Over the last year, we’ve analyzed over 8.8 billion Facebook ad impressions. We found that during the first six months, the average CPM increased from $4.12 to $11.17, and the average CPC increased from $0.42 to $0.99.
- The average CPM on Facebook ads has increased by 171% since January 2017
- The average CPC on Facebook ads has increased by 136% since January 2017
- The average CTR for Facebook ads has remained consistent over the last six months
Facebook’s Supply and Demand
Facebook’s ad impressions are flat while ad spend is moving up. This tells us advertisers are paying more to enter the auction while getting the same number of impressions.
Facebook’s CPM Increase 171%
Based on our data, we saw CPMs increase by 171% during the first half of 2017. This shows how competitive the auction is and illustrates why Facebook is having ad load issues.
Facebook’s CPC Increase 136%
The CPCs of Facebook Ads went from $0.42 to $0.99 during the first six months of 2017. That’s a huge jump, especially when thinking about the role of Facebook in the customer journey.
Facebook’s CTR Remain Flat
Advertisers are getting consistent CTRs month-over-month, but it’s costing more to get the same result due to higher CPMs and CTRs.
Why Are Facebook’s CPMs Increasing
Our ad spend data includes all ads run on Facebook, Instagram, and Audience Network. There are a number of possible explanations for the increase in CPMs and CPCs.
1) Advertisers Are Flocking to Facebook
Facebook reported a total of five million advertisers as of April 2017. That’s up from four million monthly advertisers in September 2016, and three million in March 2016. Put another way — Facebook gained two million advertisers in one year.
Keep in mind that Facebook’s five million advertisers are only 8% of the 65 million businesses active on the network. Therefore, we don’t foresee a slowdown in advertisers’ growth over the next 12 months.
2) Advertiser’s Facebook Budgets Are Growing
Hanapin Marketing conducted a paid social survey asking marketers where they plan to increase and decrease budgets in 2017. They reported that 73% of marketers are investing the majority of their social spend on Facebook and 71% plan on increasing their Facebook ad spend within the next year.
Our Facebook data confirms that advertisers are indeed increasing their Facebook budgets as overall ad spend more than doubled since January 2017 (122% increase).
3) Facebook Is Reaching Max Ad Load
Facebook CFO, David Wehner, said on the Q2 2016 earnings call:
“We anticipate ad load on Facebook will continue to grow modestly over the next 12 months and then will be a less significant factor driving revenue growth after mid-2017.”
The company’s Q2 2017 results showed its reaching max ad load with only a 19% paid ad impression growth compared to Q1’17’s 32% and Q4’16’s 49% growth. However, Facebook’s revenue will continue to increase as surging ad prices, user growth, and Instagram are enough to pick up the slack.
4) Facebook’s Ad Load Slowdown Is Real
Facebook’s Q2 2017 paid ad impression growth slowed to 19% compared to Q1’17’s 32% and Q4’16’s 49%.
Eric Jhonsa of The Street reported:
“Slower ad supply growth is naturally boosting prices. But given that supply is still growing (albeit at a slower rate), it’s also clear that strong ad ROIs — made possible by Facebook’s powerful and steadily improving targeting abilities — are motivating marketers to pay more for ad impressions and clicks. A growing mix of video ad sales might also be helping, given that video ads tend to carry relatively high prices.”
Takeaways and Insights
Based on the data, here are our main insights and takeaways:
- Small and mid-size brands are flocking to advertise on Facebook
- As a result, Facebook’s CPMs & CPCs are rising fast
- Advertiser aren’t afraid to increase budgets even as the auction gets more expensive
- Are results driving the increase in budgets or is it the competitive auction?
- How will advertisers react to increased competition and ad prices?
- Q4 is historically more expensive on Facebook, will they find more inventory or will CPMs skyrocket?
Our mission at AdStage is to connect paid marketers quickly and easily to the data they need to understand holistic campaign performance and take action at scale. If you want to learn more about our Facebook Ads reporting solution, click the banner below.
Webinar Recap featuring Quora and AdStage: Getting Started with Quora Ads
Quora’s Head of Product Marketing, Puja Ramani, and AdStage’s Head of Customer Acquisition, JD Prater, will discuss the Quora Ads platform and best practices on how to get started running your first campaign. If you’re interested in learning more about Quora Ads then you don’t want to miss this webinar.
In this webinar, we’ll provide actionable tips on
- Setting up your campaign structure
- Where Quora fits in the purchase process
- How to leverage the platform for business success
Join AdStage & Hanapin for a Webinar on Thursday, June 15th at 1:00 pm EST
You might have your blinders narrowed in on the lead, but it’s time to take a step back. Arguably more important than the conversion itself is the entire conversion journey. When you take a look beyond the conversion, both before and after, this perspective can open up your eyes to the patterns that occur, and help you tie your conversions back to revenue.
We’re teaming up with Hanapin’s Cassie Oumedian to show you how to take your conversions to the next level with actionable tips on tracking them all the way through the full funnel.
In this webinar you’ll learn:
- The best way to map out your conversion journey
- How to analyze and fully understand the click to conversion window
- The importance of different types of conversions and how to earn them in different stages of the funnel
… they’re both all about being mobile. That’s what Marin Software found (more or less) when they surveyed 500 digital marketing managers from the world’s top agencies and brands. In their 2017 State of Digital Advertising report, Marin asked these marketers what trends, opportunities, and challenges they face in 2017.
From mobile ad spend to lags in expertise and what the future of digital marketing holds, they uncovered insights that are sure to drive the field forward (and up, like a billionaire’s car doors) this year and beyond.
Budgets Migrating to Mobile
Did you know that the average mobile user unlocks their phone 150 times every day? Marin reports that 70% of respondents are actively advertising on search and social, and budgets are shifting to meet that demand.
43% of their surveyed marketers indicated that they believe their mobile budgets around search marketing investment will increase between 10% and 30% in 2017. An additional 34% of marketers plan to increase their mobile budgets by more than 30%. And when it comes to social, 70% of marketers plan to increase their advertising budget. Not a huge surprise, says Marin, given that Facebook eclipsed Google in gross traffic for the first time ever in 2016.
70% of marketers plan to increase their social advertising budget
Lack of Expertise
Because search and social are experiencing such growth and change, marketers indicated that it’s tough to stay at the top of their game. When asked to list the biggest challenges associated with delivering ROI from paid search, respondents listed: 1. Difficulty replicating campaigns across Google, Bing, Yahoo or other search providers (37%), 2. Lack of support for investing in paid search (31%), and 3. Lower conversion rates compared to other forms of advertising (25%).
Marin addressed a few solutions for those top challenges. For “difficulty replicating campaigns,” they suggested investing in tools that import and continually sync Google AdWords campaigns. Regarding “lack of support for investing in paid search,” they recommended highlighting strong returns with limited risk, using past data to prove that customers use search engines to find your product. And finally, for “low conversion rates,” Marin made the case for pre-click optimization to keep the focus on the continual testing of your targeting, message, and advertising bids.
What’s Hot in 2017 and Beyond?
Are we really surprised that high-quality content was listed as homecoming queen here? In Marin’s survey, 42% of marketers said “content marketing” was their top priority in 2017. Closing out the top three were “search marketing,” with 39% of the vote, and “social media,” with 30%.
The ability of consumers to price-check whenever they wish, ship items home, and more reveal the direct need for marketers to provide consumers with the right content at the right time. Marin notes this as a double-edged sword for marketers who find equal footing on mobile, while confronting increased competition to create rich content for consumers.
Still Too New
Surveyed marketers called voice search and virtual reality still too new to be a real priority in 2017. However, with Search Engine Land stating that “60% of smartphone users who use voice search have begun using it within the past year,” Marin suggests paying close attention to the impact these new technologies are having on the digital landscape.
Machine Learning Marketing Report
Machine learning. Is there anything marketers are more excited about right now? While machine learning marketing applications are still a rarity for businesses outside of the enterprise level, the folks over at Executive Consensus (EC) think that’s going to change in a big way over the next few years.
In their latest expert consensus, Machine Learning in Marketing – Expert Consensus of 51 Executives and Startups, they polled executives at more than 50 companies, specializing in the fields of both AI and marketing. Their goal was to “determine the applications of machine learning and AI that are driving strong business value now, as well as the applications that would make the biggest difference in the next five years.”
Most of the companies surveyed were small, with 70% clocking in at fewer than 50 employees, and primary company revenues between $0-$500k and $1-$5M. The main products and services these companies offer are analytics (26%) and targeting/segmentation (24%). And entry level price points for most respondents are under $999 (41%) or between $1k-$5k (27%).
EC also identified the primary business goals of participating companies. “Generating new revenue,” “retaining existing customers,” and “acquiring new customers” were the top three goals, leading EC to presume that that the participating companies were targeting marketing departments within their client companies. Additionally, 80% of sample companies focus on eCommerce and retail verticals, while 60% focus on online and social media companies.
Selling AI and Machine Learning
When asked about the challenges of selling AI marketing tech, respondents identified “demystifying the technology” as the biggest hurdle, garnering it almost as many responses as the next three challenges combined. “Low data quality” and “attribution is difficult” rounded out the top three here.
While EC acknowledged that “it’s hard to explain” could be viewed as an excuse for underdeveloped sales or marketing skill sets, they pointed out that AI is still viewed as something for “early adopters” and that explaining such advanced technologies is challenging for even the most experienced salespeople and marketers. As AI continues to grow in popularity and use, however, EC sees these conversations getting easier and less intimidating.
Current and Five-Year ROI
So what does the current and five-year ROI forecast look like? EC’s sample companies posture that the areas of opportunity for AI in marketing will not shift much. eCommerce and online/social media verticals maintained the top two spots, with direct-to-consumer industries benefiting the most from AI marketing.
When it comes to which businesses have the most potential for value with AI in marketing, digital media and eCommerce companies came in first, with SaaS and social media businesses closing in on third place. EC guesses that the latter two rank lower because “such businesses are less common than the first two.” Anyone can create an ad-driven site or an eCommerce store, but few people can do it successfully.
The research sample also showed a clear leaning towards businesses that “‘live and die’ quantifiable digital interactions.” Specifically those with the kind of data that can train machine learning models and improve performance over time. B2B physical businesses and service firms also ranked low, as they have much less quantifiable transaction data and their sales rely heavily on client interactions.
When it comes to current profit potential in AI marketing applications, “search” was voted the most profitable. And, interestingly enough, in a content-driven climate “segmentation/targeting” outranked “content generation” significantly in profit potential, though EC chalks this up to the fact that more of their sample companies were working on the former.
So what did the respondents think about the five-year profit potential of AI marketing applications? I thought you’d never ask. The responses for this section aligned with the value propositions given by the respondent companies. “Recommendation/personalization” took top honors, and ranked highly as a core value proposition.
However, while “analytics” was the number one value proposition reported, analytics-related apps like “decision support” and “forecasting” didn’t make their way onto the data chart. EC guesses that this is because the companies they surveyed are developing analytics technologies specific to their needs.
When Will Machine Learning Be a Crucial Part of Every Business?
Finally, the sample companies made their adoption predictions on when AI/ML would be necessary additions to companies of all sizes and verticals. 2020 was the year that 17 respondents chose for universal integration. Only time will tell, but until then, the results of this survey would encourage us all to brush up on emerging trends, adoption, and inevitable global takeover of machine learning.