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These Digital Stats Show Exactly Why Google Fears Facebook Ads

Report reveals changes in the industry

Adobe's report covers Facebook, Pinterest, 'MobileGeddon' and more. Illustration: Yuliya Kim

Facebook continues to apply pressure to Google's ad business, showing that the social network's boldness is paying off, according to new research from Adobe.

Adobe looked at the last three months in digital advertising, as it does at the end of every quarter, and highlighted some key shifts in the industry, including a slowdown in Pinterest's retail momentum and Periscope's dominance over Meerkat in video streaming. It also showed that Google's "Mobilegeddon" affected mobile Web traffic more than expected, and Reddit, despite recent turmoil, could be a good place for retailers to focus their attention.

Facebook's display-ad success was perhaps the most compelling story, however. Its ads appear to be resonating with users more than Google's, according to Tamara Gaffney, principal analyst at Adobe Digital Index.

"There have been radical changes that Facebook has done and less radical changes Google has done," Gaffney said. "And consumers in the marketplace are feeling ads on Facebook are more relevant."

Facebook ad impressions were down 50 percent, but clickthrough rates doubled. That means Facebook is getting fewer but more valuable ad impressions.

Google's clickthrough rate was up 24 percent on display ads in its network and on YouTube. It all comes down to relevance—a survey found that 51 percent of users said Facebook ads were attuned to their interests, while just 17 percent said the same of YouTube.

Facebook and YouTube are in a growing competition for video views and ad dollars.

Adobe looks at a trillion ad impressions each quarter and 20 billion social-media visits, so it can sample a broad swath of online marketing. It can measure ad costs and clicks, social-media referrals to retailers, and visits to sites. Here's a look at the rest of the findings:

Video streams

  • Periscope, the video-streaming app Twitter acquired, has generated three times as much traffic as rival Meerkat since its launch in late March, according to Adobe, and the disparity is growing.

Retail sales

  • A Facebook retail referral is the most valuable, generating on average 91 cents for each user sent to an e-commerce site, but that represented a 17 percent decrease from last year.
  • Pinterest's referral value dropped the most—25 percent in a year—to the point that the average user is worth 51 cents to the retailer, down from 68 cents.
  • Twitter went in the other direction in terms of social referrals, with the value of a referred consumer rising 63 percent to 65 cents.
  • Surprisingly, Reddit is making strides as a referrer of retail traffic, increasing the value 80 percent and making the average visit from Reddit worth 34 cents to retailers.
  • Reddit is in the middle of a leadership change and user uprising. Its interim CEO Ellen Pao resigned last week after users vented about policies at the company, which is very much dependent on its active community. The publicity thrust Reddit into the spotlight, and social-media mentions about Reddit tripled at the beginning of July, when the user-generated outrage began.

Mobilegeddon

  • Last quarter was the first time the impact of Google's search changes that downgraded sites not designed for the mobile Web were measured. The changes were called "Mobilegeddon" because of fears that ill-prepared sites would see a drop in traffic. Well, they did, according to Adobe, which found sites lost up to 10 percent of their traffic if they did not meet Google's mobile standards.
  • The reasons behind "Mobilegeddon" were also evident. Mobile advertising is still not as valuable for Google, and pressuring websites to perform better on mobile could increase the value of clicks. Desktop search ads cost 37 percent more than those on mobile, according to Adobe.
  • Mobile search ad costs per click did rise 16 percent, but clickthrough rates were down 9 percent.
  • For the first time, Adobe did project Google search revenue, saying it would increase 1 percent to 2 percent year over year. In the second quarter of 2014, search revenue was up 4.5 percent from the previous year.
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