LONDON AND SAN FRANCISCO — A new report shows that while users of Facebook are slowing, the social network is becoming more and more attractive to advertisers. Retailers have already increased their share of impressions by 10 percentage points, amassing one quarter of all impressions served.
“The increase could be due to retailers beginning to use Facebook as a discovery tool and as a way in which to communicate new products, seasons or sales to their Facebook fan base,” read the latest “Facebook Advertising Report, which was compiled by TBG Digital, a global marketing and technology firm specializing in social-media advertising. “Brands will have to work harder to be heard and be more inventive in their recruitment drives for new fans.”
The report, which was based on 372 billion impressions in more than 190 countries for 235 of TBG’s clients between the first quarters of 2011 and 2012, showed that Facebook’s average cost per thousand impressions (CPM) has increased by 41 percent since the first quarter 2011. It also showed that Facebook is earning more from Marketplace ads, with the average CPM increasing by 15 percent in the last quarter. For the U.S. market alone, CPM increased by 11 percent.
The firm also noted a massive increase in click through rates (CTR) for news clients. With the huge success of Facebook social readers from the likes of Yahoo! News, The Washington Post and The Guardian, the company has identified a strong uplift in CTR for those in the news sector since the fourth quarter 2011, which increased of 196 percent. The category now joins entertainment, beauty & fitness, house & garden, and health at the top of the league. Autos & vehicles, jobs & education, and finance remained at the bottom of the table.
“Twitter is no longer the social network of news,” read the report.
Additional findings from the report include:
• Facebook cost per click has increased by 23 percent in the Top 5 territories (Canada, France, Germany, United Kingdom and United States) vs. the fourth quarter 2011, indicating that while growth in new users may be slowing, the social network is becoming more attractive to advertisers
• The United States experienced a reduction in average CTR of 8 percent in the recent quarter, with the Top 5 territories seeing an average decrease of 6 percent. This could be attributed to an increase in the number of ads being placed on users’ pages. CTR is generally a measure of how engaging users find the ad, affected by the quality of the creative and how appropriate the ad’s targeting.
• Seasonal deviations can contribute to CTR increases and decreases in certain vertical sectors. For example, fitness is always a focus in a New Year, whereas retail drops after its heights in the holiday season.
• The retail sector has taken the lead on number of impressions served, increasing its share by 10 percentage points to make up 23 percent of all impressions in the first quarter.
• The finance sector leads with the most expensive advertising costs, with 3.5 times higher CPCs than the food & drink sector, which has the lowest ad costs. Autos & vehicles sits in the middle of pact between news and health in terms CPC.
• The Top 5 sectors continue to dominate, accounting for 78 percent of impressions among the 18 sectors measured. Retail lead the way with a 23 percent share of impressions.
On average, cost per fan increased 43 percent in the first quarter of this year, compared to the fourth quarter 2011. The United Kingdom realized the greatest jump with 77 percent, followed by the United States with 37 percent. Increased competition and advertising costs means brands will need to work harder in their recruitment of fans with a focus on “earned media,” the report noted.
Additionally, Facebook continued to incentivize advertisers to stay within the Facebook environment by offering reduced CPCs of up to 45 percent in the first quarter. Consequently, the finance Sector, which sends 91 percent of its traffic out of the Facebook environment to sign up for their services (compared to the average of 38 percent) realized the most expensive advertising costs. Alternatively the food & drink sector, which uses Facebook as a branding tool, only sent 4 percent of its traffic offsite in the first quarter and thus saw the lowest advertising fees.
“The recent Facebook Advertising Report unearthed some compelling trends as it relates to how brands are using the site to engage customers,” said Simon Mansell, CEO of TBG Digital. “One amazing finding is that Facebook has seen an increase in pricing at the same time as its number of ads per page grows. You would naturally expect to actually deflate prices.
“Additionally, the rapid increase in CTR for news clients is promising for Facebook as it demonstrates that the platform works well for sharing news as well as gaming and photos, an offering which other social networks such as Twitter have dominated to date.”
To view TBG’s Q1 Global Facebook Advertising Report, click here.