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esome social advertising price index Q4|2017

esome publishes the social media price index for the fourth quarter in 2017. The index represents price developments of the previous quarters and operates as benchmark due to advertising campaigns implemented by esome. The current price index investigates the development of prices and budgets within a very competitive time of the year and can serve as an orientation for advertiser’s future campaigns on interactive platforms.

As known, the fourth quarter is the most intense quarter in regards to competition. Whilst trying to reach as many potential customers and call attention to their brands and products during the consumption-driven Christmas season, advertisers compete against each other for valuable advertising inventory. Due to this circumstance, prices reach a high in auction-based environments. And the fourth quarter of 2017 was no exception.

Advertising spendings increased in comparison to Q3 by 50 percent in Q4. The contact price rose by a third in that period of time. Thanks to a high user activity on Facebook and in the Facebook Audience Network (FAN), the cost per click (CPC) remained stable on all platforms. Because the majority of social advertising campaigns are running on Facebook, developments on this platform are significant for the entire development of prices within the industry and compensate negative developments on other platforms in the Q4 average. 

Taking a closer look at the weeks before and during Christmas, one can see some typical phenomenons: the advertising spend constantly rose from the beginning of October until December 25th and rapidly decreased after Christmas. The relation of different kinds of campaigns noticeably changed within this time period. While advertisers were focussing on branding campaigns up until six weeks before Christmas, transaction campaigns got more and more important the closer it got to Christmas.

Instagram went through a turbulent 2017 - The click-through-rate (CTR) and CPC were unsteady throughout the entire year. Only the CPM was stable for the most part. In comparison to Facbeook, the contact price on Instagram was still very cheap, despite a big leap from Q3 to Q4. Which again illustrates the focus on branding campaigns on that platform. 

Compared to that, prices in the FAN were cheap as well. The cost per mille (CPM) and CPC constantly increased over the year, but were still beneath the price level of other social networks. Out of all platforms, the CTR in the FAN still topped the list, eventhough it had to register a decrease, due to new metrics. 

Twitter and Snapchat recorded a strongly decreasing CTR in Q4, accompanied by high click price. While the CPM on Twitter decreased during last year and finally reached a level below the previous year in Q4, Snapchat had to register increasing prices. These developments were expectable for a platform, whose advertising options are still relatively young and whose number of active users grows strongly. Furthermore, the CPM on Snapchat was still very cheap, in spite of the significant increase compared to other platforms. 

Facebook announced a modification of its newsfeed algorithm at the beginnig of this year, which will show users more content from friends and family. Advertisers already fear this alteration, since they expect a noticeable collapse of organic reach. If and to what extent these changes will impact the organic reach and the prices in social advertising, we will show in our next esome price index. 

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