This article was originally published in Facebook PPC.
Nanigans released its first benchmark report last week, reviewing the last 12 months of performance marketing activity specifically within the retail vertical on Facebook. The benchmark report, which included over 100 advertisers, highlighted some key takeaways for advertisers, including:
-152% average ROI
-3.75x CTR increase
-37% increase in CPMs
-74% of desktop spend is delivered in the News Feed
While all of these metrics are “interesting,” and it’s encouraging to see the continued shift to performance marketing on Facebook, the key takeaway for advertisers is that proxy metrics like CTR and CPA are not predictive of ROI.
Does this mean you should ignore CPC and CPM averages? Abandon CTR measurement? Of course not. However, you shouldn’t hedge your bets around them either, but rather base your media-buying decisions based on downstream metrics (like revenue, ROI, lifetime value) and data. A few examples include:
-Unpublished page post link ads averaged 23x higher CTRs than domain ads, yet averaged 53% lower ROI:
Figure 17: CTR and ROI by Ad Type
Takeaway for marketers: Ensure you can track, optimize, and scale performance based on business goals, such as ROI. CTR may not be indicative of future purchase intent or customer value.
-CTR is highest amongst the 18-24 demographic; however, this demographic also represents the lower ROI.
Takeaway for marketers: While ad engagement numbers can be encouraging, they can also be deceiving depending on your end goal. Tie all aspects of your ad campaigns to business goals and ensure that all elements of your campaign are working in unison towards that end goal.
-FBX in the News Feed averages 28x higher CTR than the RHS, yet RHS delivered a strong ROI
Takeaway for marketers: When News Feed ads were first released, they were considered the “shiny new object” for marketers to focus on. While performance on the News Feed has been strong, the value on the right hand side has been comparable, so don’t abandon what’s working just to chase the “new opportunity”; rather, ensure you have a healthy mix (based on performance) of all available placements.
-Male audiences average 9% lower CPCs than females, yet average 26% lower ROI
Takeaway for marketers: Invest more in the best lifetime value customers. Increase your upstream cost metrics like CPC or CPM to focus on the higher quality (revenue) audience.
So as you consider the general landscape of Facebook ads (which you can see the current 2013 YTD breakdown below by ad type)…
…remember to always tie your campaigns directly to business goals. Not all advertisers need ROI-based campaigns; however, the solution isn’t to build a mirage from proxy metrics either.
To download the full 2013 Facebook Retail Advertising Benchmark Report report, click here.