Facebook Advertising Performance - Benchmarks & Insights

WhitePAPeR / JAnuAry 31, 2011 851 SW 6th Ave., Suite 1600 Portland, OR 97204 Facebook Advertising Performance 1.503.294.7025 fax: 1.503.294.7 1 30 Benchmarks & Insights Webtrends Sales 1.888.932.8736 sales@Webtrends.com Europe, Middle East, Africa ExEcutivE SuMMAry +44 (0) 1784 415 700 Facebook advertising is predicted to hit US$4 billion this year, which is emea@Webtrends.com twice the volume of 2010 spending according to eMarketer. While brands are rapidly investing in the space, they lack comparative experience to For offices worldwide, visit: www.Webtrends.com assess how well their campaigns are performing. Webtrends has analyzed over eleven thousand campaigns to provide performance benchmarks brands can use to evaluate their own campaign performance. The Webtrends database is a very large sample given LotS of Ad dAtA the relatively young age of the Facebook ad network Webtrends has amassed a large (see the stats at left). We focused on a few key metrics: database of Facebook advertis- • Click-Through Rate (CTR) ing campaign results. Here are a • Cost per Click (CPC) few stats on the volume of data • Cost per Thousand (CPM) analyzed for this report. • Cost per Fan (CPF) 4.5 billion impressions LESS cLickS for MorE MonEy 2.2 million clicks From 2009 to 2010 the average CTR dropped while the costs increased. This is a typical pattern for display ad 11.2 thousand ads networks as the audience becomes more savvy and 1.5 thousand campaigns demand causes prices to rise. Brands investing now will save money building their Facebook ad programs now by taking advantage of currently low rates that will continue to increase over time. Facebook’s top advertisers have increased their ad spend 10 fold. Overall Campaign perfOrmanCe averages fOr 2009-2010 yEAr ctr cPc cPM cPf 2009 0.063% US$ 0.27 US$ 0.17 N/A 2010 0.051% US$ 0.49 US$ 0.25 US$ 1.07 CTR% AgE And gEndEr incrEASE our ctr Age and gender appear to have a direct impact on how much we click on Facebook ads. The older we get, the more we click; that is until we reach 65. Women are just as likely to click as men when they are 18-24, but grow more likely to click with age. StAtE hAS LittLE to no iMPAct on ctr While geographic targeting plays a strong role in delivering the appropriate content to local audiences, it has virtually no impact on the rate at which people click on ads. There are a few exceptions: • Hawaii has a noticably lower CTR at almost half the average • North Dakota and Wyoming have CTRs that are double and triple the average CTR% SociAL BrAndS PErforM BEttEr In a recent international survey by DDB, fans stated that they are still primarily on Facebook for fun. Therefore it stands to reason that industries that are fun to discuss with our network are seeing higher CTR. fAcEBook rEwArdS SociAL BrAndS with chEAPEr PricES Brands that are social get a higher CTR, which translates into better engagement metrics: Post Quality Score, EdgeRank, Feedback Rate, and others. In turn, Facebook rewards such behavior with a lower cost per click and greater visiblity in the News Feed. 0.057% 0.049% 0.043% 0.023% interest FoF interest FoF AvErAgE ctr of trAffic thAt AvErAgE ctr of trAffic didn’t AttEnd coLLEgE thAt AttEndEd coLLEgE whAt iMPAct doES EducAtion LEvEL hAvE on ctr? For this analysis we used a subset of ads that specifically targeted education levels. EvEryonE cLickS MorE if A friEnd LikES An Ad The bottom line is that regardless of education level, everyone clicked more if an ad had a friends’ name appear at the bottom of the ad. fAnS thAt didn’t AttEnd coLLEgE cLick on MorE AdS All things being equal, fans that didn’t attend college were more likely to click on ads than fans who did attend college. fAnS thAt AttEndEd coLLEgE ArE twicE AS LikELy to cLick if A friEnd LikES it Sure, the fans who attended college have a lower CTR, but if you use friEnd of fAn friend of fan targeting, then the CTR more than doubles. It was the largest Targeting friends of your impact when comparing education level on interest and friend of fan fans inserts your fans’ targeting, which suggests that social endorsement means more to fans names below your ad. with a college background. SociAL AdS hAvE A Short ShELf LifE If you’re used to buying search ads, you know that successful ads can be run for months without any changes. Out of the ads we measured, we found that interest targeted ads began to burn out after three to five days. Eventually the rotting CTR leads to Facebook deactivating the ad and it’s back to the drawing board. Search ads don’t have this problem because the ads are served to new people that search for the terms. Social ads, however, target people which eventually leads to ad blindness. The typical pattern is below. friEnd of fAn tArgEting coMBAtS Ad Burnout When using friend of fan targeting, marketers can fight off the ad burnout problem. What happens is that as new fans are added, the circle for ad exposure increases, as does the amount of friend names below the ad. Eventually these ads burn out too, but they can last twice to three times as long. BEnchMArkS All of our ad stats created very smooth distribution curves, which tells us that the sample size was statistically sound. These benchmarks will help you determine where your ads stack up making it easier for you to know when to high five your coworker and when it’s time to go back to the drawing board. The inflection point is middle of the curved portion of the line and is a good line of demarcation to say that if you’re above the inflection point, you’re doing well. Remember, most ads are below the inflection point. ctr diStriBution cPc diStriBution INFlECTION .082% INFlECTION US$0.83 cPf diStriBution cPM diStriBution INFlECTION US$1.75 INFlECTION US$0.52 851 SW 6th Ave., Suite 1600 ABout thiS rEPort Portland, OR 97204 This report contains analysis of over 11 thousand ads and is intended 1.503.294.7025 fax: 1.503.294.7 1 30 to provide market reference for Facebook ad performance. It is worth noting that the majority of campaigns we analyzed were focused on fan Webtrends Sales acquisition, which may skew some of the results. Benchmarks may vary 1.888.932.8736 for campaigns aimed at websites or fan nurturing campaigns. We did sales@Webtrends.com not have a statistically significant data set for the 13-17 year old market, Europe, Middle East, Africa so we excluded them from our results. Industry results were based on +44 (0) 1784 415 700 categorizing campaigns in our dataset, which means some industries emea@Webtrends.com had only a single brand and may not be representative of an industry’s performance overall. For offices worldwide, visit: www.Webtrends.com Special thanks to Dennis Yu, Nicholas Davies, Jonny Chan, Michael Girard, and Tim Mather for their contributions to this report. citAtionS Facebook Advertisers Boost Spending 10 Fold, COO Says; BusinessWeek; http://www.businessweek.com/news/2010-08-04/facebook-advertisers- boost-spending-10-fold-coo-says.