Here’s How Facebook Is Increasing Advertising Dollars
On Monday, the advertising agency TBG Digital reported that mobile ads in Facebook’s (NASDAQ:FB) news feed had click-through rates, the key metric for ad engagement, 23 times higher than the Desktop News Feed and Right Hand Side ad formats during the third quarter.
As a result, the average click-through-rates across the whole Facebook ad network, as measured by TBG, increased by 81 percent. In particular, click-through-rates in the United States rose by 99 percent.
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TBG’s report was based on 520 billion impressions, in 190 countries, for 282 of its largest clients. Since the first quarter of 2011, the agency has analyzed the data quarterly in a partnership with the University of Cambridge in England.
This quarter’s data showed a marked improvement over last quarter, when click-through rates increased by only 11 percent. The reason for the improvement is simple; the third quarter is the first full quarter that Facebook offered businesses the ability to buy ads across all of its mobile user base. According to TBG Digital, the strategy was a success because mobile ads drive more engagement than any other format. The agency also found that the cost-per-click for advertisers remained much higher in the mobile format than it did on desktop, meaning Facebook generated more money from those advertisements.
On Tuesday, the social network will report its third quarter earnings, and according to TechCrunch, the report “could give some focus to the numbers that Facebook releases,” as advertising is the company’s primary revenue generating service.
However, TechCrunch cautioned that the results excluded some mitigating factors; the positive mobile numbers could have been influenced by the novelty of the ad format and the tendency for mobile ads to be clicked accidentally on a touchscreen. Furthermore, Facebook’s growth is primarily happening outside the United States, and TBG’s data showed that while CTRs were up by 99 percent in the United States, numbers were up in Germany by only 8 percent and the UK and France saw drops of 4 percent and 25 percent respectively.
It still must be noted that U.S. brands prefer socially targeted advertisements, while in Europe the preference is for direct-response focused advertisements, according to TBG CEO Simon Mansell. “Brands are more interested in formats like the ASU [advertising standard unit], which sends traffic off Facebook to those brands’ sites,” he told TechCrunch.
The improved advertising numbers come several months after Facebook announced that it would begin testing a new new non-social ad unit, which would allow developers to buy mobile news feed ads that opened in Google’s (NASDAQ:GOOG) Play market and Apple’s (NASDAQ:AAPL) iOS App Store purchase pages when clicked.
As Mansell said to TechCrunch, the more formats Facebook adds to the mobile platform, the more advertising figures will increase.