Retailers are pouring more money into Facebook’s ad products and driving up CPM costs, according to a new report from Nanigans, an ad platform and Facebook Preferred Marketing Developer partner. The report is based on data from more than 100 online and brick-and-mortar retailers over the first nine months of 2013.
CPMs of Facebook ads from retailers rose from $0.33 in Q3 2012 to $0.89 this year. CPM costs for the retail sector increased in general by 37% from the first to the last month of each quarter this year.
“Performance-focused retailers should frontload quarterly budgets and increase budgets accordingly to avoid price inflation from heightened demand for Facebook advertising inventory at the end of the quarter,” Nanigans suggested in its report. And despite the price increase, the ROI of Facebook advertising for retailers has remained positive, averaging 152% for retailers.
Mobile represented 22%, 14% and 18% of overall retail Facebook ad spend in the first three quarters of 2013, respectively. That represents a sharp contrast to Facebook's internal mobile/desktop revenue split; according to its reports, 30% of ad revenue came from mobile ads in Q1 and 41% in Q2. Facebook had not released Q3 mobile ad revenues at the time Nanigans' report was published.
For most advertisers, mobile has become “an integral part” of their advertising strategy, according to Nanigans' marketing SVP, Dan Slagen. “Advertisers are … putting it front and center, which is corroborated by Nanigans in the sense that 46% of our revenue is attributed to mobile right now,” he said.
In terms of operating systems, retailers are seeing greater returns from iOS audiences vs. their Android counterparts. For the first three quarters of 2013, revenue per click on iOS averaged 6.1 times higher than Android, and ROI on iOS averaged 17.9 times higher than Android.
In addition, Facebook mobile CPMs increased 16% from Q1 to Q3 of this year, averaging $4.87 for Android and $4.99 for iOS. Facebook mobile CPCs have increased 70% from Q1 to Q3 of this year, averaging $0.18 for Android and $0.40 for iOS.
Retailers are also spending more on News Feed ads. Since Facebook launched a program in May that lets advertisers add Page Post Link ads to the News Feed, News Feed ads have increased from 14% of retail FBX spend to 66% in September.
Unsurprisingly, the click-through rates for ads on Facebook’s News Feed were 28 times higher than those for the right-hand-side ads, but the ROI results were 15% lower for ads on the News Feed. The results suggest advertisers should consider various types of ad units, Slagen said.
“It's not to say that ROI is better on RHS or the News Feed,” he said. “What we want advertisers to remember is that the reason to run any ad campaign is to drive value, and … just because there's a new shiny ad unit, it doesn't mean that advertisers should immediately abandon older placements.”
In addition, Turn, the demand-side platform, reported today that social eCPM went up 15.4% for Q3 this year as advertisers continue to drive demand for Facebook and Facebook Exchange ads, which globally attracted $0.45 eCPM this quarter versus $0.39 at the end of Q2. “It’s been an astounding year of growth for Facebook with eCPM up 87% year-to-date,” the company noted in its report.