages 35 and older (who tend to have higher incomes and spending power) is just 40.1% to Facebook’s 58.3%.

All of that adds up to the potential for significantly higher ad prices if auction competition were to ramp up, and that will cause some advertisers to think twice about moving more dollars to Instagram.

Key Takeaways

Advertisers remain committed, for now. Facebook’s ad revenues are still growing faster than those of the overall digital ad market.

Advertisers are being more vocal about their concerns, however. Their biggest worries are about a loss of targeting capabilities or audience.

Keep close tabs on Facebook ad performance and effectiveness.Don’t put advertising on autopilot or let inertia take over.

Have a plan. Businesses should be prepared in case there are ad targeting changes that affect the way they use Facebook.

Focus on Stories, video and messaging. These are the three key areas where users are spending their time, according to Facebook.

原文链接：https://content-na1.emarketer.com/facebook-advertising-in-2021?ecid=dfda7bcd4b86471fba0d362c1f4a962e