Facebook Ads CPM and CTR Improve in First Quarter of 2015

Peter Roesler, President - Web Marketing Pros

By Peter Roesler

President, Web Marketing Pros

Northfoto / Shutterstock.comFrom what started as a way for college students to communicate, Facebook has grown into a large part of the ways business marketer their organizations and products to consumers. To that end, Facebook created a large advertising network that extends beyond the pages of the platform. Nanigans recently released a report on the first quarter of 2015 and the data shows that ads on Facebook are effective and getting better.

Over the past year, Facebook has implemented a lot of changes that have changed the way business owners and marketers use the platform. They’ve added new advertsing products like multi-product ads, local awareness ads, and more. This first quarter report from Nanigans shows that these new ad formats have led marketers to spend more on ads. And that money spent on ads is going to better use.

According to the data, Nanigans’ customers had a 0.81% click-through rate in the first quarter of 2015. This is a 17 percent increase from the last quarter of 2014, which is impressive since it means it did better than holiday ads. It’s even more impressive when one considers that this is a 260 percent increase from the same period last year.

The report had a mixed bag of news when it came to how much it cost to place ads on Facebook. As more people use the platform, the less reach an ad will get for the same amount of money. So though overall global CPMs (cost per 1,000 impressions) dropped 3 percent in the quarter to reach $4.26 after the holidays, it still represents a huge 273 increase from the first quarter of 2014. However, such an increase is to be expected. It’s similar when you break it down to look just at ecommerce CPMs. At $3.74, the CPM fell 24 percent from the previous quarter but grew 227 percent when compared year over year.

Another takeaway from the report is that Facebook’s new advertising products are making a big impact with marketers, and many are using these new tactic. According to the study, Facebook advertisers spent 2.8 times more on video ads and 5.2 times more on multi-product ads than at the same time last year.

The report is based on first quarter data from people who used Nanigan’s automation software. Though this limits how far one can extend this research to other groups, as long as Nanigan’s has a relatively normal group of customers, the data provides insights to what the Facebook advertising landscape looks for all marketers.

There is good reason to think that Nanigans advertisers are using Facebook like many other business owners. According to the report, the lion’s share of users utilized Facebook to meet direct response goals and dedicate much of their budgets to budgets to Unpublished Page Post Ads, Mobile App Install Ads and Domain Ads. These categories represented 97% of spending through Nanigans in Q1.

This last data point shows how Facebook marketing and advertising is moving away from the Timeline and into the realm of paid content. Less than 5 percent of ads were promoted posts of content shown on the brand’s Timeline. Since there was a time when many brands would promote every post they wrote, this trend away from engagement-based goals (e.g. how many likes can I get on this posts) to direct response goals (e.g. how many Facebook users can I get to visit my website and convert from an ad) is significant.

Business owners and marketers can expect to see more brands using Facebook ads in the future as the platform continues to throttle the reach of business posts and people see there is a much greater ROI on getting people to respond to targeted ads that generic posts.

For more information on Facebook advertising, read this post on some of the new tools Facebook announced at a recent developers conference.

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