Q2 2015 Facebook Advertising Benchmarks

In some ways, 2014 was the year that social advertising reached a level of overall maturity within the advertising eco-culture. The most popular social networks all launched major new products and made a variety of key strategic acquisitions and partnerships in the areas of video, measurement, mobile and data, while reaching new heights in both user and mobile adoption.

Ad agencies quickly responded by establishing in-house departments purely dedicated to social, as they had previously with other digital and traditional advertising channels. Major worldwide brand advertisers began to devote significant chunks of their precious budgets (six and seven figure monthly USD investments), and measured ROI against an increasingly sophisticated set of metrics and criteria.

For consumers, Facebook constituted the number one social hub to engage and hangout with each other online. By the close of Q3 in 2014, Facebook laid claim to 1.3 billion monthly users, with over 1.1 billion accessing Facebook via their mobile devices.

On the advertising front, Facebook continued to innovate rapidly in 2014, offering a number of powerful new options for targeting and engaging with users. Of note is the rollout of Facebook Audience Network, newer and larger Right Hand Side Ads, Multi-Product Ads, and Reach and Frequency campaigns.

So, halfway through 2015, we already see savvy advertisers upping the ante on their Facebook advertising campaigns, and further refining their mobile strategies to take advantage of all of the robust targeting options Facebook has to offer. Based on Q2 of 2015 benchmarks, the second half of the year is shaping up to be an exciting one for advertisers.

Here in the following Blog entry, we focus on bringing you more insights from the social advertising world, while highlighting key trends seen by companies who want to manage, optimize, and measure their performance marketing ad campaigns on Facebook. We hope you find these insights to be a useful guide, which may help to provide clarity around your Facebook marketing initiatives moving forward.

There are a number of key findings from looking at the topic of Facebook advertising more closely. Facebook Video Marketing is fairly notable. As Mark Zuckerberg announced in Facebook’s Q1 2015 earnings call, this quarter reached more than 4 billion daily video views – a milestone for the social platform. As expected, video continues to gain momentum as an increasingly popular aspect of Facebook ad spend, with video enabled units accounting for 16% of total spend in Q2 2015. This is up 3% from Q1 2015, and in June this year, video ads captured their highest share of Facebook ad spend ever recorded, at 22%.

Similarly, Mobile video has proven extremely attractive to advertisers on Facebook, with 21% of total mobile ad spending worldwide invested in this format for Q2 2015, up by 6% from the previous quarter. This increase is even more evident among gaming advertisers, with mobile video capturing 19% of mobile spend last quarter, before significantly escalating to 36% in Q2 2015.

Expect this upward trend in the use of Mobile video ads to endure as a more immediate means of reaching consumers online, as the use of Mobile devices globally continues to rise.

For the fifth quarter in a row, Facebook ad Click-Through-Rates (CTRs) hit a new peak in Q2 2015, reaching 0.88%. At the same time, the costs for an advertiser on a per-click basis has marginally dropped—from $0.53 in Q1 to $0.46 in Q2— the lowest global Facebook Cost Per Click (CPC) observed since Q4 2013.

This may be attributed to non-U.S. Facebook advertising, which is quite often less expensive than U.S. inventory and comprises a larger share of advertising activity in Q2 2015 as opposed to the previous quarter. With CTR continuing to trend upward and Cost Per Acquisition costs coming down, the trend emphasizes how advertisers on Facebook are seeing strong ROI from the channel as it grows globally.

Composition of Spend by Ad Type – Global

Facebook advertisers primarily have direct response goals, and dedicated the bulk of their budgets to Unpublished Page Post Ads, Mobile App Install Ads, and Domain Ads. These three ad categories represented 95% of spend in Q2 2015.

Click-Through-Rate (CTR)

Global Facebook ad CTRs demonstrated reasonable growth in Q2 2015, continuing strong engagement rates across desktop and mobile previously reported. Average CTRs in Q2 were 0.88%, up 8% from Q1 2015 and up a staggering 187% from Q2 2014.

At 0.87%, commercial online advertisers experienced no change from the CTR reported in Q1 2015. Nevertheless, the number still reflects a 195% year-over-year increase for the sector, and remains the highest CTR witnessed across ecommerce advertisers in the past few years since its been monitored.

In 2014, gaming advertisers have among the lower end of ad engagement rates amongst the various verticals reported on, in an ultra competitive market. However, these rates doubled or tripled across the regions in the first three quarters, as they were the earlier adopters of Facebook’s new RHS ad format.

Following a 9% CTR drop in Q1 2015, gaming advertisers saw CTRs stabilise in Q2, remaining at 0.65%. Generating a 10% year-over-year increase, engagement rates in the gaming vertical are static at levels that have kept comparatively consistent over the past few quarters.

Cost-Per-Click (CPC)

Facebook advertising on a cost-per-click basis was moderately less quarter-over-quarter. Globally, Facebook CPCs dipped by 13% since Q1 2015, from $0.53 to $0.46. This latter figure is slightly lower than recent global CPCs, which have hovered between $0.50 and $0.54 since Q1 2014, aside from the expected jump during the Q4 holiday season.

This trend translates to the ecommerce and gaming sectors, which both reported Q2 2015 CPCs, which were less costly than previous quarters. For example, when we look at ecommerce advertisers, CPCs dropped 11% quarter-over-quarter to $0.38—the lowest CPC we’ve seen for the vertical since at least 2013. Meanwhile, CPCs for gaming advertisers were reduced by 21% in the same period from $0.80 to $0.63—still a 26% year-over-year increase.

Cost per 1,000 impressions (CPM)

Cost-Per-Thousand Impressions (CPM) on Facebook desktop and mobile ads have stayed fairly fixed, dropping a collective 6% quarter-over-quarter from $4.26 to $4.00 in Q2 2015. Across the ecommerce and gaming industries, impression-level costs decreased a bit more steeply. Ecommerce CPMs dipped by 11% from $3.74 to $3.30, while gaming CPMs fell by 22% from $5.17 to $4.10.

An interesting point to note is that despite these CPM reductions, this cost metric remains higher on a year-over-year basis. Overall, CPMs have increased by 142% since Q2 2014, and ecommerce and gaming CPMs have escalated by 91% and 39% respectively.

These year-over-year jumps can be attributed largely by the reduction in Right-Hand Side Ad inventory, a move Facebook began rolling out last summer.

Conclusions

More than 1 billion people use Facebook to connect with friends, family, and things that matter to them. If you’re in the business of selling online or through a Mobile App, marketing on Facebook can help you build long-term relationships with these people and to find new customers amongst them. It can help you to achieve your business goals:

  1. Drive Online Sales
  2. Increase Local Sales
  3. Promote Your Mobile App
  4. Raise Brand Awareness

Social Media advertising is currently at a low cost and not very competitive, so now is the time to take advantage of this viral and direct marketing channel.

At Digital Fuel we work with our clients to align all digital marketing channels to ensure that the same message is consistently fed throughout their advertising collateral, whether on Facebook, or seeing a real time digital display advert.

Are you ready to engage your customer and keep the conversation going?

Then CLICK HERE TO GET IN TOUCH with us at Digital Fuel.

Author: Digital Fuel

Words by the Digital Fuel team members