The Death of Direct-Response Advertising
17x ROAS. No retargeting. No funnel. This we achieved in the January 2019
It’s almost 3 years now and one thing we’re confident about is: we CANNOT replicate it. Not even with the same product.
Of course, we’re still hitting ROAS north of 5.0…but multiple elements come together to make it happen.
- Since then the CPMs have almost doubled.
- Attribution has messed up after the iOS 14 update
- Competition has increased.
A couple of years back, all you needed was a decent product (I say decent because shitty products still wouldn’t work), a good understanding of Facebook Ads, and you could make tons of money.
All powered by direct-response ads.
If you don’t know what direct-response ads are, here’s a quick brief:
Direct-response ads are the ads which focus on getting an instant response from the people you target. For most people, it’s asking people who don’t know who you are to buy, book a demo with your sales rep.
All without introducing your audience with anything.
Direct-response ads worked so well on Facebook a few years back was because the competition was lesser, people had lesser options, and algorithms were easier to crack.
And since all of these three elements have changed. You cannot expect to get this ROAS even with a perfect campaign set up.
Direct-response ads are dead.
Getting profitable ROAS will become even more difficult with cold audiences.
In fact, the whole profitability will be compromised if you’re operating at thin margins.
The only thing that can save you in the short-term is focusing on acquisition without making losses. At the same time, building audiences and following to which you can sell in the future.
Since competition is set to rise and tracking is all set to become difficult, getting positive RoIs are going to be increasingly challenging.
Brace up for the next few quarters.