SUNNYVALE, Calif.--(BUSINESS WIRE)--Facebook ad Cost Per Clicks (CPCs) increased significantly in the third quarter of 2011, indicating that advertiser competition in the Facebook marketplace is rising. CPCs for the social networking giant increased 54% from Q2, reflecting more price competition on the platform. Additionally, Facebook ad spending rose 25% Quarter on Quarter (QoQ), highlighting continued investment in social by top marketers.
Meanwhile, Google regained market share for the first time since the Yahoo/Bing alliance in the United States, and search spend increased by double digits in the US and key international markets. In separate analysis, tablets captured 77% of all retail mobile ad spend in September 2011.
This is according to Efficient Frontier, a leading performance marketing company managing more than $1 billion in marketing spend annually on behalf of advertisers worldwide, and its subsidiary Context Optional, one of the leading providers of social marketing management for global brands and agencies. This data and specific industry trends were released today in the Digital Marketing Performance Report for Q3 2011.
“This quarter, we continued to see Facebook make gains as a ‘must have’ for marketers as they try to maximize their fan base reach. Additionally, the rise in mobile search spend – especially among tablet users – was striking,” said David Karnstedt, President and CEO, Efficient Frontier. “As an industry we’re still discovering the power of social media and mobile as marketing channels but the time for brands to integrate these into their overall digital marketing strategies has clearly come.”
Additional Report Highlights
Brands Double their Fan Base on Facebook YoY
Advertisers see the value in significantly increasing their investments in social. Strategies to maximize fan reach with Sponsored Stories and acquire new fans with Facebook ads are contributing to spend growth. 84% of Facebook engagement can be attributed to Likes, which are credited to Facebook advertising. Today, brands increase fan count 9% per month on average, doubling their fan base YoY.
Google regains market share from Yahoo/Bing
As search spends increase and advertisers look to scale in volume, Google won back market share from Yahoo/Bing for the first time since they joined forces in the United States. This is largely due to Google’s ability to offer more inventory, despite Yahoo/Bing’s power to produce higher ROI.
Tablets capture 77% of all retail mobile ad spend in September 2011
In a span of less than a year, mobile search spend went from 0.5% to 4.2% For retail advertisers today, mobile spend is 7% of search spend, with tablets representing 60% of all mobile impressions and clicks.
Exchange Display Spend Increases
Advertisers’ demand for display rose 7% Quarter over Quarter (QoQ) as performance continues to garner additional investment. More modest gains on a same-advertiser basis are expected while new advertiser demands for exchange buying options remain high.
Broad-Based Search Is Up Across Most Sectors
- Retail: Spend was up 21% YoY, resulting from a rise in impressions and CTR YoY.
- Finance: Finance is trending similarly to retail in terms of high spend growth with 19% YoY. Consumer demand and CTRs are showing positive trends, but there was a 7% drop in CPCs.
- Auto: The downward trend of consumer interest in the automobile sector seen last quarter continues in Q3 with a 14% drop YoY. CTRs have improved markedly by 19%, while the search spend has remained relatively the same YoY.
International SEM Analysis
United Kingdom
In the United Kingdom, spend grew 20% YoY while ROI rose 18%, indicating that U.K. advertisers are shifting ad spend to online media where they are better able to measure Return on Ad Spend (ROAS). ROI appeared to remain relatively steady over the last four quarters, showing a significant jump in Q3. After a closer look at all three months of Q3, this spike is likely a result of a rise in ad spend and late bookings from the travel sector.
Meanwhile, Google maintains a higher spend share in the U.K. even though Yahoo exhibits a higher click share indicating lower returns on Yahoo. Google’s spend share increased 2.5% YoY as a result of the announcement and subsequent delays of the Search Alliance between Yahoo and Bing. Interestingly, both Yahoo and Bing exhibit a higher click share than spend share, signifying less expensive CPCs.
France, Germany, Australia, Japan
Contrasting the UK, Google has seen market share reverses in some international markets. In France, Google’s market share is down nearly 4% quarter on quarter, most of which was lost to Yahoo.
Likewise in Germany, Google lost just over 1% of share to Yahoo. But unlike France, Yahoo’s click share is much less than its search share. This could be to higher CPCs on Yahoo due to better quality traffic, but also more reliance on more expensive head terms. Advertisers on Google may bid on a broader set of cheaper tail keywords that lowers average CPCs.
The reverse is true in Australia. Again, Yahoo has made a small gain in spend share to 6.2% (from 5.5%), but its click share is far higher at 9.7%. The implication is that CPCs are lower on Yahoo compared to Google.
Google made gains however in Japan, taking more than half the search share (51.9%) pushing Yahoo into second place. There’s a considerable disparity on click share, with Google taking 59.5%, from which we can assume that CPCs are lower compared to Yahoo.
Outlook for Q4 2011 & Q1 2012
Facebook CPCs will continue to rise 30-40% QoQ.
Advertisers will continue to increase investments to acquire, engage and monetize Facebook users, driving more competition on the Facebook ad platform. A steady rise in engagement rates YoY and the development of new Facebook analytics will allow advertisers to monetize and gauge ROI of Facebook users more effectively.
Facebook will emerge as a more significant part of marketers’ media mix.
An evolving platform and new success metrics that mirror traditional marketing channel metrics will allow advertisers to invest more comfortably in Facebook ads. New tools such as Context Optional Analytics integrated with Facebook’s Insights API provide advertisers with clearer benchmark metrics and solid social KPIs making Facebook advertising more attractive to cautious advertisers.
Yahoo/Bing will focus on increasing inventory to regain spend share from Google.
We believe that U.S. search spend will increase 15% YoY in Q4 2011. Advertisers love the stronger performance and high ROIs they are getting from Yahoo/Bing, but as they look to scale with larger ad budgets they will not be able to increase volume due to a lack of inventory. Yahoo/Bing will need to focus on expanding inventory, while maintaining high-quality traffic.
Mobile will account for 7–10% of all paid search spend by the end of Q4 2011.
Recently, Google announced that keyword quality scores for mobile campaigns will be influenced by websites’ mobile optimization. The ability to attribute conversions across devices (mobile, tablet, desktop) is now possible with the development of the Google+ network that keeps users logged in to the Google ecosystem. Advertisers should invest time into looking at tablet traffic and conversions, while optimizing websites for mobile.
A copy of the full report can be downloaded at: http://news.efrontier.com/Q32011Report.html
Research Methodology
This analysis was completed based on data from Efficient Frontier search engine marketing customers and the resulting Efficient Frontier Customer Index. The Efficient Frontier Customer Index represents a subset of Efficient Frontier clients who have spend data for six consecutive quarters or more whose resulting SEM metrics are then normalized to average industry category contributions established by multiple third party data providers. The Efficient Frontier Customer Index consists of a fixed sample of large scale U.S. search engine advertisers across multiple sectors, including finance, travel, retail and automotive. The Efficient Frontier Customer Index sheds light on trends in search engine spending and performance on a year-over-year (YoY) and quarter-over-quarter (QoQ) basis.
Our analysis of Facebook performance was based on data from both the Efficient Frontier and Context Optional platforms. A client index representing over 15 advertisers and 20 million fans from a multitude of verticals including retail, entertainment, CPG and Finance was built from a subset of advertisers, brands and fans managed through the platforms. Advertiser and user behavior was then analyzed for three quarters beginning Q4 2010.
About Efficient Frontier & Context Optional
Efficient Frontier is a leader in online digital marketing, managing search marketing, display and social media campaigns for advertisers and agencies around the world. Efficient Frontier currently manages over $1 billion in annual digital marketing spend on behalf of its clients globally.
In May 2011, Efficient Frontier acquired Context Optional, the leading provider of social marketing management solutions for global brands on the leading social networks, including Facebook and Twitter. Context Optional’s Social Marketing Suite enables global enterprises to build, manage and measure their brand presence, and engage their fans to increase mindshare, word of mouth, customer loyalty and website traffic. Together, Efficient Frontier and Context Optional offer a complete solution for brands to acquire, activate and drive value from fans on Facebook and Twitter.
Efficient Frontier is headquartered in Sunnyvale, California, with offices in New York, Chicago the United Kingdom, France, Germany, and India, and technology licensing partnerships in Japan, Hong Kong and Australia. Context Optional is headquartered in San Francisco. Efficient Frontier is a privately held company with funding from Redpoint Ventures and Cambrian Ventures. For more information on Efficient Frontier, visit http://www.efrontier.com and for Context Optional visit http://www.contextoptional.com.