SOCIAL TRENDS REPORT. 1 st Edition. Social Advertising Report 1 st edition 1

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1 SOCIAL TRENDS REPORT 1 st Edition Social Advertising Report 1 st edition 1

2 TABLE OF CONTENTS Executive Summary...3 Macro Spend Trends...3 Vertical Spend Trends...5 Pricing Trends...7 Performance Trends...8 Methodology...9 Appendix About Resolution Media Contact Social Advertising Report 1 st edition 2

3 EXECUTIVE SUMMARY Resolution Media manages millions of dollars of social media ad spend for clients annually. To better understand directional trends impacting social advertising campaigns and continue to improve the guidance and services it provides, Resolution examined four quarters of aggregate 2013 performance data from the social advertising campaigns of more than 20 clients. This aggregate analysis of more than $37 million in 2013 social media ad spend included campaigns running on Facebook and Twitter which employed a range of ad types. The aggregate dataset included social advertising campaigns for companies in the following sectors: business and consumer services, consumer packaged goods, financial services, media, retail, technology, and tourism and hospitality. Key observations include: Advertisers invested 127 percent more in Facebook than Twitter in Many industry sectors substantially increased their Twitter investment over the course of Impressions and, to a lesser extent, clicks cost significantly more on Twitter. Facebook has extensive reach and Twitter consistently delivers a higher click-through rate (CTR). MACRO SPEND TRENDS Advertisers invested 127 percent more in Facebook than Twitter in 2013 and 159 percent more in Q4 as they ramped up their holiday campaigns. Facebook attracted the higher spend levels for a variety of reasons. Facebook s success in driving direct response results drove advertising growth. This was especially true among retailers and other advertisers focused on achieving conversions that can be tracked directly and with multi-channel attribution technology. New ad formats and targeting capabilities also drove growth in Facebook advertising campaigns. Not only did advertisers increase investments in successful ad campaigns; they also embraced various new alpha and beta Facebook advertising opportunities. The number of new Facebook advertising opportunities available to Resolution clients in 2013 outpaced Twitter, and mobile advertising offerings led the pack. For the most part, advertisers achieved positive results in comparison to key performance indicators (KPIs), and in many cases, this led alpha and beta campaigns to grow and develop into ongoing efforts. Facebook launched Partner Categories, for example, enabling advertisers to leverage third-party data to target users based on online and offline purchase behavior. Social Advertising Report 1 st edition 3

4 Facebook s relative maturity as a direct response channel, combined with these new ad offerings, explains much of the strategic thinking that drove advertisers to spend more with Facebook. Add to that the sheer reach and supply of advertising inventory offered by Facebook, and it s easy to understand what led advertisers to spend more than twice their Twitter budgets with Facebook (Figure 1). Figure 1: How Much More Advertisers Spent on Facebook Than Twitter % 135% 127% 117% 93% Q Q Q Q All of 2013 Although advertisers increased spending throughout 2013, they scaled back ad spend in Q3 on both Facebook and Twitter (Figure 2). Figure 2: QoQ % Change in Social Ad Spend by Network % 56% 44% 27% -9% -19% Q1 to Q2 Q2 to Q3 Q3 to Q4 Facebook Spend Twitter Spend Social Advertising Report 1 st edition 4

5 VERTICAL SPEND TRENDS Media companies and retailers spent the most on Twitter in Q4. Retailers boosted their quarter-over-quarter (QoQ) investment by 257 percent in Q4, healthy growth resulting from their expanded use of Twitter, not just Facebook, to support product releases and promotions. Many other industry sectors substantially increased their Twitter investments as well. In fact, the business and consumer services sector ramped up its social ad spend from Q3 to Q4 at a much faster rate (Figure 3). Figure 3: Q3 Q4 Advertiser Vertical Spend Trends % 94% 257% 211% 361% Media companies Retailers Business & Consumer Services Change in Facebook Ad Spend (Q3 Q4) Change in Twitter Ad Spend (Q3 Q4) The business and consumer services sector increased its Twitter ad spend more aggressively than any other sector from Q3 to Q4 (Figure 3) and also generated an impressive 297 percent increase over the course of 2013 (Figure 4). Still, financial services advertisers outpaced the business and consumer services sector over the course of 2013 (Figure 4). Both of these industries began to catch up with others that embraced social advertising earlier, such as media, CPG and retail. Media companies increased spend with both social networks over the course of 2013, as they incorporated social strategies more deeply into their marketing and promotion efforts. Twitter cultivated this growth with such offerings as TV Ad Targeting and Nielsen Twitter TV ratings, both of which help advertisers better align Social with TV. The following details how advertisers in various verticals grew or contracted their social ad spend over the course of 2013 (percent change between Q1 and Q4): Social Advertising Report 1 st edition 5

6 Figure 4: Q1-Q4 Advertiser Vertical Spend Trends % % 297% Business & Consumer Services 9 27% -34% Consumer Packaged Goods Financial Services 133% Media 184% 176% Change in Facebook Ad Spend (Q1 - Q4) Change in Twitter Ad Spend (Q1 to Q4) 45% Technology Although most industry sectors increased social ad spend over the course of 2013, they did not do so consistently from each quarter to the next. From Q2 to Q3, for example, advertisers in five sectors scaled back their QoQ Facebook spend, and advertisers in three sectors scaled back their Twitter spend (Figure 5). In some cases, within retail for example, this can be largely explained by softened consumer demand in Q3 and retailers choosing to pull back in preparation for the heavy holiday spending to follow in Q4. Figure 5: Q2-Q3 ADVERTISER VERTICAL SPEND TRENDS % % -81% 43% -1% 2% 79% -11% -36% -34% -33% -56% 6% 46% -10 Business & Consumer Services Consumer Packaged Goods Financial Services Media Retail Technology Tourism & Hospitality Change in Facebook Ad Spend (Q2 - Q3) Change in Twitter Ad Spend (Q2 to Q3) Social Advertising Report 1 st edition 6

7 Indexed Spent Values Indexed CPM Values PRICING TRENDS Impressions and, to a lesser extent, clicks cost significantly more on Twitter; this reflects simple supply and demand with Facebook offering far more ad inventory. Facebook enables marketers to tap into significantly more ad inventory in large part thanks to the network s right rail desktop ad placements, whereas Twitter ad placements appear predominantly in the feed. Facebook s right rail ad placements sell for much lower costs than the better performing newsfeed-based inventory, which tends to be predominantly mobile inventory (Figure 6). Figure 6: Indexed QoQ Change in Spend and CPM by Social Network Q Q Q Q Facebook Spend Indexed Twitter Spend Indexed Facebook CPM Indexed Twitter CPM Indexed For more detailed charts depicting directional changes in (1) Facebook spend compared to Facebook CPM and (2) Twitter spend compared to Twitter CPM, please see the Appendix at the end of this report. Advertisers will be well served to develop new ways to evaluate Twitter ad performance in 2014 and beyond. Although Resolution considers costs per thousand impressions (CPM) and costs per click (CPC) when evaluating ad performance on Facebook and top search engines, our teams also assess performance beyond media metrics by evaluating business outcomes (offline sales, etc.) and brand health (preference, etc.). This holistic view of media value is an important element that ensures channel selection, budgeting and optimizations are likely to move the needle for marketers, not just drive a high engagement rate or low CPC. Advertisers who take the time to customize their approach to Twitter advertising will reap rewards for doing so thanks to the unique and inherent advantages the social network can offer advertisers. While Facebook continues to have broader appeal as a mass reach platform where advertisers can connect at a 1:1 level with consumers, Twitter, because of its public nature, has become a powerful channel for reaching and engaging consumers around real-time news and events, such as the Grammy Awards and the Super Bowl. Social Advertising Report 1 st edition 7

8 PERFORMANCE TRENDS Considering what advertisers get in exchange for their investments, Facebook s more extensive reach and generally lower prices enabled advertisers to achieve much greater impression and click volume, as illustrated by the following impression and click/engagement findings (Figure 7). Figure 7: Ads Reached Much Further on Facebook Than Twitter % % 441% 2317% 1567% 1458% % 262% Q1 Q2 Q3 Q4 All of 2013 Impressions Earned on Facebook in Excess of Those Earned on Twitter Clicks Earned on Facebook in Excess of Those Earned on Twitter The impressions offered by Facebook exceed those of Twitter by so much that Facebook consistently delivers more clicks despite offering a much lower CTR on average. In fact, Twitter delivered a much higher CTR throughout 2013 (Figure 8): Figure 8: Indexed QoQ Change in Click-Through Rate by Social Network Q Q Q Q Facebook CTR Indexed Twitter CTR Indexed Social Advertising Report 1 st edition 8

9 Many advertisers included in the Resolution Media Social Advertising Quarterly Trends Report utilized Facebook ads primarily to generate awareness, not engagement or direct-response actions. In these cases, advertisers optimize for reach and frequency, not CTR or even CPC. Not surprisingly, CTRs also vary greatly within Facebook across devices (mobile, tablet or desktop) and across ad placement (newsfeed vs. right rail), with the highest rates seen on the mobile News Feed. Twitter ads, on the other hand, generate clicks at a much higher rate as advertisers integrate them tightly with broad trends and conversations, serving up straightforward messaging and content directly into relevant conversation streams. Importantly, Twitter ads appear within a less cluttered environment than Facebook ads, in the user s Twitter timeline with few additional advertisers. Throughout 2013, advertisers across all verticals sought to fine-tune Twitter ad strategies by integrating Twitter with other channels, relevant content, promotions, and news and announcements. These efforts collectively drove up the average CTR, reflecting a high level of engagement. METHODOLOGY Resolution examined performance data from all four quarters of 2013 for more than 20 brands with active social media advertising campaigns. Campaign data was analyzed in aggregate to come up with average metrics, and Resolution s active management approach to social advertising influenced the performance and results of all campaign data examined. Overall, this analysis included more than $37 million in total 2013 social media ad spend and represented a variety of ad types, including Promoted Tweets and Promoted Accounts on Twitter and Page Post Ads, Domain Ads and Page Like Ads on Facebook. Participating advertisers included retailers, CPG brands, financial services companies, consumer electronics manufacturers, and tourism and hospitality companies. Social Advertising Report 1 st edition 9

10 APPENDIX The following charts offer additional detail on select findings mentioned in the report. Figure 9: QoQ Change in Facebook Spend and Facebook CPM Q Q Q Q Facebook Spend Indexed Facebook CPM Indexed Figure 10: QoQ Change in Twitter Spend and Average Twitter CPM Q Q Q Q Twitter Spend Indexed Twitter CPM Indexed Social Advertising Report 1 st edition 10

11 ABOUT RESOLUTION MEDIA Resolution Media, an Omnicom Media Group company, is one of the largest performance media agencies in the world. The company manages more than $1.2B in media investments, with more than 850 specialists in 60+ offices worldwide. Resolution s international network delivers digitally-integrated, full-service solutions in the areas of search, social, local, mobile, behavioral and content marketing. Resolution leverages the power of technology, data and the agility of real-time media marketplaces to target empowered consumers today and as they change tomorrow. Resolution helps brands better understand consumer behaviors, interests and intent, and turn these insights into smart, ROI producing actions that keep them in front of empowered consumers across media, content and devices quickly and consistently. For more information, please visit CONTACT Viji Davis Vice President of Marketing Resolution Media Social Advertising Report 1 st edition 11

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