Consumer engagement with retailer Facebook ads as measured by click-through rates (CTRs) has increased by a factor of 3.75 when comparing Q3 2013 to Q3 2012. (see Figure 1). The greatest quarterly increase in engagement occurred from Q4 2012 to Q1 2013 – a 58% increase from 0.08% to 0.13%. This can be attributed in part to Facebook broadly launching unpublished Page post ads in News Feed.
Global CTRs for the retail sector across desktop, mobile and Facebook Exchange (FBX) increased from averaging 0.13% and 0.14% in the first two quarters of the year to 0.20% more recently in Q3.
Retailer Facebook advertising CPMs have increased by a factor of 2.71 to $0.89 when comparing $0.33 CPMs in Q3 2012 to the $0.89 CPMs in Q3 2013 (see Figure 2). One trend apparent in charting historical CPMs on Facebook for the retail sector is the spike in costs during the last month of each quarter (on average a 37% increase from the first to last month of the quarter). This is likely due to heightened demand for inventory at this time as brands and agencies rush to meet quarterly volume goals.
Facebook advertising CPCs have decreased 27% from Q3 2012 to Q3 2013 for retailers, and appear to be normalizing at $0.45 in recent quarters (see Figure 3).
When comparing average CPCs and RPCs, retailers can expect to reap greater value in sales revenue than the cost of their Facebook advertising investments (see Figure 4).
Despite price increases, with CPMs more than doubling from Q1 2013 to Q3 2013, the ROI of Facebook advertising for retailers has remained positive – averaging 152% for retailers leveraging Nanigans in 2013 (see Figure 5).
Recommendation #1: Performance focused retailers should frontload quarterly budgets and increase budgets accordingly to avoid price inflation from heightened demand for Facebook advertising inventory at the end of the quarter.
Recommendation #2: Retail CMOs focused on ROI should increase Facebook advertising budgets, as the sector is achieving strong and increasing engagement and return from their advertising investments.
This is the first of a four-part series highlighting Facebook advertising benchmarks for the retail sector going into holiday shopping season.
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