Andrew Chen’s Law of Shitty Clickthroughs:

“Over time, all marketing strategies result in shitty clickthrough rates.”

In addition to being the best-named marketing law, there’s great truth in this.  Customers respond to a new form of marketing with excitement.  Think how excited the villagers were to get the Wells Fargo wagon in The Music Man (video here for those who aren’t familiar) compared to how excited you are to get the mail today.  Or banner ads, the first of which had a 78% clickthrough rate.  Or early search engines, which could be hacked by repeating the text you wanted to have indexed over and over in the same color as the background.

Eventually, novelty wears off.  Tactics are forbidden.  Con men are banned.  And the fast give way to the effective.

We seem to be at that inflection point with Facebook.  In 2012, Facebook had fewer than one million advertisers; today they have over six million.  Those advertisers are facing an environment where Facebook has focused on organic content (not for brands, but for people), so there is less inventory.  And what happens when more demand meets less inventory?  Prices go up.  For the first quarter 2018, CPM and CPC (cost per thousand ad impressions and cost per click, respectively) were up 91% and 92%.  (Source)

Now, let’s look at the audience.  North American daily active users are flat; European DAUs are down.  So you can’t count on new people expanding the audience.  And clickthrough rates (CTR) are flat.

So advertisers are getting less for their money with no relief in sight.

For the nonprofit sector, Facebook is discontinuing third-party information.  This means that one of our more useful targeting datums for acquisition – whether someone donated to a nonprofit – is going away.  There are proxies for this, but it makes it that much harder to achieve on Facebook what we’ve done for years in the mail – targeting the philanthropic to become more so.

This is neither to praise or bury Facebook.  If you consider that Facebook may become just another channel, or even subset of the larger digital advertising ecosystem, that’s still huge.  We aren’t at the end of Facebook, just at the end of the beginning (IMHO).

In Andrew Chen’s original post, he says that the answer to the law of shitty clickthroughs is to invest more time to find the next gold rush.  We’re certainly game.  In the US, there are major cities that have no discernable F2F presence, while in the UK, every city population 50,000 and above is targeted.  It’s a clear growth market and why we’ve built a F2F retention platform to help those jumping into this market keep the donors they recruit.

But beyond that, it’s a reminder that no hot thing remains hot forever.  But there are things that transcend channel.  Knowing your donor and showing your donor that you know her/him works on every platform in every channel.  It can help you get value out of your Facebook ads where others can’t, cut your mail volume while increasing your revenues, and increase the value of a phone call.  As channels ebb and flow, focusing on your donors are the constant.