TBG Digital Global Facebook Advertising Report Q22012\

$: TBG Digital Global Facebook Advertising Report Q22012\$

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Contents

Introduction

CPM rates increase by 58% in twelve months

Ad engagement increases by 11%

Increases in global ad costs slow to 9%

Sector Click Through Rate Top 10

Sector Cost per Click Top 10

Sponsored Story ads are 53% more engaging than standard ads

Facebook mobile ads are over 4x more engaging than Twitter ads

In this report we measured:

406 BILLION impressions

in more than 190 countries

for 276 clients

from Q2 2011 to Q2 2012

Welcome to TBG Digital’s Global Facebook Advertising Report for Q2 2012. This report examines trends and changes in the performance of Facebook advertising campaigns managed by TBG Digital. We have a wide range of clients running Offsite, Fanning and Facebook Application campaigns so we believe our data provides a strong insight into the market.

This report, for the first time, includes actual values for costs and performance metrics. You will read that ad costs have risen again this quarter, as have Facebook’s earnings per ad served. These metrics are important but not as important as the real value that Facebook traffic and connections bring to our clients. Whilst this report is a good indication of the Facebook ad market as a whole, it is important to understand the data in context. Our clients, upon our advice, are now willing to pay more for quality clicks and fans. Focus is shifting toward measurable engagement and the difference Social Media connections are making to their bottom line.

TBG Digital is a Social Media specialist helping global brands to advertise and engage through Facebook and Twitter.

Our team of experts has delivered more than 610 billion impressions and over 60 million social connections with a focus on ROI. We create custom social experiences that are amplified through targeted media. All our activity is supported by proprietary technology and benchmarked against a data store of more than one trillion events.

We have offices in London, San Francisco, New York, Chicago, Atlanta, Paris, Hamburg, Amsterdam, Manila and Sydney.

Introduction

The Cambridge University Psychometrics Centre has verified the results, graphical illustrations and methodology used in this report based on the data provided by TBG Digital.


Page 3

Major territory analysis

CPM rates increase by 58% in twelve months

© 2012 TBG Digital

Insights

In TBG Digital’s previous Global Facebook Advertising Report we showed a 41% increase in Cost per Thousand Impressions (CPM) rates year on year. That gap has increased to a 58% difference in CPM between Q2 2011 and Q2 2012. In the five major territories analyzed, Germany saw the largest increase of 31% from quarter to quarter. The United States saw the next highest increase with 25%. Canada’s CPM rates increased by 21% and the United Kingdom’s CPM rates increased by 7%.

The US sees a 25% increase in one quarter alone

Point of View

CPM rates are a good indication of Facebook’s earnings per Marketplace ad served. The increases are definitely great news for Facebook as they signify that their inventory continues to work better for them. Increases in CPM could be attributed to more clients utilizing Sponsored Stories, as these receive higher CPMs (see page 8), together with the introduction of mobile ads which are also providing Facebook with higher CPM rates (see page 9). Where Click to Conversion rates are proportionately higher for both Facebook Page / App based campaigns or ‘Offsite’ (off Facebook) campaigns, this should be of no great concern to advertisers.

Figures based on 292 billion impressions served in the United States, United Kingdom, Canada, France and Germany from April 2011 to June 2012 inclusive. CPM values were calculated by dividing the total ad spend by the total number of impressions / 1000.


Ad engagement increases by 11%


All territories see increase for the first time since Q3 2011

Insights

Click Through Rates (CTR), which indicate how relevant and interesting ads are to users, have increased by 11% this quarter in the five major territories analyzed. This compares to a 6% decrease last quarter. Germany saw the greatest leap of 44%. The United States and United Kingdom follow with a 11% increase and 9% increase respectively. Canada saw an increase of 8% and France an increase of 2%.

Point of View

The launch of Facebook’s mobile ad targeting feature in early June 2012 may have had a positive effect on Click Through Rates (see page 9). In fact, Click Through Rates in the United States jumped 31% between May 2012 and June 2012. Also worthy of note is that this data set saw a 7% increase in Social Impressions (where the ad shown included social context e.g. John Smith likes this) from quarter to quarter. So, it would appear that Facebook is doing something right here; social context continues to make a difference to ad engagement and mobile targeting is positively affecting Click Through Rates. The increase of 11% in engagement could also be partially due to a general improvement in targeting techniques and ad creative. Please note that Germany’s increase in average CTR can be attributed to a large increase in the number of Fanning impressions in that territory.

Figures based on 292 billion impressions served in the United States, United Kingdom, Canada, France and Germany between April 2011 to June 2012 inclusive. CTR values were calculated by dividing the total number of clicks by the total number of impressions.


Increases in global ad costs slow to 9%


CPCs hit dollar mark for first time in US and Canada

Insights

TBG Digital’s Global Facebook Advertising Report in Q1 2012 documented a quarterly increase of 23% in Cost Per Click for the five major territories tested. The comparative increase in Q2 2012 is now 9% and, in fact, only the United States and Canada have risen. Both countries have CPCs of over $1 for the first time with the United States increasing by 13% to $1.04 and Canada increasing by 12% to $1.02. The European countries analyzed saw a reduction in CPCs with the United Kingdom reducing by 2%, Germany reducing by 9% change and France reducing by 10%.

Point of View

Facebook’s Marketplace advertising is based on an auction bidding model i.e. how much an advertiser is willing to pay for an impression or click. If, however, the CPC and CTR of an ad are not high enough, Facebook will not publish it because the ad’s corresponding CPM will not be enough to secure its place on the page when compared to other ads. Facebook uses CPC and CTR metrics to calculate CPM (what they earn per ad served). As targeting increases, so does the CPM that Facebook charges. Advertisers therefore have to increase their bid prices to ensure ads are delivered. More advanced markets such as the US and Canada are focusing on delivering highly targeted traffic at huge scale, measuring it against basket value, type of Facebook fan recruited, etc. which is probably why we have seen an increase in CPCs for those markets. A general increase in competition has also pushed max bid prices up in these territories. Finally, it should be noted that advertisers who have low daily spend levels are unlikely to experience such high CPCs. Some of TBG Digital’s clients can spend more than $100,000 per day so CPCs increase as we compete in the auction to maximize traffic levels.

Figures based on 292 billion impressions served in the United States, United Kingdom, Canada, France and Germany between April 2011 and June 2012 inclusive. CPC values were calculated by dividing total ad spend by the total number of clicks.

Sector analysis


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Sector Click Through Rate Top 10

Insights

Entertainment has dropped three places since Q1 2012 to make room for Health, Pets & Animals and Not for Profit. Health is a regular in the top five but Not for Profit has jumped four places and Pets & Animals is a new entry.

Point of View There aren’t many things that people feel more passionately about than charities and pets. This just goes to show in our Pets & Animals category which has shot into the Top 10 at number 2 and likewise with Not for Profit as Charities make up the majority of this sector. Our learnings in these sectors have led us to integrate ‘passion centers’ into our Facebook strategies for clients. For example, one of our clients is a leading US retailer and has seen engagement rates shoot up for Page Post Ads that have pet images. Likewise, we designed an app and its supporting media / engagement campaign around music for an international PC manufacturer as its target market were passionate about festivals and live events. The campaign saw phenomenal engagement rates.

Figures based on 71 billion impressions served between April 2012 and June 2012 inclusive. CTR values were calculated by dividing the total number of clicks by the total number of impressions.

Sector analysis


Sector Cost per Click Top 10

Insights

Jobs & Education has jumped four places to hit the top spot with an average CPC of $1.42, pushing Finance and Retail both down one place. Computers & Electronics has overtaken Games and ranks 4th, while Games trails in 5th position.

Point of View

It should be noted that the top five sectors include clients that direct users off Facebook to their own web properties and require highly targeted ad campaigns at scale. As we’ve mentioned before, this has the effect of increasing CPCs. For example, the Jobs & Education sector’s targeting is extremely niche, matching user demographics and locations to specific job types or courses. Please note that the cost of delivering traffic is not as important as the quality of traffic that is delivered since better targeting should increase conversion rates proportionately. All activity should deliver an appropriate return on investment.

Figures based on 71 billion impressions served between April 2012 and June 2012 inclusive. CPC values were calculated by dividing total ad spend by the total number of clicks.

Sponsored Stories analysis


Sponsored Story ads are 53% more engaging than standard ads

Insights

A previous study by TBG Digital in April 2011 investigated the differences between standard ads and the then new Sponsored Stories. The analysis of 2 billion impressions over a period of 10 days for 3 clients found that Sponsored Stories received a 46% higher Click Through Rate, a 20% lower Cost per Click and 18% lower Cost per Fan than Facebook standard ASU ads. Multiple Sponsored Story types were tested. For this report, we analyzed 13.8 billion impressions delivered in Q1 and Q2 2012 using Page Like ads and Page Like Story ads. Both ad formats are used to increase the number of fans of a Facebook Page. They both serve the same purpose but the Page Like Story ads do not include tailored ad copy and are only shown when the user’s friend has liked the Page being advertised. This analysis is therefore comparing the same function (Page Likes) against a Sponsored Story and standard ad format. The average Click Through Rates of the Page Like Story ads were 53% more than that of the Page Like ads (an increase of 15% since the previous study). Cost per Fan also improved with this data showing 39% cheaper acquisition costs for Page Like Story ads. However, this analysis saw a 6% higher CPC and 62% higher CPM for Sponsored Stories, compared to standard ads.

Point of View

These findings are very positive for Facebook and advertisers alike as it shows the Sponsored Story ad format is even more engaging than our previous study indicated and, even though ad costs and Facebook’s earnings per ad delivered have increased, fan acquisition costs are even cheaper than before. The increases in ad costs are probably due to more competition on the platform and more sophisticated targeting on Sponsored Stories as we demand better quality for our clients.

Page Like ad

Page Like Story ad

Figures based on 13.8 billion impressions served between January 2012 and June 2012 inclusive.

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Facebook mobile ads are over 4x more engaging than Twitter ads

and have a 14x higher CTR than Facebook desktop ads

Sponsored Stories analysis

Point of View New ad types, whether on Facebook or anywhere on the web, tend to generate a high CTR initially that can decline over time. However, we also know from our Twitter studies that mobile ad placements are highly engaging and the fact that Facebook have opened up this precise targeting can only be a good thing. We believe that Facebook’s mobile ads are more engaging than Twitter’s ads because they can be targeted demographically and are Sponsored Stories so include a social endorsement. Mobile Newsfeed targeting also suggests great earning potential for Facebook which received $9.86 for every thousand mobile ads served (CPM), 13 times more than it received for ‘Desktop’ ads. The high CPM does not disadvantage advertisers. Mobile Newsfeed ad placements saw savings of 29% for Cost per Fan when compared to ‘Desktop’ ads. Facebook is earning money and brands are making savings. A win-win situation.

Insights

Facebook’s recently released Newsfeed targeting options are delivering significantly better Click Through Rates, with mobile ads receiving CTRs 14 times that of ‘Desktop’ ads, on average. ‘Desktop’, which includes Newsfeed ads and the ads on Facebook’s right hand side panel, saw the lowest CTR at 0.083%. For Desktop Newsfeed ads only, the CTR was more than seven times higher at 0.588%. By far the most impressive was Mobile Newsfeed which received an average CTR of 1.140%. In a recent TBG study of 24 million Twitter impressions across multiple clients and sectors we saw an average CTR of 0.266% which would indicate that Facebook Mobile ad CTR is four times more than that of Twitter.


Figures based on 278 million impressions served in June 2012.

Email [email protected] for further information

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Visit: www.tbgdigital.com

Email: [email protected]

TBG Digital Global Facebook Advertising Report Q22012\

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