Retail marketers see ROI double on Facebook

Retail marketers have seen return on investment (ROI) rise in 2014, but increased demand has meant that Facebook’s cost per impression (CPM) is now seven times the price it was in 2013, according to a Kenshoo report.

The report from the predictive marketing supplier, a Facebook ‘strategic preferred marketing developer’, measures ROI by the amount of direct clicks that brands get on the social platform. The report also highlights that brands have seen five times the increase in click-through rates year-on-year.

Marketer’s higher demand for newsfeed and mobile ads has led to more competition for Facebook’s advertising and ultimately an increase in price for ads, according to the report. Facebook changed its “right-hand side ads” and included them in newsfeed posts earlier this year.

Alex Young, media executive for We Are Social told Marketing Week there is an increased demand for newsfeed ad space, as it provides more opportunity for optimisation and targeting.

“Brands are adopting Facebook’s more advanced and direct response methodologies. This creates fully tracked campaigns, as they use custom audience data which leads to adoption of direct response techniques and better measurement of ROI on the platform,” says Young.

The relationship between Facebook and marketers has not always been smooth, a Forrester report in 2013 highlighted that the group did little to support social experiences between brands and customers.

Forrester’s vice president and principal analyst, Nate Elliot says about the Kenshoo report: “I have no doubt that Facebook ads are performing better than a year ago as advertisers were finding it difficult to get the value previously.”

“Facebook still has a long way to go in aiding marketers. It would help marketers if [the group] let them use its own data. Facebook does surprisingly little to leverage people’s data. It needs to help marketers understand its tools better.”

A Seeking Alpha report published yesterday (9 December) highlights that if Facebook included mobile search ads, it would help the social network to make more use of its consumer data. Facebook has been updated to support searching for keywords in posts and photos but still doesn’t plan to sell mobile search ads. Seeking Alpha states that keyword searches could help to find out what a user is interested in buying at any particular moment.

It is not yet clear whether Facebook’s announcement last month to reduce organic advertising and increase paid media, will mean a further surge in ad cost after January. Young says: “Price increases will likely continue into 2015 though not as dramatically as they have recently, due to Facebook gaining additional inventory in its Audience Network.”

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