Facebook has been an obvious home for many educators, YouTubers, coaches, and other small business owners for over a decade. But is it time to move on?

The massive social network, now a part of parent company Meta, fits into so many marketing strategies because of its reach.

Buying ads on Facebook is like renting out a little bit of space on really in-demand real estate, so it makes sense that it's been the go-to social platform for advertisers.

But as Facebook conversion rates decline thanks to several factors affecting the platform, advertisers are questioning the effectiveness of Facebook Ads.

Meta lost a substantial amount of ad revenue in recent years – investors wiped $80 billion off the market value of Facebook and Instagram after 2022’s third-quarter earnings report revealed halved profits. CNBC reports that the social media company lost nearly 60% of its stock value that year alone.

Not to mention, the average conversion rates for many industries are in question as new revelations have caused many small businesses to lose trust in Facebook.

Apple’s recent tightening up of user privacy is also making it near-impossible for advertisers to know how their Facebook campaigns are performing. While it used to be a great way to track a user's every move, now, not so much.

In recent years, more brands are considering whether to use Facebook at all.

This article will look at the key factors negatively affecting Facebook, why you may want to stop Facebook advertising, and some better alternatives to consider.

Let’s start with the current issues – what's going on with Facebook and why might Facebook Ads not be right for you?

The iOS 14 update remains a problem for Facebook

The Apple IDFA (or Apple ID For Advertisers) update diminishes the quality of consumer reach on Facebook Ads.

That’s because the update affects targeting, ad personalization, and tracking by changing how iOS 14 handles user privacy. These are essential for achieving higher conversion rates through advertising.

With the update, mobile devices running iOS 14 show Facebook users and others a privacy pop-up asking if they want the given mobile application to track their activities.

90% of mobile device users decline the app tracking request by Apple.

In a public release, Facebook claims the update is about profits for Apple, not privacy. They note the change will force businesses that offer free services on Apple's ecosystem to turn to subscriptions and other in-app payments for revenue.

That means Apple will profit, considering they make money off each sale on their network. Facebook claims Apple is hurting small business owners already struggling and isn’t even playing by the rules it set for third-party mobile apps.

But are they right?

Indeed, advertisers are experiencing the effects of Apple's update, with many being small business owners and solopreneurs. The update makes effectively reaching new customers with relevant ads challenging. Businesses cannot accurately attribute their Facebook campaigns or reach the right people when the necessary data is unavailable.

For example, an accountant looking to target specific audiences will have to take a stab in the dark. It doesn’t do them any good to reach people who are not a good fit for their products or services.

Facebook did work tirelessly to prevent the Apple iOS 14 update from becoming a reality, even commissioning academic research published in June 2021.

The researchers concluded the iOS 14 update was "an anti-competitive strategy disguised as a privacy-protecting measure." They note that Apple now "prohibits non-Apple apps from using information essential to providing relevant, personalized advertising, without explicit user opt-in."

Researchers also point out that Apple is showing users an “ominous and misleading prompt” about tracking.

Here’s that prompt:

But the changes by iOS 14 affect other social media platforms, too, not just Facebook.

Snap, the parent company of Snapchat, fell by 25% in stock value after missing out on its earning targets due to the iOS 14 update.

When people see less relevant ads, they convert less – and that means potential losses for solopreneurs and small business owners.

Quality targeting and tracking will always be important to advertisers. Businesses want to reach the right people and know their ad spend is effective. No one likes paying for ads that aren’t working or won’t reach a quality audience.

So far, the iOS 14 update has led to the following concerns for small business owners:

Rising Facebook Ads costs and performance drops

Facebook published an article noting the cost of achieving business goals may rise due to the iOS 14 update. So it's no surprise that companies using Facebook Advertising are noticing an increase in Facebook Ads costs.

Businesses are spending more money to reach the same target audience, and measuring Facebook Ad campaigns has become harder.

Today anyone who wants to track web and app events for iOS 14.5 and later must use the new Aggregated Event Measurement system. But that involves jumping through extra hoops, including domain verification, setting up conversion locations, and conversion tracking.

Here’s a more detailed breakdown of how the iOS 14 update affects the three core areas concerning Facebook Ad campaign performance.

  • Targeting – The fact that the vast majority of iOS Facebook users opt out of tracking means target audiences are a lot smaller for retargeting, Core Audiences, and Lookalike Audiences.
  • Reporting – Advertisers continue to see inaccuracies in key metrics like Facebook Ad conversion rate (CVR), return on ad spend (ROAS), and cost per action (CPA).
  • Optimization – Due to the Apple update, Facebook advertisers can only track eight “conversion events” per website. That means Advertisers can no longer rely on the company’s algorithm to optimize their campaigns. Put another way; advertisers can't feed the algorithm enough conversion data and have it automatically serve ads to people who are most likely to convert.

All of the above is bound to impact average Facebook Ad conversion rates for different industries.

Studies question Facebook Ad campaigns effectiveness

During the massive brand boycott of Facebook in 2020, Crimtan ran a study to test the efficacy of Facebook Advertising for their clients.

The company found that turning off Facebook Ads had no noticeable impact on bottom-line revenues. This suggests advertisers may reach the same number of customers at a lower cost without Facebook.

Also, the Facebook tracking accuracy and targeting problems prompted a North Carolina State University team to investigate the implications of false positives on ad spending.

Their study found that about 30% of Facebook’s inferred interests are inaccurate or irrelevant. This suggests Facebook isn’t good at understanding context as it relates to people's interests, which leads to inaccuracies.

These findings have significant implications for ad spending. The number of advertisers that pay Facebook to reach new customers is immense.

Ad dollars do not affect Facebook organic engagement

Building a Facebook page and gaining a large following is challenging. But it’s even more difficult to keep that audience engaged.

That’s because of changes made to Facebook’s algorithms. The social network made it difficult for brands to reach their audience organically. As a result, small business owners can expect an average engagement of just 0.07%.

In fact, the average organic reach for Facebook pages has been declining steadily.

From 2018 to 2020, reach declined noticably – in 2018, Facebook posts saw a 7.7% reach. In 2019, it was 5.5%. In 2020, the average Facebook page organic post reach was down to 5.2%.

The historical data of Facebook page organic reach (2012 to 2016) by Ad School Master also supports the declining trend. Facebook page organic reach dropped to 2% in 2014 but increased slightly after 2016.

Some people assume running Facebook Ads can improve organic reach on the social network. But the truth is it doesn’t.

Even if companies spend thousands building their following, they would only reach a tiny fraction of that audience with Facebook Ads.

A history of allegedly misrepresenting results from Facebook

According to The Financial Times report, an anonymous employee claims Facebook misrepresented its potential audience reach to advertisers (or social media marketers) for many years to inflate revenues.

The employee claims Facebook knew its potential reach estimates were wrong but did nothing.

Also, there’s an ongoing class action lawsuit greenlit early last year over Facebook misrepresenting the size of its advertising audience.

Naturally, many small business owners see the situation as confirmation that Facebook is untrustworthy – and their platform may not be effective.

This isn't the first time Facebook’s data has been questioned. Issues go back to 2016 when the company had to release several clarifications about inaccuracies in Facebook data.

16 percent of Facebook accounts are either fake or duplicate

The social media platform revealed its estimate for duplicate accounts in the last quarterly report of 2019.

According to Statista, Facebook estimated 11 percent of monthly active users were fake or duplicate accounts.

That’s around 275 million monthly active users on the social network at the time that are not real.

In addition, Facebook removed a record 2.2 billion fake profiles in the first quarter of 2019. The proportion of 'false' (misclassified and undesirable) accounts was 5 percent, amounting to about 137 million user profiles.

Facebook also took action on 1.4 billion fake accounts in the second quarter of 2022 alone. This is down from 1.6 billion in the previous quarter.

The social media platform considers fake accounts to be any profile created with malicious intent. Also, accounts created to represent a business, organization, or non-human entity can be regarded as fake accounts.

Here’s the global number of fake accounts (4th quarter 2017 to 2nd quarter 2022):

Small businesses and solopreneurs would be right to find it difficult to trust a company that has this many duplicate and fake account troubles.

While Facebook ad performance benchmarks suggest businesses still do well, with some achieving above 10% Facebook conversion rates, the probability of inflated data is high considering all of the above.

Facebook benchmarks

These Facebook Ad performance benchmarks provide small businesses with insight into what a good conversion rate looks like and whether to bother with Facebook Advertising at all.

Average conversion rate (CVR)

Conversion rate is the percentage of users who complete a campaign objective or specific action. So low conversion rates can significantly affect revenues.

The average Facebook Ads conversion rate is 7.56% across industries.

Here's the breakdown:

As you can see, some industries are seeing very low conversion rates, including Industrial Services (0.71%), Technology (2.31%), and Travel and Hospitality (2.82%).

The sectors with the highest conversion rates are the Fitness industry (14.29%), Education (13.58%), and Employment and Job Training (11.73%).

Average click-through rate (CTR)

Click-through rate is a measurement that reveals the percentage of link clicks for an ad. The average click-through rate is 0.93 percent on Facebook across industries.

Here’s the breakdown:

Sectors with the highest click-through rates on Facebook are Apparel (1.24%), Legal Services (1.61%), and Retail (1.59%). Conversely, the lowest click-through rates are Employment and Job Training, Industrial Services (0.71%), and Finance & Insurance (0.56%).

Average cost-per-click (CPC)

This is a digital marketing revenue model where platforms bill advertisers for every successful link click.

The average cost-per-click for Facebook Ads is $1.72.

From the table above, Apparel ($0.45), Retail ($0.70), and Travel and Hospitality ($0.63) have the lowest cost-per-click. Conversely, the highest on the list are Finance and Insurance ($3.77), Consumer Services ($3.08), and Home Improvement ($2.93).

Average cost per action (CPA)

Cost per action is a digital marketing payment model where advertising platforms charge for the specific action taken by a potential new customer. For example, paying $50 per desired action is excellent when one customer is worth $10,000.

The average cost per action on Facebook is $27.11.

As you can see from the table, the industries with the lowest cost per action are Education ($7.85), Apparel ($10.98), and Healthcare ($12.31). On the other hand, Technology ($55.21), Home Improvement ($44.66), and Auto ($43.84) have the highest cost per action.

As you can see from the table, the industries with the lowest cost per action are Education ($7.85), Apparel ($10.98), and Healthcare ($12.31). On the other hand, Technology ($55.21), Home Improvement ($44.66), and Auto ($43.84) have the highest cost per action.

Are there better alternatives to Facebook Ads?

Very few companies can buy growth today. It’s not just Facebook Ads that are more expensive – Google Ads, Amazon, TikTok, and other major platform ad prices have skyrocketed.

Fortunately, there are many other ways to market your products that can deliver better results at a lower cost.

1. Search Engine Optimization (SEO)

Consider turning to SEO for growth.

The unique position of search engines allows them to generate quality traffic more efficiently than all social media platforms. This is because people use search to find specific things they are looking for at the moment.

For example, someone who searches for "the best way to start a subscription business" and finds Subkit is exactly where they need to be to achieve their goals.

Several studies also show organic search receives more click-throughs than paid advertising, including Facebook Ads. For example, this study revealed the #1 organic position on Google gets a 28.5% average click-through rate. The second position receives 15.7 percent, and the third gets 11 percent.

That’s massive compared to the average click-through rate of Facebook Advertising and Google Ads.

Facebook sits at a 0.93% average click-through rate, as noted earlier. Google has an average click-through rate of 4-6%.

Other advantages of SEO over Facebook Advertising include the following.

  • Search engines focus on sending traffic. People who use social media don't want to leave the platform. That’s because social media platforms design their systems to foster addictive behavior. For example, a link click from Facebook will open the landing page in an in-app browser, rather than the user's browser of choice. Meanwhile, search engines take you directly to the source and let you get on with your day.
  • Facebook is mainly used for entertainment and maintaining connections with friends and family. It's not well-suited for seeking products or services. Conversely, people primarily use search engines to find what they need or want.
  • Consumers who use search engines are usually further along in their buyer’s journey. As a result, organic search often leads to more conversions and higher conversion rates. Coaches, educators, YouTubers, and other solopreneurs don’t have to convince a search user that they have a problem in most cases. Instead, the landing page's job is to persuade the prospect to pick the business over others.
  • SEO is more cost-effective because you’re not paying for impressions or clicks. Marketing results also last long-term, resulting in much lower costs for most businesses.
  • There's consistency with SEO. Small business owners and solopreneurs can count on their web pages to drive roughly the same amount of traffic for many years.
  • SEO can boost a brand’s credibility. That’s because many people perceive Google search results as recommendations from the search giant. SEO can also positively affect brand awareness as businesses appear regularly in search results.

Let's suppose that's all enough to convince you: SEO is a winning game. You plan on using SEO now, so what's next? Best to understand the basics. The core elements of SEO are keywords, content, and link building.

Keywords

Companies need to know what consumers are searching for, and keyword research is the best way to do it. Many tools can help with the research, such as Ahrefs and Subkit, which facilitates many SEO processes and provides a wealth of best practices to follow.

The goal is to pick the keywords based on where they fit in the buyer’s journey stages (awareness, interest, shop, and purchase), to inform useful content that connects with your potential customer at the right time.

Keyword research tools will typically provide the following vital information.

  • Search volume. The higher the number of searches monthly, the better the potential traffic gains.
  • Keyword difficulty. This measures how strong the top-ranking pages are, usually in percentage (from 0 to 100). The lower the number, the less difficult it would be to outrank the top pages.
  • Average cost per click. This information can help small businesses understand how valuable a keyword is to the competition. For example, one could bet on a keyword if companies pay upwards of $10 per click for it.

Content

High-quality content is the most vital part of SEO – businesses can't engage audiences without it.

Ideally, businesses should begin creating content in various forms once the first wave of keyword research is complete, including:

  • Landing pages
  • Blog posts
  • Videos
  • Podcasts
  • Infographics
  • A whitepaper
  • An e-book
  • Social media posts
  • And more – get creative!

Great content is relevant, engaging, and shareable. Focus on the user experience first and the performance metrics will be a natural byproduct of amazing, can't-miss content.

Link building (aka external links or backlinks) refers to getting links from other sites that point to the business and is a critical search engine ranking factor.

External links inform search engines about web pages in various ways, including their probable value. The basic idea is the more backlinks the page has, the better it may be for the user.

But search engine algorithms assign different values to backlinks – an authoritative site like Forbes will get preference as more valuable. That's why a site with three high-quality links may outrank one with 50 subpar backlinks.

Businesses can use many tactics to build backlinks, including publishing noteworthy press releases and guest articles, adding the site to high-quality directories, and generating real brand awareness so others want to talk about your business.

See how Subkit helps teachers, coaches, YouTubers, and other small business owners with our SEO expertise: Request early access.

2. Referrals

Business referral marketing (aka word-of-mouth) has stood the test of time as a tried-and-true method of increasing revenue without incurring more costs. And no one – not Facebook Advertising, Google Ads, or any other ad service – can replace the effectiveness of referrals.

Here are some tips for using referrals to grow.

  • Provide great customer service and overall experience. This is how many successful small businesses gain word-of-mouth referrals. One study found 69% of consumers would make a recommendation to others after a positive customer experience.
  • Make a conscious effort to cultivate referrals. That means deliberately promoting referral programs. This may involve creating and managing marketing campaigns to target current customers for referrals.
  • Provide the proper motivation (a key component). For example, one could offer a 25 percent discount for every referral. That would encourage customers to advocate for the business.
  • Maintain a balanced incentive that motivates both parties (the referrer and the referred). This is why companies like Uber Eats provide referral codes.

Focusing on referrals is a better alternative to Facebook Advertising because customer acquisition cost is lower or zero. Customers refer people to businesses for free frequently, and referral marketing leverages the business’s existing network.

That's not all! Additional advantages to a referral strategy over Facebook Ads include:

High conversion rates

With Facebook Ads, paying will bring in link clicks, but most visitors won't convert. In contrast, a referral is likely to convert since people trust other people's recommendations.

One Nielson study found 77% of consumers are more likely to buy something if someone they knew recommended it.

Other notable studies covering the effectiveness of referrals include:

The power of referrals is real: There aren’t many marketing strategies that can achieve a 32% conversion rate.

More control

An advantage of focusing on improving referral rates is more control. Businesses set the terms, controlling the incentives and actions required.

The return on investment (ROI) is also predictable. For instance, a business can reduce the referral incentive if customer acquisition cost gets too high, more flexibly offsetting expenses to meet profit targets.

Momentum

A referral program provides momentum that grows exponentially over time. For example, one customer refers two friends, and they refer four family members, who then refer three co-workers.

Like a gift that keeps giving, the business generates nine leads from one primary customer.

Fosters connections

Referral programs encourage personal connections and a sense of community. That's because referring someone to a business shows trust and loyalty.

In addition, referral programs get people to talk about the business online and offline, which is excellent for building brand awareness.

3. Partnerships

Few things make an impact like strong collaborations (or as we call them, collabs) when growing a business.

Businesses should consider seeking strategic collabs with like-minded companies – particularly those that share target markets but aren’t direct competitors.

For example, coffee and tea stores can cross-promote each other. Similarly, two companies can bundle products together to create a subscription service and serve even more customers.

Collabs can boost revenue, create new opportunities, and fuel innovation. 95% of Microsoft’s revenue comes from its partner ecosystem, which is growing at an astounding 7,500 collabs per month.

Also, in 2021, Zoom’s Channel Partners contributed 40% to its revenues in Japan, and over 70% came from the U.S. Federal Government.

The business benefits of collabs include:

  • Access to a greater audience. Combining audiences multiplies outcomes. It’s also cheaper for both parties since it would otherwise take longer to reach the combined audience size.
  • Higher conversion rates. Traffic that results from partnerships converts better because the audience is highly relevant.
  • Cost-effective. There’s no need to pay for marketing alone. Instead, each company can collaborate resources to promote the services, splitting costs. Also, the initial cost of building brand awareness drops when entering a new market if one partner is established.
  • Adds value. Both businesses are introducing the target audience to solutions that solve unique challenges. This adds value and builds customer trust and loyalty. The old saying “people are judged by the company they keep" rings true for collabs between brands.

Is it time to ditch Facebook Ads?

All the challenges of Facebook Ads mean anyone advertising on the social network must work harder to see high conversion rates. That’s why some companies have begun moving their Facebook ad budgets away to other advertising platforms, investing in different ad types, or focusing on channels they own like creating an email list.

Companies that continue to advertise on Facebook must do more experimenting with ad formats, ad copy, targeting options (but keep in mind this is limited), third-party attribution solutions, and more – if they hope to even have a chance at great results.

At Subkit, we believe in a different approach:

  • Don't do ineffective Facebook Ads. Facebook can be good for some things, but it’s mostly ineffective.
  • Grow organically through collabs. Collaborations increase the potential number of new customers for all parties. It also provides businesses access to a more qualified audience than they would find on Facebook.
  • Don't do courses, create a knowledge community subscription instead. Connection remains a primary human need. With an online course, one person is sharing the knowledge, students typically don’t contribute, and they pay once for the course. In contrast, a knowledge community involves the students more, allowing them to share thoughts and even new knowledge with everyone. Students also pay monthly to maintain access to the knowledge community, which is fantastic.
  • Don't do subscription plugins, do subscription collabs instead. Collaborating with another business to create subscription products allows for cross-promotion and revenue share. This reduces costs on both sides and increases the pool of potential customers.

Start growing faster with a better alternative: Request early access to Subkit.