Facebook offers advertisers potential 45% saving in cost per click rates

The Q4 Global Facebook Advertising Report has highlighted the value potential available when managing advertising campaigns that keep users within Facebook. The report, compiled by TBG Digital and verified by the University of Cambridge, was based on 362 billion impressions in 205 countries.

The report found that cost per thousand impressions (CPM) rates, which indicate how much Facebook earns every time an advert is shown to a user, increased by 8% on average between Q3 and Q4 in the markets analysed. There has been an increase of 23% in CPM rates since Q1 2011, which means Facebook has earned substantially more during the course of the year from its advertisers; an important financial indicator for potential investors in the company. Also uncovered in the report were reductions in Cost per Click (CPC) rates for advertisers running campaigns that recruit fans or require users to install applications. Savings reached 45% compared with those that directed traffic away from Facebook – this finding presents a strong incentive for companies to build their presence within Facebook. For example, financial services firms often direct users back to their own websites to complete a quotation or sign up process but building tailored applications that perform the same function within Facebook sees a reduction in advertising costs. Click through rates, the traditional method of assessing the effectiveness of adverts, also increased by 18% over the year. This would suggest that advertisers are building better creative which engages users’ interest whilst also learning to harness the targeting options available. It would also appear that Facebook’s adverts are engaging better with their user base. Growing effectiveness indicates that advertising output is resonating with users more, which also points to a greater understanding and use of targeting methods, such as time of day, demographics and user interests.As shown in the graph, the report’s data indicates that there was an average increase of 7% in click through rates between the third and fourth quarter of 2011. In the five markets analysed (Canada, France, Germany, the UK and the US), the figure was pushed up by France (100% increase) and pushed down by Germany (18%) and the US (2%). The above pie chart indicates that of the eighteen sectors measured in the report, the top five (finance, food & drink, retail, entertainment and games) amounted to almost 70% of the total impressions in Q4 2011. In terms of click through rates by sector, the food and drink sector took top spot, overtaking beauty and fitness. These sectors are enjoying lower cost per click (CPC) rates as a result of engagement with the Facebook user base. In other movement, the not-for-profit and home & garden sectors entered the top five sectors for click through rates. The report also found that finance brands account for 61% of the impressions in Offsite campaigns (those which direct users out of the Facebook environment). This figure reflects almost a 50% increase in the sector’s share in the third quarter. This figure shows the top five sectors and their share of the Offsite category’s impressions. The finance sector sees high CPC costs (200% more than the average CPC in Q4) and low CTR values (48% lower than the average CTR in Q4). Simon Mansell, CEO of TBG Digital commented on the importance of relevant content and usability now that the opportunities for advertisers continue to grow. “Users are increasingly discerning about what they view on social media networks, so it is in all advertisers’ interests to ensure that their content resonates with their target audiences and fits with their usage habits. “The potential cost savings available by maintaining traffic within the Facebook environment is particularly compelling and demonstrates its effectiveness as an advertising channel and also as a ‘destination’, with more and more clients investing heavily into their Facebook presence With the reported introduction of mobile adverts early this year, the opportunities for advertisers will continue to grow and Facebook is cementing its position as an increasingly essential part of major brands’ advertising strategies.”

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