Meta's new ad model challenges advertisers

To comply with the EU’s stricter data protection regulations, Meta introduced an ad-free subscription last year, giving European users the choice between a paid, ad-free experience or continuing with targeted advertising. However, interest in the subscription turned out to be minimal.

Now, after feedback from the EU, Meta has introduced a third option: “less personalized ads.” Users can still opt for the ad-free subscription, but they can also choose this new free option, where ads are less personally targeted. Here, ads are based on basic data like age, gender, and general behavioral data on the platform.

What does this mean for advertisers?

With the new solution, advertisers risk losing access to in-depth user data, potentially resulting in fewer precisely targeted campaigns. If many users choose “less personalized ads,” we can expect higher CPM (cost per thousand impressions) and CPA (cost per action), as audiences become harder to define and reach effectively. This may lead to higher ad costs and lower conversion rates.

Meta's "Dark Horse": Unavoidable ad breaks

To make “less personalized ads” less appealing, Meta has introduced unavoidable “ad breaks,” similar to YouTube’s non-skippable ads. This move could push users to either opt for the targeted free ad model or pay for the ad-free subscription.

What’s the next step?

For advertisers, this development requires rethinking ad purchasing strategies and adjusting approaches to ensure strong performance, regardless of user choices. While efficiency may face challenges in the short term, dynamic CPM prices could adapt and balance out the differences over time.

With these changes, Meta faces a dilemma, and the marketing landscape in Europe is gearing up for an exciting period of adaptation.