Socialbakers Quarterly Facebook Advertising Report

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1

SOCIALMEDIA

#

#SHARELIKE

Social Advertising Quarterly Report

Socialbakers Quarterly Ads Benchmark Reveals News Feed Ads Dominate CTRs and Share of Spend

2

1. Introduction

Social advertising continues to grow at a rapid rate, with the majority of that growth coming from Facebook. Now, 92% of social marketers report that they are using Facebook for advertising.

Facebook is a powerful advertising platform, but there are some who still debate its value for brands. Although a lot of writing focuses on claims that Facebooks organic reach is declining in favour of paid ads on the platform, most brands find that Facebook advertising is highly efficient and generates long term ROI.

This report will take a look at Facebook advertising in detail to showcase what has changed from Q2 2013 through Q1 2014.

Which Facebook ad placements and types work the best

In this report you will learn

Average KPIs by industry

Average KPIs by region

Forecast on Facebook Q1 quarterly earnings for advertising

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Methodology

KPI Definitions

Weve pulled together data from the Socialbakers Ad Analytics tool, industry data, and Facebook quarterly reports to present our quarterly Facebook advertising report.

Data has been analysed from April 2013 - March 2014 for verticals, and April 2013 - February 2014 for all other sections. We have looked at more than 2,000 advertising accounts and aggregated their performance (impressions, spend, clicks) into ad types, placements, regions, and verticals.

Click-Through Rate (CTR) Number of clicks divided by number of impressions per ad. Example: If the CTR of an ad is 1%, that means that 1% of everyone who saw the ad clicked.

Cost per Click (CPC) Total cost divided by number of clicks per ad.

Cost per Impression (CPM) Total cost divided by number of impressions per ad, multiplied by 1000. Example: A business may have bought 10,000 impressions at a CPM of $5, meaning they spent $50.

Determining the right ad placements is crucial for increasing the effectiveness of your ads. Why? Certain types of ads perform better in general - such as ads in News Feed- while others work better based on the content that is distributed.

Here is a quick list of the six different types of ad placements that advertisers can choose from when setting up an Ad Set:

All Facebook - Will create variations for every type of ad placement

Desktop - Will create 2 variations (News Feed Desktop and Right-Hand Side)

News Feed (Desktop and Mobile) News Feed (Desktop)

News Feed (Mobile) Right- Hand Side

2. Ad Placements

1.2

1.1

4

Here, we look at CTR and the breakdown of ad placement effectiveness:

As one would expect due to time spent in News Feed, CTRs on the News Feed are much higher than the right-hand column, and mobile ads dominate desktop ads in terms of clickthrough rate. News Feed ads are growing quarter-on-quarter, with mobile increasing its dominance from Q3 2013 through to Q1 2014.

Below, you can see how advertisers adjusted their ad placement preferences by taking a look at the quarter-over-quarter spend. Note the decline in the All Facebook placement:

This shift in ad placement spend shows the changing attitudes of advertisers. Interestingly, mobile News Feed lost share slightly to News Feed on desktop and mobile, although this may be due to advertisers increasing their post boosting efforts, with the default targeting option being to target both desktop and mobile.

2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,005 %

0,01 %

0,015 %

0,02 %

0,025 %

0,03 %

0

All Facebook

Desktop

News Feed (Desktop and Mobile)

News Feed (Desktop)

News Feed (Mobile)

Right-hand Column

All Facebook

Desktop

News Feed (Desktop and Mobile)

News Feed (Desktop)

News Feed (Mobile)

Right-hand Column

2013_Q2 2013_Q3 2013_Q4 2014_Q1

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

0

2.2

2.1

5

2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,05 %

0,1 %

0,15 %

0,2 %

0,25 %

0

Next, we look at CPC and CPM of each ad placement

CPC

CPM

All Facebook

Desktop

News Feed (Desktop and Mobile)

News Feed (Desktop)

News Feed (Mobile)

Right-hand Column

2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,5 %

1 %

1,5 %

2 %

2,5 %

3 %

3,5 %

0

All Facebook

Desktop

News Feed (Desktop and Mobile)

News Feed (Desktop)

News Feed (Mobile)

Right-hand Column

The graphs show that CPCs and CPMs are much lower on ads that are targeted to All Facebook, with the most expensive being News Feed placements. The reason these are often more expensive in terms of CPC and CPM is due to higher competition - more posts are promoted in fewer ad slots available compared to the right-hand column placements.

News Feed mobile placements have seen an upward trend in terms of CPM since Q2 2013, however, they have declined slightly this quar-ter. The right-hand column ads have seen a marked decrease in terms of CPC over the past year as their competitiveness begins to decline.

2.3

6

Ad Placement Takeaway

Suggestion

In terms of ad placement, the key takeaway for advertisers is that News Feed Ads are starting to domi-nate in terms of ad spend and CTRs, and as a result CPCs and CPMs are higher for these prized slots.

We recommend that advertisers focus their attention on News Feed. This is a more competitive environ-ment for a reason - the potential here is bigger. News Feed Ads attract higher levels of user interaction due to their prominence.

Weve also studied ad types, including

App ads

Event ads

Mobile app install ads

Sponsored Stories

Page Like ads

Page Like sponsored stories

Page post sponsored stories

3. Advertising Type

2.4

2.5

7

The first data point shows the CTR of each of these ad types

2013_Q1 2013_Q2 2013_Q3 2013_Q4 2014_Q1*

0,005 %

0,01 %

0,015 %

0,02 %

0,025 %

0

App Ad

Event Ad

Page like Ad

Page Like Sponsored Story

The CTR on mobile app install ads has dropped greatly over the last year, but they are still higher than most. At present, Page post sponsored stories are seeing the highest CTRs. App and event ads have a very small CTR compared to the other formats.

Mobile App Install Ad

Open Graph Sponsored Story

Page Post Sponsored Story

Share of spend has increased on Page post sponsored stories with the increase of these types of ads as more mobile inventory has opened up over time.

2013_Q1 2013_Q2 2013_Q3 2013_Q4 2014_Q1

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

0

App Ad

Event Ad

Mobile App Install Ad

Open Graph Sponsored Story

Page Like Ad

Page Like Sponsored Story

Page Post Sponsored Story

3.1

3.2

8

In terms of CPC and CPM for various ad types, Page post sponsored stories (which are predomi-nantly News Feed Ads) have the lowest CPC of any of the ad types, but higher CPMs than all but the mobile app install ads.

Mobile app install ads had the highest CPM and CPC across the board, although this decreased in the latest results. CPC and CPMs stayed at relatively similar levels between Q1 2013 and Q1 2014.

2013_Q1 2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,05 %

0,1 %

0,15 %

0,2 %

0,25 %

0,3 %

0

CPC

CPM

2013_Q1 2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,5 %

1 %

1,5 %

2 %

2,5 %

3 %

3,5 %

0

3.3

App Ad

Event Ad

Page like Ad

Page Like Sponsored Story

Mobile App Install Ad

Open Graph Sponsored Story

Page Post Sponsored Story

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Sponsored stories are being removed from the advertising system as Facebook is streamlining its advertising offerings (Page post and Page Like ads already automatically have the best social context added), and we feel this is a positive thing. Page

As with the placement section, this leads to the recommendation that advertisers should focus their attentions on News Feed as these placements are more cost effective and achieve higher response rates.

post sponsored stories at present have the highest CTR, the highest share of spend, and the lowest CPM and CPCs. Despite the removal of the format of sponsored stories, ads with social context will still exist across all ad variants as noted above.

Takeaway Ad Types

Suggestion

First, we looked at CTR by region

Weve looked at the world of Facebook advertising on a regional basis, covering 5 defined regions

Weve studied the differences in CTRs, CPCs, CPMs, and the share of spend between these regions to show differences between them.

Our data shows that all regions, particularly JAPAC, are increasing in terms of CTR, with the excep-tion of North America which is on a steady decline. North America is Facebooks most mature market in terms of advertising and is seeing increased competition and higher spend levels.

4. Region

Europe

JAPAC

LATAM

North America

Rest of the World

2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,001 %

0,002 %

0,003 %

0,004 %

0,005 %

0,006 %

0

Europe

JAPAC

LATAM

North America

Rest of the World

3.4

3.5

4.1

10

In terms of share of spend, Europe has increased over the last three quarters, with JAPAC and North America decreasing. The graph shows aggregated spend versus the number of accounts advertising in each area, meaning that the spend per account is lower in North America.

*Please note that above graph depicts the average spend per account, not the total spend per region.Data is also representative of Facebook Ad accounts that are connected with Socialbakers Ad Analytics, and therefore, the amount of spend per region is not fully representative of the entire Facebook population.

Europe

JAPAC

LATAM

North America

Rest of the World

Europe

JAPAC

LATAM

North America

Rest of the World

2013_Q2 2013_Q3 2013_Q4 2014_Q1*

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

0

Next, we look at the pricing of each placement by CPC and CPM

2013_Q2 2013_Q3 2013_Q4 2014_Q1*

0,05

0,1

0,15

0,2

0,25

0,3

0,35

0,4

0

CPC

4.3

11

Europe

JAPAC

LATAM

North America

Rest of the World

2013_Q2 2013_Q3 2013_Q4 2014_Q1*

0,2

0,4

0,6

0,8

1

1,2

1,4

0

CPM

This data shows that CPCs and CPMs are much higher in North America, with both metrics more than double the next nearest region. LATAM is the lowest-cost region in terms of CPC and CPM.

If youre in North America, consider running multi-variant A/B testing to increase the performance of your Facebook campaigns to ensure you stay ahead of your competition.

Facebook advertising performance by vertical is a particularly interesting area, as it provides bench-marks for brands to their industry in general and shows how different industries perform in the social advertising environment.

Weve studied a number of verticals with a particular focus on

5. Industry

Telecom

Electronics

Retail (food)

Ecommerce

Auto

Alcohol

Airlines

FMCG Food

Finance

Fashion

4.4

12

CTR by industry

2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,2000%

0,4000%

0,6000%

0,8000%

1,0000%

1,2000%

0

Telecom

Retail Food

Fashion

Electronics

Ecommerce

Alcohol

FMCG Food

Finance

CTR

CTR is increasing in most of these verticals, presumably as they get smarter with their targeting and optimisation efforts. Ecommerce brands get the highest CTR (and it continues to increase), with retail food, electronics, and fashion brands all having similar CTRs. Auto and finance brands had the lowest CTR in this category.

Share of spend

2013_Q2 2013_Q3 2013_Q4 2014_Q1

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

0

Telecom

Retail Food

FMCG Food

Finance

Fashion

Electronics

Ecommerce

Alcohol

5.1

5.2

13

In terms of CPC and CPM, the following results have been found.

2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,02

0,04

0,06

0,08

0

0,1

0,12

0,14

0,16

0,18

0,2

Telecom

Retail Food

Fashion

Electronics

Ecommerce

Alcohol

FMCG Food

Finance

Telecom

Retail Food

Fashion

Electronics

Ecommerce

Alcohol

FMCG Food

Finance

CPC

CPM

2013_Q2 2013_Q3 2013_Q4 2014_Q1

0,1

0,2

0,3

0,4

0

0,5

0,6

0,7

0,8

0,9

1

CPCs generally declined over time, particularly in the Electronics and Auto verticals. CPMs on the other hand increased in Q1 2014 compared to Q4 2013. This again may be due to increased competition. Electronics saw the biggest CPM increase this quarter, with Finance and Auto seeing a small decline.

5.3

14

The key takeaway from this section is that some verticals are more competitive, and therefore more expensive to target than others. Some of the softer brands (Retail Food, for instance) achieve higher CTRs and lower CPCs, while Electronics brands are paying much more due to the higher-value items being offered, increased competition, and a more sales-led approach.

If youre in one of the more competitive verticals, consider how you can target in a different way than the competition to gain a competitive advantage. Also, be more creative with your content and boost it in News Feeds to achieve a larger share of voice in a slightly softer way.

Takeaway Industry

Suggestion

6. Key findings

5.4

5.5

News Feed Ads dominate CTRs and share of spend

Page post sponsored stories are a dominant ad type, largely due to their presence in News Feed

North America dominates in terms of regions, although CTRs are higher in the other areas

Verticals such as Electronics, Retail, and E-Commerce are particularly competitive

15

Facebook advertising is going from strength to strength, and we expect this trend

to continue through 2014. Facebook advertising is clearly something that is going to

continue to grow in importance for marketers, and with increased competition it will

be paramount for marketers to use all the necessary tools to help optimize performance.

Socialbakers has developed an advanced social measurement, management, and

optimization solution to increase the effectiveness of social advertising campaigns.

For more, check out

ads.socialbakers.com