Facebook again proved to be an extremely important advertising channel for marketers during the end of the year festive season.
Even though spend more than doubled, cost per click (CPC) and click-through rate were both relatively flat year-over-year (YoY) which showed that Facebook was able to handle the heavy volume without losing efficiency.
Here’s a look at all the key metrics we saw across advertisers using the 4C Social Ads product.
Total marketing spend was up 128% YoY in Q4 2015, bolstered by retailer faith in Facebook as a strong direct response vehicle. This is quite a reversal from the early days of social advertising when Facebook struggled with marketer skepticism over its ability to drive offline and online sales.
It would seem that that debate is now definitively over and Facebook has now firmly proven to holdout naysayers to be one of the most valuable channels for driving conversions along with it’s already-cemented position as a tremendous platform for audience reach and branding.
Even stronger evidence with regards to Facebook’s seasonal dominance is the fact that Q4 spend was up 46.9% quarter-over-quarter (QoQ) from Q3. This indicates that marketers not only planned to rely heavily on Facebook for the holidays with preset, annual budgets, but also redirected the incremental dollars that are often set aside by brands to ensure a strong end of the year surge in sales.
When marketers have to choose where to spend incremental dollars in a hurry, they almost always go with the safest bets.
Facebook, in Q4 of 2015, was that safe bet.
Clicks and Cost-per-Click (CPC)
Historically, when advertisers rapidly scale up spend on auction-based media, the increased competition drives click costs up beyond standard market prices. This held true in Q4 as marketer spend on Facebook was up almost 50% from the previous quarter and — CPC was up 21.5% from Q3 so clicks were up just 20.9% QoQ due to budgets capping out at a faster pace.
Even though click-to-spend efficiency was down QoQ, clicks followed the YoY doubling spend trend and were up 113.9% from Q4 2014. This was because marketers were able to keep CPCs stable from their previous year prices with nominal inflation (6.6%) from Q4 2014.
Once a critical mass of advertisers enter an auction-based media market, CPC rates generally tend to settle in and stabilize. With Q4 2015 CPCs basically flat from the previous year, it may be a sign that Facebook’s offering has begun to reach saturation and maturity.
If marketers can feel comfortable that costs won’t unexpectedly go through the roof on a channel, they will be able to safely plan costs and expected return. This stability could mean more marketer will begin to rely on Facebook as a stable partner moving forward and dedicate more dollars to this publisher. When it comes to annual media planning, reliable channels tend to be more favored than volatile ones.
Impressions, CPM and Click-Through Rate (CTR)
Many advertisers choose to buy some if not all of their Facebook media using an impression based pricing model. Because of the competitive nature of the holiday season, CPMs rose due to heavy bidding, but just 10.4% up QoQ and 26.8% YoY. So, marketers did pay more for impressions in the busiest advertising quarter of the year, but they received the desired increase in impressions both QoQ (33.1% higher than in Q3 2015) and YoY (79.8% higher than Q4 2014).
CTR was down slightly (9.2%) from Q3 to Q4. This is to be expected due to the aforementioned cluttered holiday marketplace and will most likely, for all intents and purposes be viewed by marketers as somewhat flat rather than down.
Although Facebook ad CTR was down from the previous quarter, it was up 18.9% from Q4 2014. The fact that marketers were able to generate a higher response rate from their paid programs shows that they are getting savvier on what works on Facebook. That’s a strong sign that social advertisers are maturing in this channel and can continue to optimize their accounts to squeeze out more performance from their investment.
Instagram Ramping Up Quickly
With just a half year of advertiser activity under it’s belt, Instagram ended the year strong, up over 3100% in spend from July to December on our platform.
This was due mainly to the fact that there were more advertisers ramping up on the platform. While 4C has just 5 and 11 advertiser accounts active on Instagram in July and August respectively, marketers geared up for Q4 and in December, we had 77 advertiser accounts.
There is strong marketer interest in Instagram as it reaches valuable mobile audiences. It also provides a unique placement that is an attractive ad format for brands who are able to take advantage of Instagram’s image-based platform.
4 Tips to Continue Your Post-Holiday Season Success with Facebook Advertising
1. Use Facebook conversion pixels to measure as much as you can. Facebook pixels can be utilized to track multiple events. Even if your end goal isn’t related to a specific action or revenue goal, measuring events once consumers click to your site is a great way to gain valuable insights into what is and isn’t working with your social advertising. These insights can help understand how to optimize your bids, creative, and targeting to get the most return from your Facebook budget.
2. Test and try new ad formats like Carousels. As Facebook expands its ad offering, it continues to release new ad formats that require testing to develop best practice for their use. For example, Carousel Ads are highly impactful and can be much more interactive than standard ads. Their multi-panel format offers engaging storytelling opportunities for brands. Also, marketers can track performance on individual cards which can be a quick way to test new, individual creative ideas.
3. Run mixed placements on Instagram. Even though ads on Instagram are less than a year old, it’s market advantage is that it can be approached as simply another placement within Facebook’s suite. This makes it very accessible to marketers in a way that a new [non-Facebook] social ad offering will never be able to match. For social advertisers, the question is “why shouldn’t I?” run Instagram placements inside Facebook campaigns, and not “why should I?”. If you have yet to run Instagram ads, try adding its placements to your existing Facebook accounts. Play around with them. Test them. See how they can be best applied to your social advertising strategy.
4. Sync your social ads to TV. With more and more multi-tasking occurring during media consumption, getting in front of TV viewers on second screens is a new, exciting way to reach consumers. Take advantage of 4C TV Synced Ads to automatically run Facebook and Instagram ads when your television commercials air. You can even sync your social ads when competitor ads run or when certain programs air. This coordinated marketing approach can lead to increased engagement and other key performance metrics.
Through 4C TV Synced Ads, you can also trigger your paid search and display ads programmatically through a self-serve portal. Ask your 4C account manager or email firstname.lastname@example.org for more information.
The Facebook Q4 2015 analysis provided in this post includes an aggregation of Facebook ad activity across all 4C clients from Q3 2014 to Q4 2015. The data set analyzed covers more than 50 billion Facebook ads.