Yes, it’s true that advertising on Facebook — especially during the holiday season — is getting very costly. But Facebook Marketing Partner Kenshoo found that with that increased cost comes an increase in return on investment.
Kenshoo noted in a recent blog post that the aggregate average CPM of Facebook ads increased 7x, comparing Nov. 2013 to Nov. 2014. But that also comes with a 5x lift in ROI in that same time period.
Kenshoo Marketing Research analyst Laura Ruszkowski described how Facebook advertising has gotten more effective:
These trends were apparent across both Facebook Marketplace and FBX ads, but the growing impact of mobile within the Marketplace environment is worth noting. Although Facebook Marketplace CPM increased by 7X from 2013 to 2014, CTR increased by 5.2X and ROI nearly doubled. Advertisers are going after more Newsfeed placements across devices and honing in on desirable audiences using advanced targeting features like Custom Audiences to generate more engagement than ever before.
While overall performance increases throughout the month of November in 2014 were staggering, the same metrics were even more compelling this year on Cyber Monday. As shown in the chart below, both FBX and Marketplace drove substantial return on investment – 5X greater than ROI on Cyber Monday in 2013. This year, FBX generated greater efficiency than Marketplace with CPM increasing by 3X and 10X respectively, likely due to the changes in Marketplace ads mentioned above.
Kenshoo also compared Facebook Exchange ads with Marketplace ads: