Overall Facebook advertising costs and ROI rose dramatically year-on-year in November 2014 according to the latest global data from Kenshoo.
In fact, aggregate average CPM from Facebook ads increased by 7X this November compared with November 2013 and return on investment (ROI) increased nearly 2X in 2014.
The rise in costs is for two main reasons:
• Facebook now shows fewer ads in the right hand column, meaning advertisers are buying more of the Page Post ads that appear in users’ Facebook Newsfeeds (newsfeed ads perform better because they are more contextual and native – so have more impact and better engagement). The higher demand for news feed ads has driven up prices.
• Increased mobile usage by consumers – and competition from advertisers for mobile adviews – has pushed up prices.
The increased ROI (nearly 2X more in 2014) is down to the better performance of Newsfeed ads and come with a 5X YoY increase in click-through rate. The opportunity to reach a more targeted, tailored audience through Newsfeed ads justifies the increased investment from advertisers.
So advertisers are going after more Newsfeed placements across devices and honing in on desirable audiences using advanced targeting features like Custom Audiences to generate more engagement than ever before according to Kenshoo.
Summarizing the findings from the data, Laura Ruszkowski, Marketing Research Analyst at Kenshoo, said “As Facebook advertising has evolved, it has given marketers the opportunity to identify and target their highest valued audiences to drive engagement and conversions.
“Not only has the Facebook ecosystem shifted but so have marketers’ approaches and programmes to reflect the changing environment. By driving efficiencies and optimisations in their paid social programmes, marketers have become more sophisticated and their strategies more vigorous, thus increasing overall competition within Facebook advertising and, in turn, upping the worth of Facebook users.”