• by Laurie Sullivan , Staff Writer @lauriesullivan, April 3, 2025

Ad fatigue, competition, and platform changes are making it more difficult to sustain performance.

Taboola, a performance marketing company, released a report with Qualtrics, an experience management company, that explores key factors behind diminishing returns in paid social, and what performance advertisers can do to optimize their strategy.

The study surveyed 307 U.S.-based performance marketers, focusing on a mix of small to large advertisers from brands and agencies. Respondents managed performance advertising campaigns on digital platforms and run paid campaigns on social media.

The findings provide a snapshot of trends and challenges in performance marketing, particularly in the context of diminishing returns in social media advertising.

What does diminishing returns mean? Spending more doesn’t always mean better results for advertisers because the cost per acquisition (CPA) rises as the amount spent increases. For example, the first $1,000 might achieve 100 conversions, but the next $1,000 only 80

Social media has been the most difficult to maintain, according to the report. Performance marketers struggle to maintain return on ad spend (ROAS) with the majority experiencing diminishing returns on social media. Some 74.7% said they have experienced diminishing returns on their social media ad budget, compared with 21.8% who said "no," and 3.6% said they "did not know."

Returns decline before budgets are depleted. Almost 80% of respondents said diminishing returns start early in their budgeting process, not just at the end. For some it affects more than half of their total spend.

When asked to site the budget spent on social media, some 44.8% said they see diminishing returns between 50% and 70%.

Most performance marketers blame audience exposure and user fatigue as the primary culprits. More than 60% of respondents believe their ads are losing impact because potential buyers have already been reached or have seen the same creatives too often.

While 66% cited saturation in targeting audience, 59% cited user fatigue, while 49% cited ad-created fatigue, 47% cited algorithm inefficiencies, 37% cited rise in ad costs, and 36% cited weak targeting as a result of privacy restrictions.

Performance marketers seeking solutions through diversification and experimentation are not alone. More than 70% are testing new ad formats, while 67% are changing audience targeting strategies, 55% are expanding to additional digital channels beyond social or expanding to new social platforms. Forty-seven percent have shifted budgets between high-performing and low-performing campaigns, and 5% said they have no satisfactory tactics.