CHARTS: Facebook Had A Massive Q1 2012 In Ad Sales, But Performance Softens In The US

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Photo: Aepoc, CC.

Facebook had a great Q1 2012, with a 41 per cent increase in ad rates (the cost-per thousand impressions that advertisers pay), according to TBG Digital, a major seller and manager of Facebook advertising campaigns.This bodes well for Facebook’s Q1 earnings, which the soon-to-go-public social network has yet to report.

The only bad news: performance softened somewhat in the U.S., where Facebook’s growth overall is slowing.

TBG’s conclusion was based on a sample of 327 billion ad impressions from 235 Facebook advertising clients. What follows are TBG’s estimates of Facebook’s Q1 ad performance, accompanied by commentary from TBG CEO Simon Mansell and his team.

(If you want the Q4 2011 Facebook numbers for comparison, click here.)

CPM rates are up 41%

'Facebook is earning more from Marketplace ads which could have a positive impact on their imminent IPO. We have seen an increase of 41% in Cost per Thousand impressions (CPM) since Q1 2011, which indicates how much Facebook earns per ad served. Average CPM has increased by 15% from Q4 2011 to Q1 2012 with the US seeing an increase of 11% and the UK seeing an increase of 13% during the same period.'

Cost of advertising up by almost 23%

'Cost per Click (CPC) prices have increased by almost 25% since last quarter with the biggest increase in France (35%) followed by the US (20%). There has been a 34% increase in US CPC costs in the past year. Unbalanced supply and demand could be the reason behind these rises. Growth in new users may be slowing but the social network is becoming more attractive to advertisers.'

Ad engagement decreases in the US

'The US experienced a reduction in average Click Through Rate (CTR) of 8% in this quarter with the top five territories seeing an average decrease of 6%. France saw a drop of 13%. 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. However, this drop comes after Facebook has increased the number of ads on a page, sometimes showing up to seven at a time, which could also be a contributing factor to this change.'

Retail takes 23% of all impressions in Q1

'In this quarter's sector breakdown of impressions, Retail increased its share by 10 percentage points amassing almost one quarter of all impressions served. This 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 bases. It should be noted that there has not been a change in the sectors which make up the top five. Together, these equate to 78% of all impressions served in the eighteen sectors measured.'

Finance leads CPC League

'This quarter sees Finance with the most expensive advertising costs, with 3.5 times higher CPCs than the Food & Drink sector which has the lowest ad costs. This could be due to the Finance sector sending 91% of its traffic out of the Facebook environment to sign up for their services, compared to the average of 38%. The Food & Drink sector, which uses Facebook as a branding tool, only sent 4% of its traffic offsite in Q1 2012. This further supports our previous findings in the Global Facebook Advertising Report of Q4 2011 which noted that Facebook incentivizes advertisers to stay within the Facebook environment by offering them reduced CPCs of up to 45%.'

196% increase in the Click-Through Rate for News advertisers

'Twitter is no longer the social network for News. With the huge success of Facebook social readers from the likes of Yahoo! News, The Washington Post and The Guardian, we have seen a strong uplift in CTR for those in the News sector since Q4 2011.

Food & Drink has fallen five places to make room for Entertainment and newcomer News. Entertainment CTR is now almost three times higher than Finance which takes the bottom spot. This quarter's trends would suggest seasonal deviations with Fitness always being a focus in a New Year and a drop in Retail expected after its heights in the holiday season.'

Cost per Fan increases by 43%

'On average, Cost per Fan increased 43% in Q1 2012, compared to Q4 2011.'

The UK and US saw the biggest jumps

'The UK saw the greatest jump with 77% followed by the US with 37%.'

Click-Through Rates reduced

'Upon reflection, this is no great surprise with increased ad costs, reducing click through rates and an increase in competition. Brands will have to work harder to be heard and be more inventive in their recruitment drives for new fans. Never has the necessity to focus on 'earned media' been more important than it is right now.'

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