REPORT: Facebook Advertising More Expensive Year-Over-Year, But ROI Is Up, Too

By David Cohen 

GreenUpChartCartoon650The bad news for advertisers on Facebook: The cost of advertising on the social network rose dramatically in November 2014 compared with November 2013, with aggregate average cost per thousand impressions (CPMs) seven times higher. The good news: Return on investment saw substantial gains, as well, according to the latest data from Kenshoo, a Facebook Strategic Preferred Marketing Developer.

Kenshoo cited the shift from right-hand-side ads to News Feed, as well as the social network’s increased mobile usage, for the upswing.

The company also examined the performance of Facebook Exchange and Marketplace on Cyber Monday, finding that ROI was five times greater than Cyber Monday 2013, and CPMs were up three times for FBX and 10 times for Marketplace.

Marketing research analyst Laura Ruszkowski wrote in a blog post:

When comparing November 2013 to that in 2014, overall Facebook advertising costs rose dramatically. This is largely due to the shift in prevalence of right-hand-side ads to the page post ad format in the News Feed, along with increased mobile usage by consumers and competition by advertisers for mobile ad views. In fact, aggregate average CPM increased by seven times when comparing November 2013 to November 2014.

While cost increased significantly, return on investment increased significantly over the period, as well, with retailers seeing a return on investment nearly two times more in 2014. This return — paired with a five times year-over-year increase in click-through rate and the opportunity to reach a more targeted, tailored audience — justifies the increased investment.

KenshooNovember2014CPMROI

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 seven times from 2013 to 2014, CTR increased by 5.2 times and ROI nearly doubled. Advertisers are going after more News Feed 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 — five times greater than ROI on Cyber Monday in 2013. This year, FBX generated greater efficiency than Marketplace with CPM increasing by three times and 10 times, respectively, likely due to the changes in Marketplace ads mentioned above.

KenshooCyberMondayFacebookExchangeMarketplace

Image of upward chart cartoon courtesy of Shutterstock.

Advertisement
Advertisement