2012 facebook-ad-report

The 2012ReportPRODUCED BY Jason Keath CEO, Social FreshThanks to our research partners:

socialfreshTable of ContentsEach segment of this report will include research from our 2012 Facebook Ad Survey, aswell as industry analysis from Social Fresh and industry experts.Intro .................................................................................................................................... 3 i. Methodology .............................................................................................................................................................................. 3 ii. Partners...................................................................................................................................................................................... 3 iii. Industry Experts .................................................................................................................................................................... 3 iv. About This Report ................................................................................................................................................................. 4 v. Facebook Ads - Then and Now.......................................................................................................................................... 5 vi. Adoption and Growth .......................................................................................................................................................... 6 vii. About Social Fresh............................................................................................................................................................... 7 1. Goals .............................................................................................................................. 8 i. Most Popular Goals by Frequency.................................................................................................................................... 9 ii. Most Popular Goals by Budget ...................................................................................................................................... 10 2. Targeting .................................................................................................................. 11 i. Targeting Criteria ................................................................................................................................................................ 11 ii. Top Criteria ........................................................................................................................................................................... 11 iii. Gender..................................................................................................................................................................................... 11 iv. Geography ............................................................................................................................................................................. 12 v. Connections............................................................................................................................................................................ 13 vi. Total Segments Per Ad..................................................................................................................................................... 14 3. Creative ..................................................................................................................... 15 i. Image, Headline, and Copy............................................................................................................................................... 15 ii. Ad Lifespan............................................................................................................................................................................. 17 iii. Sponsored Stories .............................................................................................................................................................. 19 4. Management ............................................................................................................ 20 i. Biggest Challenges ............................................................................................................................................................... 20 ii. Ad Management Software............................................................................................................................................... 21 iii. Agency and Vendor Partners........................................................................................................................................ 22 iv. Using A Facebook Ad Rep ............................................................................................................................................... 23 v. CPC vs CPM ............................................................................................................................................................................. 26 5. Review ........................................................................................................................ 27 i. Pricing and Performance .................................................................................................................................................. 27 ii. Learning From Analytics ................................................................................................................................................. 29 Closing Thoughts ....................................................................................................... 30 2 The 2012 Facebook Ads Report

socialfreshIntroi. MethodologyThis report was produced using data from the Social Fresh 2012 Facebook Ad Survey. ● The survey was distributed from February 16th to March 2nd ● It was distributed online by Social Fresh and our research partners, listed below ● 347 Facebook advertisers completed the surveyii. PartnersThank you, to the partners that helped us with the 2012 Facebook Ad Survey.NOTE: These partners also helped us with the content and analysis, in this report. 1. Webtrends 2. Convince and Convert 3. Likeable Media 4. Buddy Media 5. BlitzLocaliii. Industry ExpertsAdditional analysis provided by: ● Dave Kerpen, CEO of Likeable Media ● Justin Kistner, Director of Social Products at Webtrends ● Michael Lazerow, CEO of Buddy Media ● Dennis Yu, CEO of BlitzLocal ● Jason Keath, CEO of Social Fresh At Social Fresh, our goal is to educate marketers, enhancing their ability to build their businesses, using social media. These partners are critical to that task.3 The 2012 Facebook Ads Report

socialfreshiv. About This ReportAbout Respondents ● They are experienced marketers, with an average age of 34.3 years ● They average 8.3 years of marketing experience ● They have been managing Facebook ads for an average of 2.0 years (Facebook ads have only been around for four and a half years) ● 56% of survey respondents were female ● 42% work for a brand (as opposed to an agency or vendor) ● 21% of the advertisers we surveyed work with a Facebook ad representative NOTE: Does that make a difference? See the Management section on p. 20The roles that Facebook advertisers play in their companies are varied, but focused onmid-level marketing positions. We took the job titles of all those who filled out thesurvey, and created the below word cloud. The larger the word, the more people had itin their job title.The most common roles were manager, director, strategist, and specialist. We also sawCEO and intern a little more than we expected.It is clear that Facebook ads are being managed by a large range of marketers — fromsmall business owners, to PR professionals.4 The 2012 Facebook Ads Report

socialfreshv. Facebook Ads - Then and NowWhen Facebook ads launched as a new feature in November2007, Mark Zuckerberg announced it to an audience ofadvertising executives, in New York City.“Facebook Ads represent a completely new way of advertisingonline,” Zuckerberg told them.“For the last hundred years, media has been pushed out topeople, but now marketers are going to be part of theconversation. And they’re going to do this by using the socialgraph, in the same way our users do.”No one ever claimed Zuck set the bar low.Since then, almost five years later, Facebook ads have evolved at a rapid pace.Facebook treats the product like they treat the rest of the Facebook platform — theyexperiment, and constantly iterate, improving it.Since they have launched, Facebook Ads have been one of the most powerful onlinemarketing tools available to small and large businesses alike. The information that isvolunteered by Facebook users allows marketers to do things that are not possibleanywhere else online.And today we are beginning to see Zuckerberg’s vision, as Facebook puts more andmore emphasis on sponsored stories. Ads that are not actually ads, but content,delivered to the social graph.5 The 2012 Facebook Ads Report

socialfreshvi. Adoption and GrowthFacebook has seen steady growth of their ad revenue.Facebook has courted Madison Avenue advertisers ever since the product launched.And, as Google did with their search ads, they sought to keep their ads simple andfocused on the benefit of information. The ads are simple- an image, a couplesentences, and a link- however, the options to advertisers to create those ads areanything but simple.Facebook offers unmatched targeting options to advertisers. We asked advertisers howoften they used the 15 unique targeting criteria available to them when creating aFacebook ad (gender, city, language, etc). See p. 11 for their answers.Many of these criteria also have additional sub-criteria and additional options. One ofthe barriers to continued Facebook ad growth, is the complexity of the tool. It is easy touse, but the sheer number of options creates a lot for the average business to learn,before they can maximize the power of Facebook ads.When we talk about Targeting in the report (section 2, p. 11), we will talk about acouple criteria that are not being used as much as they could be.6 The 2012 Facebook Ads Report

socialfreshvii. About Social FreshsocialfreshSocial Fresh is a social media education company. We produce advanced social mediatraining for marketers through conferences, online training, and through our blog, atsocialfresh.com.7 The 2012 Facebook Ads Report

socialfresh1. GoalsWe start where all marketing starts — what are the goals of Facebook advertisers?44% of respondents surveyed spend most of theirFacebook ad budget on audience growth.Facebook ads are generally used for one of four goals: 1. Awareness 2. Engagement 3. Conversion 4. Audience GrowthWe asked advertisers two questions about their goals:We wanted to see which goal types were used most often, and which goal typesreceived the most budget. Budget is a key indicator of where a business is focusing itsmarketing dollars.8 The 2012 Facebook Ads Report

socialfreshi. Most Popular Goals by FrequencyRespondents listed awareness and fan growth as their most common reasons forrunning Facebook ads.The graph above displays the percentage of advertisers that use each Facebookad goal “always” or “often.” They could choose from always, often, sometimes,rarely, or never.9 The 2012 Facebook Ads Report

socialfreshii. Most Popular Goals by BudgetBut when it came to which goal received the most budget, 44% of respondents spentthe most money on audience growth.10 The 2012 Facebook Ads Report

socialfresh2. Targetingi. Targeting CriteriaThe graph above displays the percentage of advertisers that use each targeting criteria“always” or “often.” They could choose from always, often, sometimes, rarely, or never.ii. Top CriteriaAge and country are the most used Facebook ad criteria. Coming in at 55% and 53%,these two simple demographics are very important to the vast majority of advertisers.iii. GenderOne notable demographic option that ranked in the bottom of the list was gender, 9th inpopularity out of 15. Only 34% of advertisers use gender “always” or “often.” It is interesting that the buyers surveyed are not putting high importance on some very important targeting options such as gender. We see big differences in performance based on gender, so not segmenting by this variable and controlling your budget accordingly is definitely sub-optimal. – Michael Lazerow, CEO of Buddy Media11 The 2012 Facebook Ads Report

socialfreshiv. GeographyCountry was the second most popular, but location can be targeted with state and city.Both rank in the middle of the pack, at 35% and 34%. Over a third of advertisers areputting large emphasis on narrow geographic targeting. And almost one in fiveadvertisers are targeting zip codes, a large portion of the time.12 The 2012 Facebook Ads Report

socialfreshv. Connections“Connections” was the 6th most popular criteria at 37%. This is the criteria that allowsadvertisers to target fans and friend of fans. Or exclude fans. Targeting fans for loyaltyand friends of fans for audience growth are beginning to emerge as best practices, butthese results would suggest that many, 63%, are still not using them that often. Connections should be the number one criteria used by advertisers. Nothing increases your click-through rate more than targeting your own fans, which is what connection targeting allows you to do. Webtrends did a study of 11,000 Facebook campaigns and found that targeting fans has an average of a 7X higher click-through rate and a higher conversion rate. The difference can be as much as multiple dollars per click. – Justin Kistner, Director of Social Products at WebtrendsTargeting was selected least often (2.8%), as the biggest Facebook advertisingchallenge.13 The 2012 Facebook Ads Report

socialfreshvi. Total Segments Per Ad79% of respondents are targeting 1 to 5 audiencesegments.57% of advertisers target their ads to 2 to 5 audience segments on average, per ad.Almost a quarter, 22%, send their ads to one segment only.Manually creating each ad segment through Facebook’s built in advertising tools can bea limitation. We also know that 85% of respondents are not using management softwarethat allow for more segmentation, with less work. It is interesting that 57% of advertisers market to 2 to 5 segments per ad, yet doing this at scale without ad software tools, makes this a very inefficient task. The right tool can make this process far more robust and efficient. – Michael Lazerow, CEO of Buddy Media14 The 2012 Facebook Ads Report

socialfresh3. Creativei. Image, Headline, and CopyFacebook ad creative usually includes an image, headline and ad copy.There is a lot of guesswork about which types of Facebook ad images, headlines, andcopies work. There is also a lot of research that has produced some strong tacticalsuggestions. These ad creative tips can be useful, but what is more useful, is to splittest different ad creative against each other.66% of respondents are split testing their ad creative.15 The 2012 Facebook Ads Report

socialfreshIt is a very good sign that so many advertisers are split testing their ad creative. Yet,34% of Facebook advertisers are not split testing at all. This means that over a third ofmarketers that use Facebook ads, put up one ad, and do not test it against otherimages, headlines, ad copies, landing pages, or targeting options.16 The 2012 Facebook Ads Report

socialfreshii. Ad LifespanAnother key to getting ad creative to perform optimally is to refresh your creative everyfew days. Facebook recommends all advertisers “update your ads regularly with newimages and body copy to prevent them from going stale.” So, how often is regularly?According to data from Webtrends, the average Facebook ad has a peak click-throughrate during the first 72 hours, after going live. This is important, because advertisers paymore for each click, as the click-through rate declines. Yet, over two-thirds ofrespondents run their ads for longer than 3 days. Most are paying too much for theirads, because they are not refreshing the creative. Social has a voracious appetite for creative, and ads need to be refreshed 2-3 times per week - another good reason to partner with agencies, who can keep up with the flow. – Justin Kistner, Director of Social Products at Webtrends17 The 2012 Facebook Ads Report

socialfreshThis is likely a resource issue, for most advertisers.Asking the average business to create multiple versions of an ad, and then change outthose ad versions every 3 days can be a high demand on their resources. The largerthe scale of your Facebook advertising, the more these optimization techniques shouldbe considered and implemented.18 The 2012 Facebook Ads Report

socialfreshiii. Sponsored Stories55% of respondents are not using Sponsored Stories.This is a gap that Facebook wants to close.Most of their new ad units are versions of sponsored stories. These are the mostsuccessful ad types on Facebook, when it comes to click-through rate and userengagement, because they are content focused and do not look and feel liketraditional ads. The real power of Facebook advertising lies in the ability to tap into the word of mouth marketing potential that your fans have with their own friends. Sponsored Stories is your best option for driving word of mouth. It is being underutilized. - Dave Kerpen, CEO of LikeableSponsored stories are also an easier option, because the ad creative problem isreduced.Since sponsored stories are essentially promoted status updates, for most advertisers,they require less new creative work, drawing from an existing stock of Facebook pagecontent.19 The 2012 Facebook Ads Report

socialfresh4. Managementi. Biggest Challenges46% of respondents listed theirbiggest challenge as ROI.Tracking ad success with analytics was the second most popular challenge, listedby 22% of respondents.20 The 2012 Facebook Ads Report

socialfreshii. Ad Management SoftwareNot every business can afford to work with an agency, vendor, or software solutionto improve their Facebook ad performance. Our goal is not to encourage you to hireanyone or spend more money, but to provide the data that can help you make thosedecisions.85% of respondents do not use admanagement software. "As powerful as Facebook advertising is, there are times when advertisers will need help with strategy, creativity, execution of very complex campaigns, and most importantly — the ability to track the ROI on your FB ad investment. At those times, it may make sense to engage a Facebook Ads API partner." – Dave Donohue, VP UNIFIED (Facebook Ads API partner)Many Facebook ad API partners provide software that helps manage all aspects of theFacebook ad process.Agencies and vendors work with Facebook advertisers to make the process easier, bygiving them access to these software solutions, or implementing it on their behalf. Marketers in this survey have an average of two years of Facebook ad buying experience, but still 85% of them do not use ad management software. This means that there are a lot of experienced Facebook ad buyers who are not leveraging the full benefits of their experience, by using software for managing at scale. – Michael Lazerow, CEO of Buddy Media21 The 2012 Facebook Ads Report

socialfreshiii. Agency and Vendor Partners70% of respondents do not work with an agency.Just as software can be a useful aid for Facebook advertisers, agencies and FacebookAPI vendors help businesses by taking over different portions of the process. 70% are not working with agencies. This is bad, because it means there are a lot of advertisers spending money without sufficient experience, to get results. Very few successful AdWords advertisers manage their own ads. – Justin Kistner, Director of Social Products at WebtrendsFor those that do work with agencies, 31% are working with a digital agency, more thanany other agency type. 21% are working with social media agencies, and 20% work withan ad agency.22 The 2012 Facebook Ads Report

socialfreshiv. Using A Facebook Ad RepWhen we talk about the concept of a Facebook ad rep, we are talking about anundefined concept. In general, if you spend enough money with Facebook, there arerepresentatives who will give you their time, to help you use the platform better andcreate ad campaigns for you, when it comes to their premium advertising products.If you, or your agency, are not spending $10,000 to $20,000 a month on Facebook ads,this is not usually a resource that will be made available to you. Use a rep, if you are in a vertical that is regulated, or has ads constantly disapproved-- gambling, dating, health supplements. Otherwise, youre better off running your own ads. I suppose the exception is if youre a big brand and you want access to the latest things in beta, such as offers. – Dennis Yu, CEO of BlitzLocalWhen it comes to working with a Facebook ad rep, we saw 2 small benefits reported byrespondents.23 The 2012 Facebook Ads Report

socialfreshAdvertisers who worked with Facebook ad reps reported a lower average CPC at $0.78,compared to advertisers that did not work with a rep, $0.83.24 The 2012 Facebook Ads Report

socialfreshAdvertisers who worked with Facebook ad reps reported a higher average click-throughrate at 0.05%, compared to advertisers that did not work with a rep, 0.04%.25 The 2012 Facebook Ads Report

socialfreshv. CPC vs CPM83% of respondents use CPC pricing most of the time.CPC (cost per click) and CPM (cost per thousand views) are the two pricing options forFacebook ads. Each has advantages over the other, and even more important,marketers have strong preferences about which option they prefer to use. Respondentsoverwhelmingly prefer paying per click, for Facebook ads. CPM is useful in audiences under 1,000 — where Facebooks ad algorithm has trouble matching inventory. – Dennis Yu, CEO of BlitzLocalRespondents see an average CPC of $0.80.26 The 2012 Facebook Ads Report

socialfresh5. Review Identify ads with the highest performance, and review their target audiences, to determine which segments are most receptive to your message. - Facebook for Businessi. Pricing and PerformanceRespondents that worked for an agency reported the highest click-through rates at.049%. Vendors reported a CTR that was on par with the overall average of allrespondents at .041%, and brand employees reported a slightly lower CTR at .038%.70% of respondents are more likely to point ad trafficto a Facebook app.In addition, 75% of respondents said their ads are more likely to support a Facebookpage than not. The best practice is to point Facebook ads to a page or app on the site,rather than sending users off Facebook.com, partially because it is cheaper. Researchfrom TBG Digital showed that ads pointing on Facebook saw a 29% to 45% CPC costsavings, in 2011.Respondents that point their ads off of Facebook.com reported a 50% higher cost perclick, than respondents that point their ads on Facebook.com.27 The 2012 Facebook Ads Report

socialfreshFacebook has also said that when ads point to Facebook.com, they see a 50%improvement on ROI. Facebook vendors like Pagemodo and Webtrends haveconfirmed similar numbers through their client performance.Recent Facebook Timeline changes allow apps that were once limited to a narrow 520pixel width to display at a broader 810 pixel width. This means that many websites andlanding pages that exist off of Facebook.com can more easily be incorporated as aFacebook app, without many adjustments.28 The 2012 Facebook Ads Report

socialfreshii. Learning From AnalyticsBuilt-in Facebook ad analytics offer great feedback on which ads are performing well,and when that performance drops off. Facebook suggests when testing any ad, to giveit 3 days to get enough data to learn from.Another tip is to use your Facebook page Insights, to compare to the ad performancedata you are seeing. Marketers need to make sure theyre looking at all of the data available to them. You cant just look at data around ad performance, but instead you must focus on everything available via the Insights API. If youre not taking a holistic view of your paid, owned, and earned content on Facebook, youre not driving the highest ROI. – Michael Lazerow, CEO of Buddy Media62% of respondents do not use 3rd party analytics.Most advertisers are relying on the built-in Facebook ad analytics to judge the successof their campaigns. ROI and analytics combine to represent 68% of the biggestFacebook ad challenges, listed by respondents. If 62% are not using third party analytics on their Facebook ads, its no wonder we have so much discussion in the marketplace about not seeing a good return on ad spend. No mature digital advertiser in search or display would spend without having analytics to track what happens after a visitor clicks on an ad, which is what third party analytics are designed to measure. – Justin Kistner, Director of Social Products at Webtrends Once advertisers better utilize targeting opportunities, friends of fans, connections, and A-B split testing, they will see better ROI on their Facebook ads. And will, in turn, spend more. – Dave Kerpen, CEO of Likeable Media29 The 2012 Facebook Ads Report

socialfreshClosing ThoughtsThank you for reading the 2012 Facebook Advertising Report. The data we collected isnot only insightful for you the reader, but will help us understand where the Facebookadvertiser needs help.Social Fresh conducts research on industry topics, in order to produce better socialmedia education content for marketers.Reports like this one, allow us to build content specifically designed to meet thechallenges social marketers are facing.Facebook advertising is one of the largest investments social marketers are makingtoday, and there is a lot of education on the topic that is simply not being shared.If you would like to be notified of future content releases from Social Fresh, aboutFacebook marketing and Facebook advertising, please subscribe to SocialFresh.com.If you did not enter your email address to receive this report, go toSocialFresh.com/fb12 to opt-in to future updates on this topic.Thank you for reading,Jason KeathCEO, Social Fresh30 The 2012 Facebook Ads Report

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