State of Facebook Ads: CPMs Go Down, Inventory Goes Way Up

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ADOTAS — Spruce Media, a leading provider of enterprise-class marketing solutions for Facebook Ads and one of 13 Strategic Preferred Marketing Developer partners, has issued its State of Facebook Advertising Q1 2013 report.

The report offers an inside look at the state of advertising on Facebook in Q1 2013 and offers predictions for remainder of the year.

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In this latest report, Spruce Media provides statistics and trends analysis on key campaign performance metrics including cost per thousand impressions (CPM), click-through rates (CTR), and cost per click (CPC), and also offers its take on the social network’s advertising products, including Partner Categories, Nielsen OCR and CPA Bidding.

Highlights in the report include the following:

  • CPMs declined in from Q4 to Q1 2013 for two reasons: seasonality (less demand for ads in Q1 than in Q4); and a significant supply increase (Facebook opened up more inventory in its highest yielding placement: Newsfeed.)
  • Despite declining CPMs, don’t worry about Facebook’s financial health; we suspect that Facebook’s revenue remained flat or even increased in Q1. More ads may mean lower eCPM per ad, but the sum of the ads yields a higher page eCPM one of the top indicators of Facebook revenue growth.
  • As Facebook re-allocates what inventory is available to its advertisers – everyone wins. Run of Network advertisers (All Facebook) are benefiting from CPC price drops of over 30% and seeing 50% improvements on CTR Advertisers who are optimizing to Facebook’s highest yielding placements – Mobile and Desktop Newsfeed — are seeing CTR rates 11-18x higher than Run of Network, and are pocketing up to 50% cost savings in their CPC prices.
  • Facebook has done a nice job balancing demand for their inventory. Its FBX partners continue to increase demand and eCPMs for its “right hand side” inventory. Its Native API partners (PMDs and Strategic PMDs) have shifted much of their buying into Newsfeed and Mobile – higher yielding inventory that is currently unavailable to FBX partners.
  • Facebook is poised to disrupt traditional online display advertising by becoming the starting point for all media buys.  Facebook is laying this foundation through a combination of acquisitions, monumental ad product releases, and market strategy. Its proprietary data targeting as well as 1st and 3rd party targeting options are superior to any other publisher or DSP. It has greatly improved its bidding algorithms and even launched a bidding option of “CPA” which no other publisher has ever done before. And it has has the advantage of “identity buying” vs. “cookie-based buying.” This in particular is becoming more and more critical as advertisers need a way to reach and optimize to users across  devices and identity buying is the only way to do this.

The report also covers Facebook Predictions for 2013, including insights for Partner Categories (Targeting); CPA Bidding (Optimization); Nielsen OCR (Measurement).

About Spruce Media

Spruce Media is the leading provider of enterprise-class marketing technology that delivers real results at scale, and drives consumers from likes to influence for the most successful advertisers, agencies, and trading desks on Facebook. Recently named one of 12 Facebook Strategic Preferred Marketing Developers, the highest distinction of excellence offered, Spruce has pushed over 300-billion impressions through its software and is the technology of choice for the largest advertisers on Facebook. Founded in 2009, Spruce has developed a robust solution integrating ad creation, bid management, analytics, and reporting into one easy to use, yet powerful interface, which can be licensed or coupled with managed services. Spruce Media is based in San Francisco and has sales offices in Los Angeles, Dallas, Chicago, Minneapolis, Washington D.C., and New York.

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