Social marketing platform Nanigans, a Facebook Strategic Preferred Marketing Developer, analyzed more than 300 billion ad impressions on the social network during the third quarter of 2014 from clients using its advertising automation software, and it found that 95 percent of total ad spend went to Facebook’s three main direct-response ad units: unpublished link ads, mobile application install ads and domain ads.
Nanigans also found that:
- Global click-through rates continued their upswing, soaring 195 percent compared with the third quarter of 2013, to an average of 0.56 percent.
- Cost per click of $0.53 was down compared with the second quarter of 2014 but up 30 percent year-over-year.
- Demand for and performance by Facebook advertising remained strong, as effective cost per thousand impressions and CTRs were up in the third quarter, while CPCs dropped slightly.
- 62 percent of third-quarter ad spend was geared toward reaching mobile users.
Nanigans also outlined the following four factors that drove the increase in Facebook CPMs:
- Increased News Feed ad demand: Overall higher advertiser demand in the News Feed has led to higher CPMs in News Feed inventory.
- Larger right-hand-side ad units: The newly introduced larger right-hand-side ad format has resulted in fewer available RHS ad impressions, leading to a higher overall CPM. Third-quarter-2014 RHS ad impressions dropped 50 percent quarter-over-quarter and 65 percent year-over-year.
- Decreased right hand-side ad demand: RHS ad inventory declined as a percentage of total spend. Because RHS CPMs are 10 times to 20 times lower than News Feed CPMs, less spend on RHS leads to overall higher CPMs. Despite decreased demand, advertisers leveraging the redesigned RHS ad units saw improved performance, with CPCs down 53 percent from the second quarter of 2014. Lower demand is likely due to the transition period, in which some advertisers were slow to adopt the new format. With the better-performing larger ad units now comprising the majority of spend on RHS inventory, demand is expected to increase in the fourth quarter.
- Increased optimized CPM bidding: A 38 percent quarter-over-quarter increase in Facebook’s oCPM bidding indicates that advertisers are leveraging Facebook’s improved targeting optimization and bidding to reach more valuable audience segments, but at lower CPCs.
Readers: Did any of the findings by Nanigans surprise you?