Social media ad returns decline sharply, new report finds

A growing number of marketers are facing a stark reality: spending more on social media doesn’t necessarily yield better results.

According to a new study released by advertising platform Taboola in partnership with Qualtrics, 74.7% of U.S.-based performance marketers say they are experiencing diminishing returns on their social media ad spend. The findings highlight a growing inefficiency in the channel that has long dominated digital performance strategies.

The report, titled The Pulse of Performance Advertising: Diminishing Returns, surveyed 307 marketing professionals across brands and agencies. All respondents manage digital campaigns and maintain paid social media strategies.

The study found that performance marketers often encounter diminishing returns well before their budgets are fully deployed. Nearly 45% of respondents said returns start to decline after spending just 50–70% of their social budget, while another 33% reported similar declines even earlier in their spend cycle.

The core issue, the report suggests, lies in ad fatigue and audience saturation. Over two-thirds (66%) of marketers cited repeated exposure to the same audience as the top reason for declining performance, followed by user fatigue (59%) and creative fatigue (49%). Rising ad costs and platform algorithm inefficiencies were also cited by nearly half of respondents.

In response, marketers are increasingly looking beyond social media. More than half (55%) said they are expanding into additional digital channels, such as native advertising, search, and content recommendations. Another 55% are experimenting with alternative social platforms, while 70% are testing new ad formats to regain performance traction.

Shifting spend between high- and low-performing campaigns (47%) and changing audience targeting strategies (67%) were also among the top tactics marketers are deploying to counteract diminishing returns.

Despite continued investment in social media, the report underscores the need for a more agile and diversified approach to performance advertising.

“As budgets grow, the assumption has been that results will scale in parallel. That’s no longer the case,” the report concludes. “Advertisers who diversify, test continuously, and quickly adapt to platform changes will be best positioned for long-term success.”