75% of performance marketers face diminishing returns on social media ad spend: Report

Taboola has released a new report based on a survey conducted in partnership with Qualtrics, an experience management company that works with nearly 20,000 organisations globally.

The reportpresents insights from 307 US-based performance marketers and highlights a growing challenge in digital advertising: as paid social budgets increase, advertisers are seeing diminishing returns on their investment.

Declining returns

According to the findings, nearly 75% of respondents said they are experiencing diminishing returns on paid social media campaigns. The report defines diminishing returns as a scenario where increased spending fails to yield proportional improvements in campaign performance—such as higher costs per acquisition (CPA) or fewer incremental conversions.

This trend appears to emerge early in the spend cycle, with 44.8% of respondents indicating that diminishing returns begin when less than 70% of their total social media budget is spent. Another 32.8% said the issue typically begins between 70-85% of their spend.

Audience fatigue and saturation

When asked about the reasons behind this trend, respondents pointed to several factors. The most common explanation was saturation in the target audience (66%), followed by user fatigue (59%) and ad creative fatigue (49%). Marketers also cited rising ad costs (47%), algorithm inefficiencies (47%), and the weakening of targeting capabilities due to privacy restrictions (36%).

These findings suggest that performance declines are less about budget limits and more about the effectiveness of ad delivery and resonance with audiences.

Diversification

In response to these challenges, advertisers are increasingly diversifying their strategies. Over 50% of surveyed marketers said they are expanding into additional digital channels beyond social media. Another 55% are exploring new social platforms, while 67% are changing audience targeting strategies. Testing new ad formats was cited by 70% as a tactic to mitigate performance drops.

Only 5% of respondents reported that they had not yet found any satisfactory mitigation tactics.

Shifting landscape 

The report underscores a growing need for marketers to evolve their approaches as paid social advertising becomes less predictable. While social media remains a major part of the performance marketing mix, the findings highlight a shift toward more agile, data-driven, and diversified strategies.

“While social media accounts for a large portion of performance advertising budgets, many marketers have hit a barrier in the form of diminishing returns,” said Adam Singolda, CEO of Taboola. “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.”

 

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