Report: Facebook Advertising by Brands For Their Pages Increased 1900% Year Over Year

Facebook Ads API tool and managed-spend service provider TBG Digital has released its Global Facebook Advertising Report for 2011 Q2 (.PDF). The report indicates that the number of Facebook ad impressions brands bought to gain fans for their Facebook Pages increased 104% in Q2, and 1900% year over year. TBG Digital says it ran 60 billion ad impressions in 2011 Q2, and just under half were brand advertising of this nature, so we can interpret that the actual number of impressions of ads for brand Pages run by the company’s clients has grown from approximately 1.4 billion to 27 billion.

Other key findings include that ads aimed at driving sales had a more than 350% higher conversion rate when aimed at existing Facebook fans, advertising by retailers has grown significantly to 36% of total impressions, and Facebook’s Sponsored Stories ad unit produced a 32% lower cost per acquisition.

The report shows that Facebook Pages have become so important to brand presence on Facebook that brands are aggressively increasing spend on fan acquisitions. It also demonstrates building a fan base produces clear return on investment by lowering the cost of attaining sales and additional fans.

The data for TBG Digital’s report analyzes a total of 200 billion impressions ran in 21 countries by 167 clients of the company’s licensable ad management tool and managed spend service. The tool and service both allow clients to tap into Facebook’s Ads API to more efficiently create ad variants, A/B test to find top performing creative and targeting combinations, optimize bids, and analyze results in order to get a higher return on spend than would be possible by running ads manually.

Showing Facebook as a good place to advertise is in the interest ofTBG Digital’s business, so one could expect there to be some potential for bias. However, the company had the report’s methodology and conclusions verified by The Psychometrics Centre of University of Cambridge.

In the recent past TBG Digital reports have shown that Facebook’s Sponsored Stories ad units provides a 46% higher click through rate, a 20% lower cost per click, and an 18% lower cost per fan than Facebook’s standard ad units. For those less familiar, Sponsored Stories take the actions of friends such as Liking a Page and turns them into Facebook sidebar ads that show the friend’s name and face. TBG Digital  also indicated that by advertising to Facebook fans rather than non-fans, acquisition costs can be lowered for registrations by 44%, for event signups by 33%, and for purchases by 15%.

Brands Push to Gain Fans Before Price Increases

Brands, recognizing the value of Facebook fans, have been pouring money into upping their Like counts this year. In 2010 Q2, most Facebook advertising pointed offsite, either to brand websites or purchase sites. Total share of impressions pointing offsite has since dropped to just above 50%. Now, ads pointing to Facebook Pages now make up nearly half of all impressions, having risen 1900% since 2010 Q2, and 104% during 2011 Q2.  This data is based on 170 billion ad impressions for 146 clients.

Brands may be concerned that as adoption of Facebook by businesses increases, so will the cost per acquisition of fans. Therefore, brands are trying to amass large fan bases while doing so is still relatively cheap. The shift towards ads pointing within Facebook benefits the social network, as clicks of these ads lead to it being able to serve more ad impressions.

With High Conversion Rates for Fan-Targeted Ads, Retail Spends More

The retail and finance industry spending on Facebook ads significantly increased during 2011 Q2 when analyzing 120 billion impressions. Retail now makes up 36% of all Facebook ad impressions, and Food and drink industry spending has also increased. A 60 billion impression study shows that retail advertising saw the highest click through rate, followed by arts and entertainment, and food and drink.

TBG Digital conducted a study of 170 billion impressions that included 150 billion impressions of ads aimed at driving sales by two major retailers. It concluded that advertisers are able to attain an average 435% higher conversion rate when targeting fans instead of non-fans when trying to attain sales, loyalty program registrations, and event RSVPs.

Many companies have spent the last year concentrating on building their fan base, and are now ready to monetize these fans with conversion-oriented ads. With a growing set of ecommerce applications allowing retailers to sell products from their Facebook Pages, high CTR, and high conversion rates when advertising to their fans, retailers are finding Facebook a lucrative place for their ad dollars.

Sponsored Stories Produce More Qualified Clicks

As we noted, TBG Digital previously reported that Sponsored Stories can increase CTR and lower CPC and cost per fan. The reduction in acquisition cost goes beyond Facebook fans though, with the new report showing a 32% lower CPA when using Sponsored Stories instead of standard Facebook ads. However, this study only looked at 208 million impressions.

This indicates that the social context and trusted recommendation produced by Sponsored Stories that display the names and faces of friends make users more likely to become fans, make purchases, register, or RSVP. A combination of low cost and high performance means Sponsored Stories could become a core component of many Facebook campaigns once more advertisers learn how to use them.

TBG Digital also included data about changes in average CPM and CPC pricing for Facebook ads. The report indicates that CPC prices rose in several major markets including the US. However, we’ve received conflicting reports from other Ads API tool and service providers so we’re hesitant to make a steadfast conclusion about changes in ad rates at this time. We’re following up with Facebook and additional Ads API partners and will soon release a study looking at ad rate data from multiple sources.

Overall, the report suggests that interest in Facebook ads is growing, the channel is proving to perform for many industries and desired conversion types, and that Facebook’s newest ad units can drastically improve advertising efficiency.