Frederike

esome Social Advertising Price Index Q3|2015

The data for this price index has been aggregated from over 170 clients advertising in the German market spanning all major industries.

Only data where a specific placement has been targeted has been included. Campaigns which targeted multiple placements (e.g. “Feed” or “Desktop”) are not included.

Data from Q3/2014 serves as the basis and all subsequent quarters have been normalized against Q3/2014.

The method for calculating the price evolution has changed since we first released our data for the previous quarter. Initially, we decided to give each client the same weight in calculating the price, regardless of their spending. However, this approach turned out to overly influence a client’s particularities and in the end did not necessarily correlate with the entire market’s evolution, thus skewing our findings. This quarter we additionally weighted the price evolution based on the client’s spend level to find more accurate results.

This time around we included the first findings for our clients‘ Instagram campaigns. While we are not able to show an evolution yet, since Instagram just started showing ads in October, we included the absolute CPM, CPC and CTR. We plan to separately show the price evolution of Instagram in the future.

Mobile News Feed

While people on Facebook have increasingly shifted their attention from desktop to mobile, it has taken advertisers longer to adopt the evolution of Facebook into their mobile marketing strategies. However, our internal data shows that the overall spend of our clients on Mobile has increased more than 5X in Year-on-Year (YoY) comparison, which indicates that adoption of Facebook as the best place to execute mobile marketing strategies is well under way.

Even though on first glance our current report might show decreasing CPMs and CPCs, the prices are still up 20% and 40% respectively in YoY comparison. Historically, Q3 seems to be a slower period which in turn leads to lower prices than any other period in a supply-and-demand system like Facebook. In the long run, we believe prices on mobile will continue to go up as more and more advertisers embrace this option and expand their activities in the mobile news feed. One particular area that we expect to see a significant growth in, is driving in-store purchases with location-based ads on mobile.

For Q4 2015, we expect a significant rise in CPMs and CPCs that goes even higher than last year’s jump by 115% and 150% from Q3 to Q4.

Desktop News Feed

While the overall time spent on desktop is in fact stagnating (and not shrinking), we clearly see budgets being shifted away from desktop news feed, which only makes sense as the strong growth in mobile news feed activities needs to be financed within more or less the same budget constraints for any individual advertiser.

When studying the development of CTR, even though the curve suggest an overall positive and rising trend, the absolute CTR is still more than 50% below the benchmark of mobile, i.e. that for the same amount of impressions you receive 50% less interactions on desktop news feed.

On desktop news feed, we also expect a significant rise of the price level in Q4 comparable to last year’s 165% increase in CPMs, possibly even higher than on mobile.

Right Hand Side

Right hand side ads show a remarkably steady price level regarding CPMs. The Christmas season effect does not seem to affect CPMs on right hand side quite the same as it does affect the other placements. However, we do see a significant rise in CPCs from Q3 to Q4 in 2014 (about 68%) which over the year returned back to about the same level as last year.

While right hand side is still effectively employed by many advertisers as a way to drive direct response campaigns in combination with custom audiences due to their significantly lower CPMs (which makes up for a significantly lower conversion rate), we believe the relevancy of this placement will be decreased compared to the increase of relevancy of mobile news feed and Instagram.

Instagram

The long awaited launch of self-service ads on Instagram had finally arrived in October. While some advertisers continue to struggle in finding a way to incorporate Instagram into their overall social media and advertising strategies, others have jumped right in and tried to work out all out as you went along.

The overall importance of Instagram cannot be understated. As the initial generation of Facebook users has grown up and the overall demographics of the platform are slowly starting to mature, Instagram has become the go to place for younger demographics. It is an aesthetically appealing platform with inspiring messages. Advertisers need to find a way to contribute to this community in order to reach younger audiences and stay relevant with the next generation of customers.

We’re excited to see how Instagram will develop in the next years and will continue to include this placement in all future editions of our price index.

Outlook

In the future, we expect to further break down the price level for different marketing goals and include industry benchmarks. Follow along, as we continue to observe the very exciting developments in the world of social media advertising.

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Kristin B.

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