The PPC Show

[PPC Show] AdStage's 2017 Ad Network Trends Report

This week on The PPC Show, I got Director of Marketing at AdStage, Mike McEuen, away from his desk to walk-through AdStage's latest industry analysis reports for Facebook, LinkedIn, and Twitter. Get ready to geek out on the latest stats and trends across the big three social media networks.

Tune in as we discuss:

  1. Facebook's CPMs increasing 171% with budgets rising by 122%.
  2. LinkedIn's CPMs increasing 15% with budgets rising by 23%.
  3. Twitter's CPMs increasing 22% with budgets rising by 8%.

 

Mike McEuen

Michael leads marketing at AdStage, a software company that connects marketers to their paid advertising data across search, social, and web analytics channels. Mike is an experienced marketing executive with a track record of growing brands, teams, and revenue.

Specialties:
Go-to-market product strategy, customer lifecycle marketing, corporate branding, user acquisition, demand generation, and SaaS analytics.

Follow Mike on Twitter: @lonohead

Show Notes and Transcript

JD Prater:

Welcome everyone, we got a very awesome show today. We've got the director of marketing at AdStage, Mike McEuen. How's it going man?

Mike McEuen:

Feeling good, JD. I know this is a long time coming. I'm real excited that we're going to talk, kind of tackle this topic today.

JD Prater:

I'm just glad to have you back on the show man. We had you on for some headlines, but not actually on as a guest, right?

Mike McEuen:

I'm an introverted spreadsheet marketer, so it's really hard to get me away from my desk, other than maybe some office cake.

JD Prater:

We did have some awesome ice cream cake the other day though.

Mike McEuen:

True.

JD Prater:

Alright. Well, we got Mike on today because we're pretty excited to officially announce, if you've been keeping up with the blog, we just did some industry analysis reporting on Facebook, LinkedIn, and Twitter. Mike, would you walk us through maybe some of the methodology of how we ended up coming up with this data.

Mike McEuen:

I think this has been a long time coming and something that we had planned for, for many years in AdStage, so even when we were an infant, we're unique in that we do cater across search and social and most of the major social networks Facebook, Twitter, and LinkedIn. There's a lot of unique perspective in the different ways that people have used our own platform and used the different networks. We're sitting on a wealth of data. Several hundred current customers, over 2000 plus trialers over the course of the many years of our history. It's a lot of advertisers and a lot of data that we've been processing. So now having the ability working with the engineers and product team to look into slices of that data across our customer base and provide some great insights that you can use to understand how you are performing in your individual market is really compelling and I ... JD, I really appreciate you putting this together. I'm really looking forward to diving into some of these trends.

JD Prater:

Yeah, man. I'm just excited. Even within AdStage, you know, we're all about trying to connect marketers to data and this is just like one small way that we can do that and that's really just to kind of help them understand what's happening in the industry. There's only a handful of platforms out there that can really pull this information and even show it and then do it regularly. Without further ado, let's jump into it, man. Let's jump into Facebook, then we'll do LinkedIn, then we'll do Twitter. Let's start off with Facebook, man. Anything that you saw that was just like eye-opening.

FACEBOOK

Mike McEuen:

I would say when the actual stats came back it was eye-opening, but I think we all understand these trends as we're experiencing them in our own accounts, but across the board whether it's your cost-per-click or CPM, or estimated CPM, you're starting to see that it is the same cost for going after that audience pool rise as more advertisers enter the market as Facebook is basically saying, "You know, we are at capacity as far as user experience on desktop, especially we don't want to add additional load or impressions to many of our users."

JD Prater:

No, it's a really great position, which is I think kind of been interesting. They have so many advertisers and not really even a lot. 5 million sound like a lot but that's only like 8% of the 65,000,000 businesses that are active on the network, which is absolutely crazy. They're really trying to make sure that you still have a good user experience. I think that's something that they're trying to balance, but at the same time you gotta make those shareholders happy, you know? You gotta make sure that you're still returning all of that growth and I think what they're doing instead is really supply and demand. It's now becoming more expensive so we actually saw CPMs rise 171% from January through June. That's only the first six months. That's insane.

Mike McEuen:

You mentioned that, you know. You synthesize, I don't think I ... We sat next to each other, I don't think I saw you for a good week and a half or so as we were processing everything, heads down. You analyze about 8.8 billion impressions and so to go over that trend again, you were saying that there was a 171% increase quarter of a quarter, that you were seeing in some of those costs?

JD Prater:

Yeah, from January to June. Yeah, in six months.

Mike McEuen:

So even in that short time range that's a pretty incredible amount of additional budget it's going to take just to reach the same audience. Is there any more trends as you were diving in there that stook out to you?

JD Prater:

No, I think you just hit on it with budget. We actually saw budgets also increase, which was kind of crazy. We saw a 122% increase in budgets. It seems like that advertisers are chasing these auctions, that they really do value Facebook, they really do value the results that they're getting, if they're willing to increase the budget. My question is, is this new budget or is this shifted budget, which we maybe don't necessarily know that answer. We saw Hanapin, they did a really cool survey, the paid social survey for 2017, and their findings actually said that 73% of marketers are investing the majority of their social spend on Facebook, but of those 71% of advertisers, they plan on increasing and I think we can safely say, more like 100%.

Mike McEuen:

I think there's a couple of things to note there. First, I actually saw an e-marketer report where it said for the first time this year that digital advertising's going to overtake television spend, which is pretty incredible. Television spend is still growing, but as percentage, year over year it's actually the growth is shrinking. And so you are, at least from a CPG, like very large brand, starting to find them shift more towards a social strategy and with that be able to target their audience and extend their message for very cost effective means versus your traditional television buy. For a long time they couldn't even understand who in the household was viewing it, if it was active views and they were relying on a lot of old data, so a lot of US Census data that's not always completely accurate. Where Facebook does a pretty good job with their profiling of letting you narrow down to a specific audience.

JD Prater:

Yeah, and that's been a really fun trend as well. It was kind of like micro targeting if you will and it's been a really good trend as well and I think you coupled that and you put it next to ... Buzzsumo did a really cool, organic report and so I'm kind of just keeping these two in comparison and what they saw was the average number of engagements, so this is organic engagements on Facebook posts, decline by 20% since January. You can definitely see Facebook's predicament and they're like "Well, organic, sorry, we're going to go ahead and just give more to ads and now advertisers are going to be paying more for it." So CPCs are increasing. We actually saw CPCs increase 136%. So again, CPMs 171%, CPCs 136%, budgets overall were up 122%, but here's the real kicker. CTRs. Pretty much flat. You're paying more for those clicks, but you're not necessarily getting a better click through rate because of it. On average, or just over one, so about a 1.1% CTR was pretty average for Facebook.

Mike McEuen:

I think if we're talking about winners and losers here in these types of auctions we noted that a lot of CTRs were remaining quite flat and a lot of our customer base today is really geared towards acquisition and direct response. I did hear from the CEO of AdParlor on their own particular metrics. Great company, but they have a very small client portfolio base really heavily into kind of CPG brands so the broader targeting ... I think we're seeing across the board when people are ... their end goal is more brand and engagement with Facebook, they are benefiting from increased click through rates and lower overall costs while those who are, such as ourselves very cost conscious and running a lot of more direct response campaigns, it is costing us more and we are seeing things like desktop inventory start to dry out. Where we couldn't rely on the past on right hand rail ads, that is one particular area I remember Kenshoo revealing his starting to really skyrocket. I think if you're looking across all the mediums, video and engagement are the two big players today.

JD Prater:

That's a great analysis right there. I really think that's 100% true where if you're really wanting to succeed now, you really have to have ads that are engaging and engaging could be video, it could just be really good content, but it has to be this like, edutainment. You know, education and entertainment mixed together where really this direct response ads aren't really doing as well, which is ... One thing I kind of liked, if you've noticed with Facebook's collection ads, you know, where they're doing with e-commerce, it looks really good because they're putting this fall video together and it's like this catalog of inventory at the bottom and I think that's really ... it's a better looking ad. I'm sure it works maybe a little bit better rather than, "Hey, do you want a demonstrate?" Or "Hey, do you want to buy my product right now? Or "Hey ..." You know, it's like this constant badgering. And then even trying to get the right type of offer in front of people is really tricky, really tricky.

Mike McEuen:

So let's say we even get our engagement down. Let's talk about ad load. So you'd previously mentioned so ... The CFO at Facebook, he had a Q2 2016 earnings call and said, "Intensive pay ad load on Facebook will continue to grow modestly over the next 12 months and then there will be a less significant factor driving revenue growth mid 2017. So Facebook already told their investors this is going to happen, we're seeing it across board. Even with better engagement units, even with more of a brand story you are still seeing those costs increase. So JD, let's talk a little bit more about how Facebook is expanding that so if they're hitting their load in their native walls, so they don't want to serve any more additional ad units for user experience, were they kind of opening up inventory.

JD Prater:

That's really probably what everyone's interested in. We've seen and heard rumors of in-stream ads, right? So we know that, that's out and it's available. That's one thing. So there's stuffing ads in the middle of ads that are videos, right? We're seeing group ads being beta tested. It's not here in the US yet. I'm sure we would all freak out if that was available, but I really think groups could be a really good future bet for Facebook. They're now allowing businesses to be like admins and owners of groups so it's almost like you could build a group for your business and then drop ads into it. Sure, that makes sense.

Then we're seeing Instagram.  A lot more ad units there. They just opened up canvas within stories. And then, probably one that we're all ... maybe not here in the US that excited about, but if you were listening last week on the BBC show for headlines, we talked about WhatsApp. So they just released WhatsApp with like ... you have to pay for a business profile. It sounds like they're gearing up, WhatsApp, to be monetized. So I think between those, then you throw in Messenger, we're getting more types of ad units in Messenger and as ... I haven't heard great results. Meaning, people don't really like them as much. I think people are definitely seeing them, they're interacting with them, they're opening them. They're getting these amazing click through rates, which is really what I've seen, but driving business results is definitely going to be tricky if you're an expensive, like SAAS product, like AdStage or something like that, but I think if you got an e-commerce site and if you got 30-50 dollar, anything like maybe under a hundred bucks, can see those working really well.

Mike McEuen:

I definitely agree with you there. I think in the mediate, Instagram was a smart move where I'm hearing that some ... even though it's nuance, we do have a lot of people I hear about trying Snap Ads. They are actually pulling budgets from there and moving it over to Instagram sponsor stories because it's just an easy way to kind of tell a great narrative. To the publisher mark, I think they're doing a really good job working with publishers and expanding their audience network. Their overall reach outside of their own walls, I think ... You know, fast forward a couple of years, you get a good notion of Messenger. They're really looking at Facebook as another vehicle closer to the Chinese, I think it's Wechat, where everything's kind of housed, every action you do, or transaction is kind of housed in the central messaging app, and then they have the bigger, illuminating VR play, and what they may do that, but that's very future leaning. It does seem like they're making very smart bets on expanding their inventory to other areas.

JD Prater:

Yeah, I mean, we didn't even talk about market place, we didn't even talk about Facebook watch, that they're launching these mini episodes. I do not doubt that Facebook will figure it out. They got a lot of smart people over there, but in the meantime for us, key takeaways that I'd say, more advertisers flocking to the platform, to Facebook as a result CPMs, CPCs are rising very fast and then it seems like advertisers are just not afraid to increase their budgets.

Mike McEuen:

You talk to any of us old time search marketers and we know this story very well with AdWords. You're still going to invest there if there's return. And so while I think it makes us a little bit jumpy, makes our lives harder, it's still a go to channel today that you must have and kind of your paid media a stack.

JD Prater:

I would say that is definitely true and definitely new. I think two years ago, advertisers were trying to convince brands, "You gotta be on Facebook. C'mon, you gotta invest on Facebook." And now it's like brands are like, "No, I need to invest on Facebook," so I think they're going to advertisers and trying to find the right type of advertiser to run their ads for them. Definitely a shift in the market.

LINKEDIN

Mike McEuen:

So I think, you know, changing gears here, what's really unique about AdStage in the market was we have a lot of B2B geared players, which is, I think, often an under covered topic in the paid media sphere. You hear a lot about B2C because all the transaction kind of happens online. But the B2B folks, it's a very different ball game. I wanted to bring up the elephant in the room, LinkedIn, you know, with the acquisition by Microsoft and they're kind of expanding their inventory. JD, I'd love any insights that you found as you were doing that analysis there.

JD Prater:

Yeah, I thought LinkedIn had a really strong first two quarters. We analyzed 4.3 billion impressions so it's about half of Facebook, but when I think about LinkedIn hovering just over 500 million users, Facebook at two billion, I'm like, "Wow, you guys ... " I mean, that's still pretty good when you think about impressions served and we saw only like a 15% rise in CPMs. CPCs only increased 8% and CTRs still remained flat, which is pretty much is the key takeaway so overall, I thought it was a really good showing for LinkedIn especially when you put that in contrast to Facebook.

Mike McEuen:

I was at a meetup yesterday, Drift actually sponsored it, and they had all different players around the valley here and they were speaking to some of their strategies. All who were in the B2B technology, sass play, all went to LinkedIn. The reason they have a dedicated budget there is while it can be kind of expensive if you look at the quality of the lead coming through because you do have the job title and the function targeting and the company targeting. Those are stuff that Facebook's trying to figure out, but as far as a B2B play and targeting, Facebook, excuse me, LinkedIn is still king there, absolutely.

JD Prater:

I was talking to AJ Wilcox over ... CEO of B2Linked. If you guys are familiar with AJ, if you're in the PPC world, he is the, pretty much expert on LinkedIn ads and he was just saying it's only natural. This progression of 15% increased CPMs, 8% for CPCs, it's only like kind of a natural thing for it to become more competitive over time. You know, we're going to see more advertisers come in to the auction and because of this and limited ad inventory, like yeah, you're going to see competition rising. You're going to see your prices go up. It's no different than AdWords. It's no different than Facebook. It's still an auction. The question is, will Facebook, or sorry, will LinkedIn find that extra inventory? Our analysis was only Q1, Q2, they just released that audience network where they expanded that, I should say just two weeks ago so it seems like they are keenly aware that that's what's going on and they're definitely going to try to find more inventory.

Mike McEuen:

I think you ask anyone today and everyone's kind of pushing them towards Outlook to some degree. Whether that's taking targeting from Outlook or whether it's actually open up inventory within that inbox. That's a really interesting play. There's a notion ... So I saw it here with the analysis of, you said CPCs rose Q1 to Q2 about 15%, but CTR looks pretty flat there, and so even though they have better targeting now with their mash audiences, I think the potential next play to increase engagement or click through rates there would be something like sponsor video.

JD Prater:

Yeah. Yeah, and rumor has it, they're actually looking at it for a beta right now. So, pretty exciting stuff there. It looks like they have that on their radar as well so maybe it'll be rolling it out hopefully, maybe by Q1. I hope they would maybe beta by Q4 and then maybe roll it out by Q1.

Mike McEuen:

Get ready for the inspirational quotes about on your LinkedIn profile. There's going to be a lot of track music in the background, inspirational quotes and someone yelling at you in the screen so I'm excited.

JD Prater:

Oh man, it's going to be so good. Anyway, I think it's a good play for them. I think, again, more ad units I think is going to be key and especially video, we know video is so hot right now and if I can take this video that I've created and maybe I created it for YouTube, maybe I'm creating it on Facebook, now being able to have another placement, another channel for that video, is going to be fantastic. Again, you probably want to channel them to each network, but still, any ways that I can get maximum reach out of this video is always a good thing for me.

TWITTER

Mike McEuen:

And let's finally stop at the network that no one knows what quite to do with anymore. Twitter. You know, there are cases I've seen advertisers have really success, I've seen some really poor results, it's more of a mixed bag there. I would love JD, as you're diving into Twitter, I think that's one area that's less covered. What were some interesting insights?

JD Prater:

I think you kind of hit on that one pretty well with the budgets were all over the place. This is what I loved when we were trying to analyze their supply and their demand, was it looked like every month was up and then down, down and then up and it was like there's real no rhyme or reason. I couldn't even say seasonality, it just seemed like everyone is trying to figure out what Twitter is about. We analyzed 3.5 billion impressions from Twitter. So yes, people are still advertising and I'm guessing they're still getting great results. But we saw CPMs increase 27% so even still more than LinkedIn and we saw CPCs increase by 18%. So again, more than LinkedIn but less than Facebook so again, a third network where CPMs and CPCs rose and CTRs still remained flat. It was like the exact same story for all three, just at different amounts.

Mike McEuen:

I will say, I'll give Twitter some credit in kind of a multi-channel approach. A lot of the times because most the native networks are really counting last click attribution, or Google Analytics that's really only counting click throughs, there is something to be said for running a lot of very tailored targeting and retargeting with Twitter where you're constantly present. I know when I make software decisions it does kind of lend to the experience when I can see that brand everywhere and Twitter being a great place for that. I may never click or engage with the unit but it's constantly ever present for pretty cost effective means.

JD Prater:

Yeah, that's a really good point. And it's something that I've, as an advertiser have always kind of thought about and really have solidified. I really think if I'm running Google Display, so if you're just running display ads, you really want to consider Twitter. I think it's probably a better display play, assuming that your audience is on this network. They have a decent audience network as well. Definitely keep an eye on it, you might get a lot of garbage clicks, but you know, just keep an eye on it. As far as the Twitter newsfeed goes, if you're scrolling through it as much as I am, and I would consider myself a decently active user of Twitter, yeah, I'm probably seeing a lot of ads and I'm seeing your ad and it really does ... There's a couple that I see constantly from the same company and you're like, arrgghhhh It's so good.

Mike McEuen:

So we're going to play a little game called Q4 planning hot spot with JD here and we're saying Twitter has a channel, experimental or part of your core strategy?

JD Prater:

Oh, man. You know, we've experimented even with it here at AdStage in Q2. We didn't get great results and coming at it from a performance lens of last click attribution, of driving, we'll say sign ups and customer stats to AdStage, right?

Mike McEuen:

Mm-hmm (affirmative) mm-hmm (affirmative)

JD Prater:

Did it influence purchase decision? Maybe. Possibly. Is our audience on Twitter? Yes, I mean, that's an emphatic yes so, I would say definitely experimental. I wouldn't say a core strategy, but as I'm seeing Facebook rise and becoming more competitive in the auction and I can go over to Twitter and maybe still interact with the same type of audience, yeah, I think it's definitely worth experimenting.

Mike McEuen:

Awesome and I think the last thing to just kind of wrap things up, tie everything in a bow together is there is kind of the trend where so far as taking that hard stance where they don't want to allow cookie polls, and I'm curious as to your thoughts and general audience thoughts on what potential impact they may have across the board.

JD Prater:

It's going to be huge because I just saw a report yesterday from, oh man, I can't remember who did it, but really good report yesterday saying that actually mobile device targeting, this was like your cookie polls, are actually better than desktop. I was like, "What?" But I guess as we shifted mobile and we are in apps more, we're on our phones more, it does make sense that you maybe have better targeting there, assuming ... I guess you're just being cookied like crazy everywhere.

Mike McEuen:

I would say in the mobile experience I'm definitely probably in incognito less, right? In desktop I'm always kind of doing that, look how my website looks or what have you, it's just easier browsing. So mobile definitely has me there.

JD Prater:

Yeah, I think another thing to, within that, is when we think about super, like these cookies, I know Google's already come out and said, "Well, we're gonna fix that," or whatever it is and so, it'll be interesting to see how it all plays out because I'm pretty sure that Apple has these handshake deals with Google or with Bing, right? To be their search provider, right? And so, I'm wondering what that partnership looks like if Google's paying a billion dollars to be the search engine for Safari. Are they going to wrap in something like that? It's just like Apple's taken a stance which I think is more of a ... they may say it's for user protection, but it's definitely I think, a stance to hurt google and to hurt Bing, more than anything else.

Mike McEuen:

I agree. 100%.

JD Prater:

It's Silicon Valley's companies just trying to piss off another company.

Mike McEuen:

So JD, wrapping this up, is there key takeaways you think the audience should know? So you were doing this analysis, things they should look at when they're planning for Q4, Q1?

JD Prater:

I think the biggest takeaways are this was Q1 and Q2, so we haven't even touched Q3. Q4's coming up. Q4 is historically the most expensive for ... and I'll specifically say Facebook. Well, we can get into LinkedIn, Twitter next, but I don't see it slowing down with any three. I only see more competition coming. I only see less inventory as we ... Unless they just have massive user growth or they can figure out how to get users to open the app more or to use the platform, more. That way they could serve more impression or figure out different ways to really place ads. So I think those are all kind of my key takeaways are. It's going to be more expensive and the networks are going to have to figure out how to keep a good user experience, but also figure out how to place more ads. Yeah, yeah. That's all I got man, what about you?

Mike McEuen:

That's it? That's it?

JD Prater:

Alright man, well, I think we went through all three networks, we're pretty excited about it. I'll link all of these, well, I'll link Facebook and Twitter's in the show notes where we still haven't released the LinkedIn one yet and enjoy the rest of your week. We'll see ya next week on the PPC Show.

AdStage Team