Facebook’s bet on social ads appears to be paying off according to research findings released today by Marin Software, the leading online advertising management platform. In February 2011, Facebook took significant steps to boost the effectiveness and relevancy of social advertising by introducing new social ad units, such as Sponsored Stories. Unlike other Marketplace Ads (ads appearing on the right hand margin of Facebook pages), which operate similarly to traditional display ad units, “social ads” incorporate user engagement into the ad copy.
According to the Marin Software research, Facebook social ad budgets in the U.S. increased from 5 percent to 23 percent in the last 12 months. The research also projects that by the end of 2012, social ads will account for nearly 50 percent of Facebook ad budgets. Consumer engagement with Facebook ads has also risen in the past year, as measured by click through rates (CTR) improving 50% during the same time period.
Andrew Leinicke, Director at Red Bricks Media said.
“Advertising on Facebook is 100 percent different than paid search in large part to the social aspect of it. As an advertiser, being able to participate in the social context of Facebook is huge. In the last year we’ve significantly increased our attention to Facebook social ads and we’ve noticed an uptick in response to social ads.”
Matt Lawson, vice president of marketing and partnerships at Marin Software said.
“With Facebook’s introduction of Sponsored Stories last year, two questions arose — will advertisers adopt the new ads and will the new ads produce revenue results? Marin Software’s research confirms that answer is an emphatic ‘Yes’, as budgets continue to increase and will soon represent 50 percent of Facebook ad investments.”
“In the last year advertisers have directed more budgets to social ads and Facebook users have responded by clicking more often. This trend is not only positive for Facebook from a revenue standpoint, but also provides important validation of the opportunity advertisers have to drive revenues from word of mouth marketing efforts.”
In 2011, Facebook's saw significant increases in the adoption of social ads. This resulted in double-digit increases in global CTR, CPC and CPM's
Some Interesting Findings of The Study:
- Advertisers are increasing investments in social ads on Facebook. In the last 12 months, the percentage of Facebook ad budgets in the U.S. allocated towards social ads increased from 5% to 23%.
- Given the trajectory of the data, Marin Software predicts that by the end of 2012 advertisers will direct 50% of their Facebook ad budgets towards ads that incorporate the user’s social graph.
- In the past 12 months, the cost per click (CPC) of social ads in the U.S. increased 86% while the CPC of Marketplace Ads overall decreased 15%, further validating the shift in advertisers’ preference towards social ads.
- Consumer engagement with Facebook ads, as measured by click through rates, has increased 50% over the last 12 months implying a boost in overall ad relevance.
- Facebook’s move to increase ad relevance through a focus on social ads and the introduction of Sponsored Stories is paying off, as indicated by increased advertiser investment and greater user engagement.
- Marketers interested in strategies and tactics for advertising on Facebook can download “The Search Marketers Guide to Successful Facebook Ads” on Marin Software’s site at: marinsoftware.com/resources/best-practices/search-marketers-guide-to-successful-facebook-ads.
COMMENTARY: Marin Software's mission is to provide the leading online advertising management platform to advertisers and agencies.
To make the most of online advertising spend, advertisers and agencies require a solution that can help them understand and optimize activity across the online sales funnel; increasing sales volume while at the same time reducing costs.
Founded in April 2006 by seasoned digital marketing and enterprise software professionals, Marin Software is a leading provider of online advertising management solutions, offering an integrated platform for managing search, display, and social marketing. The company’s platform helps advertisers and agencies save time and improve financial performance by increasing marketing insight, efficiency, and effectiveness.
Over 1500 companies, including many of the world’s largest interactive agencies and advertisers, rely on Marin Software’s platform to manage more than $3.5 billion of annual marketing spend globally. Leading advertisers using Marin include Razorfish, Neo@Ogilvy, University of Phoenix, Macy’s, PriceGrabber, Salesforce.com and Reply.
Marin Software makes money by taking a 4% to 5% cut of the actual advertising spent by clients on social media sites like Facebook and search engines like Google.
Marin Software offers the following pricing options:
- Marin Professional - For clients spending less than $100,000 in ads per month.
- Marin Enterprise - For clients spending more than $100,000 in ads per month.
Marin Software is a privately held company funded by Amicus Capital, Benchmark Capital, DAG Ventures, Focus Ventures, Crosslink Capital, SAP Ventures, and Temasek with headquarters in San Francisco, California and offices in London, New York, Chicago, Shanghai, Singapore, Hamburg, Paris and Sydney.
Courtesy of an article dated May 8, 2012 appearing in Marin Software