Here is the Facebook Data That Shows Why All Ads Need Social Context

It's hard - very hard, actually - to remember a world without cell phones. How did we communicate with people once we left home or the office? For many, it's just as hard to remember a world without Facebook, Twitter, and even Instagram. 

So it's a surprise to no one but the most ardent naysayers that the past few years have witnessed exponential growth in social advertising, with Facebook leading the way.

Social ad spending is predicted to reach $11 billion by 2017, and the holy grail for advertisers on Facebook is the ability to reach the right people, at the right place at the right time.

Just last week, Facebook took steps to make it easier for advertisers to succeed on the platform. The company announced plans to simplify their ad offerings by cutting the 27 ad units in half to map them to "the business objectives marketers care about — be it in-store sales, online conversions, app installs, etc.” You can read more about the changes on the Facebook newsroom.

After a recent meeting of Facebook’s Creative Council, of which I am a member, I asked my team to run some numbers to see how brands can get the best bang for their buck on Facebook.

Rather than keeping the data internal, we've decided to share this research with the community. And with that, I'm excited to give birth to the Facebook Ads Benchmark Report, which we released today and hope will become an important tool to help grow the social advertising ecosystem for everyone. 

I wanted to walk through the highlights of the aggregated data pulled directly from our Social.com social advertising application. From what I can tell, this is the largest set of third-party Facebook ad data set ever released comprising one million ad units and over 114 billion impressions served in the first three months of the year.  

Global and regional trends

RegionalCompare

Asia-Pacific as a region has a high click-through rate (CTR) -- 61% above average -- and in terms of cost, cost-per-click (CPC) is 21% above average, cost-per-impression (CPM) is 39% above average and Cost per Page Like is 26% above average.

EMEA as a region has a 55% higher CTR than the Americas, as well as a 15% below-average CPC and 29% below-average CPM. EMEA is also the cheapest in “Cost per App Install” and “Cost Per Page Like.” The Americas and APAC have high “Page Like Rates,” which we define as the number of page likes divided by number of impressions per ad, and they are both more expensive regions than EMEA.

Sponsored stories outperform

One of they key changes Facebook made when they simplified their ads product portfolio last week was making it easier to add social context to all ads.

As Facebook product manager Fidji Simo said in post, “Previously, to get the best social context available, advertisers had to purchase sponsored stories in addition to ads. In the future, for example, when you create a Page post photo ad, we will automatically add social context to boost performance and eliminate the extra step of creating sponsored stories.” These changes will come in Fall 2013, according to Facebook. 

SponsoredAppInstall
This is a crucial shift. As our research shows, sponsored stories perform better than non-sponsored stories. When it comes to Sponsored App Action Stories – these are the ads you see in your stream that show your friends have installed an app, or are playing a social game -- they cost 25 percent more per app install compared to their non-Sponsored counterpart but convert at a 5.7x higher app install rate. In addition, click-through rates (CTR) are well above average for several sponsored ad types, including Sponsored Place Check-In Stories and Sponsored Page Post Like Stories. These ad buys are a very effective means for driving awareness and action.

Which industries are performing best on Facebook?

HighCTRs
Our research shows that Facebook ad performance varies widely by industry.   Several industries show CTR and CPM well above average. Telecommunications (2.8x above average), publishing (2.5x above average) and general retail (58 percent above average) are a few examples, as shown in the chart above. On the other hand, deal sites have a click-through rate 48 percent below average, while dating sites have a CTR 92 percent below average.

With the Facebook advertising ecosystem constantly evolving, savvy marketers need to have plan in place, backed by industry intelligence to successfully and efficiently reach their target audiences.

Interested in learning more? You can download the entire report for free on our website.

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