Facebook has been slowly, but steadily placing more ads in the News Feed — right in the middle of friends’ status updates and pictures — instead of casting them off to the right-hand side of the screen. Are users tired of them yet and, more important to advertisers, are they valuable? In Facebook’s second quarterly earnings call of 2013, Facebook executives insisted that News Feed ads are working.
This quarter Facebook’s advertising revenue rose 61 percent to $1.60 billion compared to the same quarter last year, representing 88 percent of the total revenue for the quarter. Another area of growth, mobile ads, represented 41 percent of the advertising revenue overall.
News Feed ads in particular indicated a “healthy and growing demand” on the part of the advertisers and “continued user interest,” Facebook COO Sheryl Sandberg said, as click-through rates for these advertisements remained strong.
Social marketers, for the most part, have agreed. According to Adobe’s analysis of 150 billion ad impressions across more than 50 advertisers worldwide, News Feed ads out-performed the standard ad placement on the right-hand side.
Between April and June 2013, the click-through rate (CTR) on News Feed ads shown on mobile devices was 28 times that of ads placed on the right-hand side, and the cost per click (CPC) was 42 percent lower, Adobe analysts found. News Feed placements were also strong on desktop ads, with a click-through rate that was 14 times higher than right-side ads, with a comparable cost per click. Overall, Adobe found that the click-through-rate advantage of News Feed ads compared to right-side ads was five times greater on desktop and eight times greater on mobile.
But Facebook marketing company Spruce Media noted in its quarterly trends report that user engagement with News Feed ads were down. On mobile, likes went down 24 percent, comments went down 68 percent, and shares stayed the same; on desktop, likes were down 75 percent, and shares were down 68 percent.
Clients’ Feed placement cost per click had also increased 75 percent since last quarter.
Meanwhile, click-through rates fell 46 percent on the desktop and 27 percent on mobile. Spruce Media analysts noted that the numbers could have dropped simply because the “newness” of the ad unit had worn off. They added that the All Facebook placement, which gives advertisers a combination of all the ad units, went up 13 percent, which could mean that Facebook has been mixing in more News Feed ads, since they have a higher click-through rate overall.
Today’s earnings call revealed that Facebook has, in fact, increased the number of ads that are appearing in the News Feed. These advertisements now make up 5 percent of users’ News Feeds, compared to zero percent this time last year.
But targeting the ads to reach the right people is a big part of the process. “When I see something on Facebook or anywhere that I’m interested in, that’s a great experience,” Sandberg said. “When I see something that I’m not interested in, it’s not.”
Adobe analysts noted in their report that Facebook still limits the number of ads that advertisers can place in users’ News Feeds on any given day. Their results showed that the daily impression frequency, which measures the number of times people actually saw the ads in their News Feeds, was 62 percent lower for desktop News Feed ads and 66 percent lower for mobile News Feed ads than right-hand side campaigns.
CFO David Ebersam said in today’s earnings call that the company anticipates that News Feed ads will “remain the main driver of revenue growth in the second half of the year, and we believe we have a great opportunity to continue to drive long-term growth by improving the quality and relevance of these ads.”
Image by Gonzalo Aragon.