FACEBOOK Q3 PREVIEW: A Huge Shift Of Ad Dollars Into Mobile

Simon MansellTBG Digital CEO Simon Mansell

Photo: TBG Digital, with permission

Facebook reports its Q3 2012 earnings later this week, and as usual our friends at TBG Digital, one of the largest buyers of ads in social media, has given Business Insider a look at its Q3 Facebook ad performance report.This report is derived from 520 billion ad impressions for 282 clients in 190 for countries, from Q1 2011 through Q3 2012.

The main findings are that the average cost-per-click (CPC) — the price advertisers pay when their ads perform — has declined by 40% in the most mature markets, like the U.S.

Click-through rates (CTR) — which measure how well the ads performed — increased significantly.

The higher performance for lower prices seems to be a result of North American clients increasingly utilising News Feed and Mobile ads (which also appear in the feed).

The charts on the following pages describe that performance; a summary of TBG’s commentary is below each chart.

Cost-per-click in the United States and Canada drops back to 2010 levels.

Last quarter showed the U.S. and Canada's average cost-per-click (CPC) rise above $1 for the first time. This quarter, the United States dropped by 40% and Canada fell by 27%.

High click-through rates provided by News Feed ad placements have meant that advertisers do not have to spend as much. This may have had a positive effect on CPCs. Expect to see CPCs rise as competition for inventory increases.

Click-through rates almost double in the U.S.

CTRs are an indication of how engaging and relevant users find ads on Facebook. Last quarter saw an average increase of 11%. This quarter, the average CTR rate of five major territories increased by 81%. By far the largest increase was in the United States, with a 99% increase, followed by Canada with a 37% increase.

Q3 2012 is the first full quarter since Facebook provided advertisers with access to its Mobile user base. This territory has seen the biggest uptake in the new Mobile ad placement targeting. In an unchanging environment, a rise in CTRs could be attributed to improvements in ad creative and targeting.

Where you place ads on Facebook makes a huge difference: Advertisers in the U.S. are making the most of News Feed.

Facebook users find Page Post Ads highly engaging.

A global deep dive into Page Post Ads has shown the relatively new ad format to be delivering average CTRs above 2%.

Page Post Ads on Mobile are larger in format and can include a sizeable image together with the promoted post's messaging and additional social context. It is very difficult for a user to miss these ads on their device's small screen which might be why we are seeing such high Click Through Rates.

It should also be noted that the introduction of Dark Posts has allowed advertisers to create posts that are not published to their Facebook Page but can be converted to Page Post Ads and therefore tailored and targeted to different groups of users. This new method of creating Page Post Ads has also probably improved Click Through Rates.

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