Introduction
The Readout, a quarterly trends and learnings report by Nest Commerce, derives its insights from aggregated advertising data across Nest’s portfolio of ecommerce clients. Drawing on global ad data from over 40 ecommerce brands, Nest manages an annual media spend exceeding £100 million.
Rising Consumer Confidence and Ad Spend on Meta Platforms
Against the backdrop of increasing consumer confidence, the report highlights a remarkable 57% year-over-year surge in average ad spend on Meta platforms. This figure is also up by 5% from the peak season in Q4 2023. The overall cost per thousand impressions (CPM) on Meta has increased by 6% year-over-year due to heightened competition among advertisers responding to the optimistic market outlook.
Strategic Shift Towards Paid Social
Nest Commerce’s research indicates a strategic shift towards paid social channels to drive growth across all stages of the customer journey. The data shows a substantial 4.2x year-over-year rise in awareness campaigns on Meta, underscoring the growing use of upper-funnel marketing strategies on social platforms. This shift is propelled by factors such as rising customer acquisition costs and declining brand search visibility. Brands focusing solely on bottom-of-the-funnel strategies are predicted to fall behind in this evolving landscape.
Increasing Costs of Search Advertising and YouTube’s Potential
While Search remains a critical channel, its cost is rising. The report reveals a 49% year-over-year increase in cost-per-click, pressuring lower-funnel strategies reliant on this platform. However, investing in full-funnel performance across Meta, combined with search efforts, can help mitigate these increasing costs. Performance Max campaigns on Google continue to show strong results, with a 72% year-over-year increase in return on ad spend. Nest Commerce recommends using Performance Max alongside other channels and excluding brand terms for optimal outcomes.
Within Google’s ecosystem, YouTube presents a significant opportunity at the top of the funnel. YouTube’s CPMs are 20% lower than Meta’s awareness ads, making it an effective channel within a video-first full-funnel strategy.
The Crucial Role of Short-Form Video Content
The report emphasizes the importance of data-driven creative optimization for success in paid social. Conversion rates for Reels conversion objective ads are 150% higher than standard campaigns, highlighting the impact of engaging short-form video content on sales. Ad spend on Reels has increased 2.4x year-over-year, with improved engagement and a 23% year-over-year decrease in traffic costs.
Nest Commerce also points to the growing potential of TikTok in driving sales. Conversion objective ad conversion rates on TikTok have seen a significant 51% increase for two consecutive quarters, presenting a promising avenue for brands aiming to leverage this platform for ecommerce success.
CEO Insights
Will Ashton, CEO of Nest Commerce, notes, “Online retail conditions are much more favorable than this time last year. However, brands looking to scale will find that performance works very differently than in 2021. As our report highlights, winning online marketing today means a full-funnel, social-first approach that requires continuously rotating creative. This maximizes efficiency and fuels growth.”
He adds, “The truth is many brands haven’t adapted, clinging to outdated strategies that are failing to deliver. Retailer confidence needs to catch up to consumer confidence – the time for excuses is over. Q4 is fast approaching, and those who haven’t adapted risk falling behind.”
About Nest Commerce
Nest Commerce is a full-funnel performance agency powering marketing for ecommerce brands such as ME+EM, Reiss, Hims, Monsoon, Crew Clothing, and Nadine Merabi. The Readout report, a quarterly publication, aggregates data from Nest’s portfolio of ecommerce clients, utilizing global data from over 40 ecommerce brands managing more than £100 million in media spend annually.