There’s good reason Facebook Inc.’s ad revenue continues to surge: Advertisers’ return on Facebook ad spend keeps rising, according to a new report from social media advertising firm Nanigans.
For Nanigans clients, the average return on their Facebook ad spend grew an average of 31% in the first quarter. Those strong results led retailers to boost their ad spending 16%.
That growth came from increases in both the ads’ average conversion rates and the average order value of the items that consumers clicked and bought. Those results are from 20 of the highest-spending e-commerce and game advertisers that used Nanigans’ platform over the past year.
Helping drive that growth are the social network’s dynamic ads, which let retailers and other advertisers serve shoppers ads based on the products they looked at on the merchant’s site or app. The social network has steadily rolled out new ways for retailers to leverage the ad format, including: an update that lets retailers use on-Facebook and off-Facebook signals from multiple websites and apps to target ads at consumers whom Facebook’s algorithm suggests are likely to respond to specific products.
The update also enables advertisers to target an ad at a consumer who recently browsed its products that encourages him to download the merchant’s app, and to showcase products available in a store that’s near the consumer seeing the ad.
Those developments drove online retailers to boost their dynamic ad spending 62% year over year and, more dramatically, 33% compared to the fourth quarter when most retailers are most aggressive in their marketing.
The report also finds that retailers’ ad dollars continued to shift to mobile ads from desktops during the quarter, the vendor says, noting that mobile e-commerce ad spending jumped 58%.
A growing share of Facebook ad spending is also being spent on ads that appear off of Facebook via Audience Network, which is the social network’s ad network. Looking at a same-advertiser set of companies that used Audience Network in the first quarters of 2016 and 2017, Nanigans found the share of ad spending going to off-Facebook inventory grew 31% year over year.
The average click-through rate for Facebook ads for Nanigans’ retailer clients stood at 1.75% in the first quarter, up from 1.32% in the same period a year earlier. The average cost per click fell 28.9% to 32 cents from 45 cents a year earlier. And the average cost-per-thousand (CPM) impressions fell 6.2% to $5.56 from $5.93 a year earlier.
Another digital marketing vendor, Kenshoo, also released a digital ad spending report this week. Kenshoo reports that social ad spending grew 41% year over year in the first quarter, which was helped by a 153% jump in video ad spend and a 202% surge in dynamic product ad spending.
Kenshoo says that search spending rose 10%, thanks in part to a 45% increase in mobile ad spending.
In related news, Facebook-owned Instagram announced today that it now has 700 million monthly active users. That’s more than double Twitter Inc.’s user base.