“Write two letters”

An almost certainly apocryphal parable from the terminal stage of the Soviet Union goes like this:

Joseph Stalin, in poor health and cognizent that Nikita Khrushchev would likely succeed him as the Secretary of the Communist Party, summoned Khrushchev to a meeting. Stalin presented Khrushchev with two sealed letters and told him that they contained insights into leadership. Khrushchev was instructed to open the first letter when conditions became dire, and the second if that happened again. Khrushchev eventually encountered challenges and opened the first letter, which read: “Blame everything on me.” Time passed, and Khrushchev once again found himself in an untenable position, so he opened the second letter. It read: “Write two letters.”

The marketing equivalent of the first letter is “Blame poor performance on structural problems with Facebook or Google.” Unfortunately, the marketing equivalent of the second letter is the same.

Two persistent threads have circulated marketing circles on social media and Reddit for months, purporting to highlight structural deficiencies on Meta’s advertising platform and explain poor account-specific advertising performance:

• That Temu has saturated Meta’s advertising platform to such a degree that other advertisers are crowded out;
• That Meta’s AI-empowered tools are experiencing bugs or have become polluted with bad data over time to an extent that renders them ineffective.

I address Temu’s impact on social media advertising in this piece; my belief is that Temu’s ad spend, while extraordinary, is not meaningful enough relative to the scale of Meta’s platform to distort prices on it broadly. Further:

• Temu doesn’t seem to be pursuing high-value audiences;
• The metrics released by Meta for Q1 related to impression economics simply don’t support the idea that auction dynamics in the United States have materially changed since Temu launched in the US;
• Meta’s CFO stated explicitly in the company’s Q4 earnings call that “two-thirds of [Meta’s] China ad revenue came from advertisers outside the top 10 spenders in that country in 2023.”

And if Meta’s advertising platform is indeed broken, resulting in degraded advertising performance across the board, then no one told most advertisers: Meta’s advertising revenue grew 27% year-over-year in Q1. It seems entirely possible that Meta’s targeting tools have grown more effective at delivering value to such a degree that some advertisers — selling low-priced, generic products to broad audiences — are no longer competitive in auctions because their products don’t monetize or convert well enough.

Advertisers should be loath to extrapolate the challenges that they face as systemic problems or to attribute those challenges to platform-wide deficiencies. There are innumerable reasons that an advertiser’s performance could degrade. In my experience, the most plausible are related to flawed or outdated internal processes, talent gaps, and inadequate measurement or analytics.

Regardless, even if a platform does suffer from glitches, bugs, and outages — which all platforms do — a marketing leader’s job is not to clearly articulate why their advertising performance has suffered but to quickly and deliberately recover from declining advertising performance. Marketing teams will always face an ascendant competitor, tepid macroeconomic conditions, seasonal frictions, evolving consumer preferences, market saturation, platform malfunctions, etc. The marketing team is tasked with ameliorating those issues — that’s the substance of the job.

A marketing team’s mandate is to grow revenue through increased spend, improved advertising efficiency, or both. Conveying credible reasons for declining ad spend or performance isn’t part of that mandate. In other words: dealing with adversity when it arises, because it inevitably and consistently will, is the raison d’être of a marketing leader. As I write in It’s impossible to saturate a marketing channel:

The “saturation” explanation for poor campaign performance isn’t a strong one, and user acquisition managers should be reticent to use it before thoroughly examining some of the more fundamental aspects of their marketing campaigns.

The appropriate response when any marketing leader bemoans the systemic decline of a scaled advertising platform isn’t a note of consolation but to ask, “Why haven’t you shifted budget to another channel yet?”