Facebook & Instagram Price Index Q1/2016
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1 Facebook & Instagram Price Index Q1/216
2 About this price index The data for this price index has been aggregated from over 18 clients social advertising campaigns in the German market spanning all major industries. Data has been weighted depending on the clients spends and only data from campaigns in which a specific placement has been targeted has been included. Data from Q1/215 serves as the basis and all subsequent quarters have been normalized against Q1/215. Facebook and Instagram are changing the definition of the click metric and will implement that gradually which has a major impact on the calculation of CPC and CTR in this price index. Where every interaction with an ad used to be counted as a click, now only link clicks are being counted as clicks. For this reason only campaigns with the objective Clicks to website have been considered for calculating CPC and CTR. This does not only eliminate irritating factors in the interpretation of CPC as a cost indicator but also makes the click metric comparable to the click metric of digital advertising channels. For CPM calculations we still considered campaigns of the particular period with all the different campaign objectives. esome advertising is a social media advertising specialist located in Hamburg, Düsseldorf and Belgrade. The company currently employs 85 people and is a certified Facebook and Instagram Marketing Partner, as well as Twitter Ads Partner. esome advertising operates in the field of paid advertising exclusively and optimizes performance and branding campaigns in social media. The esome approach is based on comprehensive know-how and technology integration, aiming to achieve superior brand and performance KPIs. The proprietary esome technology and the team of experienced social media advertising experts are the heart of esome s work.
3 Total 18,4% 16,35% 14,3% 12,25% Q1 Q2 Q3 Q4 Q1,2%,15%,1%,5%,% As predicted the overall spends in the first quarter of 216 went down considerably compared to Q4/215 according to internal data: total spends sank to two thirds of the previous quarter s level. This has a positive impact on the costs CPM decreased by 22 percent and also CPC shrank by 19 percent due to the smaller demand for advertising inventory. Though CTR went down slightly it is still on a very good level which is mainly caused by a high usage of Carousel Ads
4 Mobile News Feed 18,7% 16,6% 14 12,5%,4% Q1 Q2 Q3 Q4 Q ,3%,2%,1%,% The risen CTR on Mobile News Feed shows that carousel ads are attracting attention on this placement as well. Compared to the previous quarter, the average CTR climbed by.15 percentage points which caused a lower CPC than in the previous quarter. Though the CTR is considerably lower than in the same period of time last year, clicks have been cheaper in Q1/216. Despite all expectations, the CPM did sink indeed but not as much as one would have expected looking at the strong drop of advertising spend compared to Q4/215. The CPM is influenced by the View-Through-Rate (VTR): as VTR declined in Q1, it has been more expensive to reach users with video ads, which had a negative impact on the overall CPM.
5 Desktop News Feed 16,4% 14,35% 12,3%,25% 8 6 4,2%,15%,1% Compared to all other placements, advertising spends on Desktop News Feed did not decline as much from last quarter as they did on the other placements, which means that the share of spends on Desktop in the overall spends has increased again. 2 Q1 Q2 Q3 Q4 Q ,5%,% This is why the sinking CPM on Desktop has a greater impact on the overall price developments and contributes to a declining CPM for all placements. Though CTR on Desktop sank slightly, the CPC did not rise. On the contrary the cost per click sank below the level of the previous quarter and also below the level of the same period of time in 215.
6 Right Hand Side 16,1% 14,9% 12,8%,7%,6% ,5%,4%,3%,2%,1% Also on Right Hand Side a declining CTR is visible. By now the CTR on this placement has decreased to one quarter of the average merit of all placements and has now reached the lowest level in the considered period. Despite of the sinking CTR the CPC did not rise within the last quarter, it even dropped heavily just as CPM did. This probably correlates with a lessened relevance of this placement. Q1 Q2 Q3 Q4 Q ,% Looking at the shrinking absolute spends on the Right Hand Side according to internal data one can see that advertisers consider this placement as less important. For this reason there is a weaker competition for advertising inventory and thus prices fall.
7 Instagram 8 1,8% 7 1,6% 6 1,4% 5 1,2% ,%,8%,6%,4% Just as in Q4/215 CTR on Instagram sank in in Q1/216 as well. The reason for this drop is the introduction of overlays for link ads last year and its revision in March inadvertent clicks can be prevented this way and only relevant link clicks will be counted. Q3 Q4 Q1,2%,% Contrary to the CPC the CPM on Instagram is continually sinking which can be explained by the growing reach on Instagram
8 Video CPV CPV_1sec VTR_1sec 12 8,% 7,% 6,% 8 5,% Q2 Q3 Q4 Q ,% 3,% 2,% 1,%,% Spends for video ads fell by 45 percent in Q1/216 compared to the previous quarter, which caused a lower CPM. The View-Through-Rate (VTR, based on 1- second-view) shows a continually positive trend since the introduction of the 1-secondview metric. Overall, there is a broad acceptance for video content on Facebook and Instagram which is being supported by the fact that advertisers adapt their video content more to the requirements of social media: the average duration of a video spot becomes shorter constantly (from 35 seconds in Q1/215 to 25 seconds in Q1/216) and the content is being adapted to make use of the auto play function.
9 Industry trends Telco & Automotive
10 Telecommunication 18,6% 16 14,5% 12,4% 8,3% The Telco industry trends in Q1/216 differ from the overall market trends once more Q1 Q2 Q3 Q4 Q ,2%,1%,% Though the CTR declines here as well, it does not decline as strongly as it does in comparison to the total market. This is caused by a comparatively high share of desktop news feed spends in the overall industry spends, so that the rising CTR on mobile news feed does not have that much of an impact on the overall trend. This also causes that the CPC for the Telco industry is not dropping as much as in the total market, but still CPC and CPM sank in comparison to the previous quarter.
11 Automotive 12,5%,45%,4% 8,35%,3% Q1 Q2 Q3 Q4 Q1,25%,2%,15%,1%,5%,% Compared to the previous quarter the CTR in the automotive industry remained at an equal level in Q1/216. Nonetheless the CPC and the CPM sank just as they did in the total market. The automotive industry thus follows the overall market trend and is characterized by a similar usage of ad formats with a growing significance of Carousel Ads
12 Forecast After having been granted full Twitter API access in May we are now able to use and deploy all Twitter advertising features with our proprietary technology which allows us to reflect trends of Twitter ads prices in the next price index as well. This enables us to have a more holistic view on the developments in social media advertising. esome advertising technologies GmbH Hohe Bleichen Hamburg info@esome.com
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