Why charities will be paying 20% more for Facebook

Why charities will be paying 20% more for Facebook

By Mike Colling, founder of The Kite Factory and a director of JICMail.

This is a piece I had thought I would never write. For the last decade there has only been one-way traffic in budget allocation by charities between mail and digital media. And it’s not been in mail’s favour.

The chart below shows the budget allocation across media channels by UK charities in Q2 of each year from 2016 until this year.

During these five years the budget allocation to mail has halved, with investments shifted to TV and to digital media – primarily to Facebook.

The chart below shows one of the major reasons why.

Around 70% of us spend nearly two hours a day on social media, almost all of it with Facebook or Facebook-owned Instagram. That’s nearly eight times more minutes than we spend with mail.

And then there is the price gap. Even allowing for dodgy non-JIC research on which we rely for Facebook audiences, one would be hard pushed to spend more than £10 per thousand for a Facebook ad. Mail, even helped by JICMail, would have come in about 20 times that price for most audience segments.

Hey ho, you can see why I had not thought to ever write this piece.

But, in the words of one Mr Dylan, “the times they are a-changing.” Facebook is facing prevailing winds, all of which are blowing in mail’s favour as an effective medium for charities, especially for fundraising this Christmas.

Firstly, they have had a price hike. HMRC in their wisdom have decided to level the playing field with mail and have applied standard rate VAT to all charity advertising on Facebook. Charity CPTs have jumped 20% following the HMRC guidance issued in August. They still won’t be as expensive as mail, but the rise will make an element of Facebook investment ineffective.

Secondly, they have seen response rates suffer during lockdown. The chart below shows data from The Kite Factory response index for social.

We have created a tool that is similar to Google Trends. It tracks the response, by channel, for a blended average of all of our clients active in any one week.

This shows that, on average, response to a paid social campaign has been lower since lockdown started than in January and February this year.

Our explanation is the clutter in the newsfeeds. Facebook responded to the budget cuts from large advertisers by dropping rates and enticing many new small SMEs to advertise. Result – lots of clutter that impacted response for many clients.

The last wind is a tail wind for mail rather than a headwind for Facebook. The Q1 JICMail data showed just how mail has thrived in 2020. 80% of us now open all of our mail, including all the door drops and pure advertising mail, compared with 69% in the same quarter last year.

We’re also sharing and discussing the mail we receive with others more often (up by 13% vs last year), resulting in many more commercially valuable outcomes (likeliness of purchase or donation is up by 20% and website visits up 60%) as a result of receiving a piece of mail.

As a result, we are keeping mail for longer – up to 68% longer, giving us the opportunity to return to it again and again over a typical 9½ days.

All of the above gives all of us in the mail value chain reasons to be cheerful – and new reasons to suggest to charity clients that they switch budget from Facebook to mail this Christmas. Maybe not all of the Facebook budget, but enough to bring the client a little more cash and cheer.