Adobe: Facebook had strong Q4, but warning signs ahead

Facebook advertising performed quite well in 2013's Q4, which includes the vital holiday shopping season, but Adobe believes that the continual growth may slow soon. Among its clients, Adobe found that clickthrough rates on Facebook ads are starting to max out and that CPM continued to grow. Additionally, Twitter and Pinterest continued to eat into Facebook's market share, with Tumblr also growing by leaps and bounds. However, there was lots of good news for Facebook advertisers in the previous quarter. Revenue-per-visit for Facebook ads rose 31 percent quarter-over-quarter and 72 percent year-over-year. Facebook will release its official Q4 financial report on Wednesday. Adobe Senior Analyst Joe Martin spoke with Inside Facebook about Q4: This is a time where consumers are even more open to advertising, and we really see that in the data. In Q3, we were really bullish on Facebook and their ad platform. With the data in Q4, we see some caution flags. They're still doing really well, but we can see clickthrough rates growth kind of leveled off a little bit. CPC saw a seasonal rebound, but will probably drop down again in Q1 and CPM continues to grow. We also saw Facebook competitors gain strength again. They took some market share from Facebook in Q4. Really, social is growing as a whole. These places like Twitter, Pinterest — they're just growing faster than Facebook. Facebook is still the top dog in terms of revenue-per-visit, but other sites are growing quickly. Martin said that in the U.K., Pinterest passed Facebook in this metric and he predicts that the more conversion-focused Pinterest will continue to grow in RPV. Here's a look at how the major social platforms did in Q4 with regard to RPV: Facebook ads also garnered more engagement, with higher quality too. While Facebook likes produce 42 percent of all social engagement, comments and shares are up 40 percent year-over-year. Clickthrough rate continued to grow for Facebook. Adobe found that for its clients, CTR was up a whopping 365 percent year-over-year and 41 percent quarter-over-quarter. Ad click volume rose 125 percent year-over-year. However, CPM keeps climbing, as it saw a 51 percent quarter-over-quarter rise and a 437 percent rise compared to last year. As Facebook noted in the most recent changes to the News Feed algorithm, users love visual content and tend to pass on plain-text status updates. Martin also noted that video also had a calm quarter, as many advertisers still aren't sure how to do it properly. Midway through the quarter, Facebook started testing and implementing auto-play videos. Martin noted that it probably won't show too much in Q4 figures, but as more users are exposed to auto-play videos and video ads, we'll see a better correlation to performance in Q1 2014. Engagement for text posts, links and video were all down year-over-year, while posts with images produced 650 percent higher engagement than status updates. Top image courtesy of dolphfyn / Shutterstock.com.

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Adobe: Facebook had strong Q4, but warning signs ahead

Justin Lafferty

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