Singapore – A new study from Taboola, done alongside Qualtrics, has recently revealed that nearly 75% of performance marketers are experiencing diminishing returns on social media ad spend; and around over 50% expand into additional channels beyond social.
It noted that the diminishing returns occur as CPA rises with increased spend, such that the incremental conversions decrease with each additional investment increment. Some of the primary causes include ad fatigue, increased competition, and platform changes, making it difficult to sustain performance.
In terms of struggle on paid social Struggles, nearly 80% of respondents experiencing diminishing returns report that the impact isn’t limited to the final stretch of their budget, often starting early and affecting more than half of their total spend. Meanwhile, over 60% believe audience saturation and user fatigue from repeated ad exposure are the primary reasons for diminishing returns.
Other contributing factors include rising ad costs (47%), algorithm inefficiencies (47%), weaker targeting due to privacy restrictions (36%), and ad creative fatigue (49%).
Moreover, Over 80% of performance marketers are using multiple tactics to combat diminishing returns, with 55% expanding into additional digital channels beyond social media.
Common mitigation tactics include testing new ad formats (70%), changing audience targeting strategies (67%), and shifting budgets between high and low-performing campaigns (47%). To stay competitive, the report stated that marketers need strategic diversification, continuous testing, and agility to adapt to changing trends and platform dynamics.
Adam Singolda, CEO of Taboola, said, “While social media accounts for a large portion of performance advertising budgets, many marketers have hit a barrier in the form of diminishing returns. More spend just isn’t translating into better results. The findings in this report point to difficulty in sustaining performance over time, with marketers seeking solutions that can help them overcome that barrier.”
