Advertising is going digital, and in a big way. Facebook, Twitter and LinkedIn grew their advertising revenue by 49 per cent over last year, and the growth isn’t slowing down.
The latest Social Advertising Benchmark Report from Salesforce.com looks at advertising spending across popular social media platforms. The big three – Facebook, Twitter and LinkedIn – experienced 49 per cent growth in ad revenue on the first quarter of 2015, compared to the same period one year ago. The growth is being driven by a shift in budget as mobile entrenches itself as the first screen for more and more users. New advertising channels are also emerging, such as Instagram and Snapchat, which open up coveted younger demographics to marketers.
Looking at Facebook, the overall cost per thousand (CPM) declined by 11 per cent in Q1 to $3.30 (all figures US$), which the report says is in line with normal seasonal trends in digital advertising following a ramp-up in spending for the holidays in Q4 of 2014. Canada is a bit more affordable with a CPM of $2.21, down from $3.02 in Q4. Cost per click (CPC) in Canada was up from 96 cents in Q4 to $1.08 in Q1, while the click-through rate (CTR) dropped to 0.2 per cent from 0.31 per cent.
Facebook is also being used to drive the install of apps, which are becoming increasingly important to reaching mobile consumers. Research from Yahoo shows 88 per cent of the time people spent on their mobile device is spent within apps; as much as 37 hours every month. Cost per install (CPI) rates for apps vary by country, but in Canada the average is $4.72, more pricey than the $3.04 in the U.S. CTR for apps varied by country; a Canadian figure wasn’t provided but in the U.S., app CTR was 0.65 per cent.
The Facebook app itself is becoming more popular with its users, with the percentage of users that just use the desktop app dropping to 14.7 per cent. Still, the report recommends a mix of desktop and mobile ads on Facebook is the most effective approach.
“Advertisers should continue to test different ad placements on Facebook, and where possible embrace the mobile-first nature of the platform,” advised the report.
On Twitter, the two major ad types – promoted accounts and promoted tweets – saw a decrease in CPM and a small increase in CPE. Promoted tweets has a CPM of $8.92 with a CPE of 45 cents, while promoted accounts has a CPM of $3.63 with a CPE of $1.06. Engagements are more affordable than promoted accounts as there are more avenues for engagement, such as clicking a tweeted link, favouriting it or re-tweeting it.
LinkedIn tends to deliver a more premium, business-focused audience than the other platforms and it reported revenue of $119 million from advertising in Q1, up 38 per cent from the year-ago quarter. Sponsored updates doubled to account for nearly 40 per cent of LinkedIn’s ad revenue. More ads being purchased was reflected in a slight decrease in CPM to $13.05, with a CTR of .34 per cent and CPC of $3.89.
“Advertisers can take advantage of the premium audience on LinkedIn by creating campaigns that drive specific actions on your websites, such as filling out a test drive form for a new car at a dealership,” advised the report.