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Online retail sales reached a record $46.5 billion during the 2013 holiday shopping season, a 10% increase from 2012.
With Facebook cited as the leading social network for driving social traffic to retail websites (roughly 60%), it’s not surprising that advertisers across both desktop and mobile turned to Facebook in Q4 to take advantage of its massive reach of over 1 billion, extensive engagement opportunities and targeting parameters.
Facebook advertising has significantly evolved in 2013, offering retailers a breadth of sophisticated performance marketing opportunities. Below are a few of our key Facebook retail advertising benchmarks for Q4, 2013.
Figure 1: Retail Facebook CPM, Q4 2012 – Q4 2013
The 2.9X increase in CPMs YOY shows the continued demand for valuable inventory as Facebook has ramped up its direct response advertising capabilities. With CPMs increasing, it’s another signal that Facebook ads are deriving value for advertisers, hence, the willingness to invest in media.
Figure 2: Retail Facebook CPC, Q4 2012 – Q4 2013
Retailers continue to focus on CPC as an indicator to better understand the impact of their Facebook campaigns. Advertisers saw an increase in demand from Q3 2013 to Q4 2013 due to seasonality. A number of factors influence CPC beyond creative and targeting parameters, such as time of day, day of the week, competitor bidding, ad unit strategies and ad load.
Figure 3: Retail Facebook RPC, Q4 2012 – Q4 2013
With an increase in upfront costs including both CPM and CPC, the concern for advertisers becomes price saturation and an inability to hit marketing goals. To combat the surge in demand, advertisers need to extrapolate additional revenue from their Facebook campaigns, precisely the trend online retailers are continually realizing. Revenue per click increased 83% YOY and a 72% QOQ.
In regards to overall revenue expectations within the e-commerce retail category, marketer goals vary by a few factors. Those factors include budget size, geo-location and specific business models. For certain advertisers, a return of 5:1 is the goal while for others the goal is 1:1 with more of a focus on customer future behavior. Regardless of the goal, Facebook is hitting performance goals for online retailers.
After examining our Q4 cost and revenue data, the increase in Facebook advertising efficiency remains encouraging. Advertisers continue to evolve and become more sophisticated with their campaign creative, targeting and optimization techniques. Advancements in ad formats, ad placement, audience targeting and mobile have also proliferated opportunities for advertisers to realize and secure ROI goals.
At the core of Facebook’s advertising success is the company’s commitment to product innovation. From creative and targeting to optimization and reporting, Facebook continues to build and improve, creating a more relevant experience for users and enhanced performance for advertisers.
The surge in mobile adoption has also created new opportunities for retailers. Nearly half of Facebook’s mobile users are now only accessing the social network from their mobile device. In Q3 2013, Facebook reported 874 million daily active mobile users. This will only continue to grow in 2014 as the market also experienced a 3x increase in the number of companies tracking and optimizing towards mobile revenue from 2012 to 2013.
With healthy growth and performance indicators for Facebook advertisers during 2013, we now look to 2014. To be successful in 2014, Facebook marketers must continue to embrace creative, targeting and optimization. In addition, retailers will continue to shift their focus to mobile users, consider video and invest in creative testing at scale.
To analyze quarterly data in its historical context, an aggregate data set was built from over 100 advertisers and partners who have been active on the Nanigans Ad Engine platform during the previous 12 months.