February 14, 2012
Brands are continuing to invest in Facebook advertising and focusing on fan acquisition.
Spend in social media advertising is now additive to existing budgets rather than subtracting from other digital media channels, demonstrating the growing investment in the medium.
Brands continued to acquire Facebook fans at 9 percent per month. Facebook spend share reached 2.7 percent of biddable online advertising spend in Q4 2011 and is expected to increase fan base by 2x by the end of 2012.
Search spend increased significantly in Q4 of 2011, bolstered by aggressive spending by retailers. Overall, search spend grew 14 percent Year over Year (YoY) in the United States, while retail specifically grew by 18 percent YoY and 40 percent Quarter over Quarter (QoQ), indicating that search is still the primary driver of digital marketing spend.
While Q4 search spend increased significantly, Cost Per Clicks (CPCs) decreased 5 percent due to a rise in mobile advertising, where clicks are less expensive. Meanwhile, improvements in more efficient ad delivery by search engines resulted in higher click-through rates, and mobile spendbecame 7-8 percent of search spend compared to 2 percent a year ago. This is according to Efficient Frontier, a performance marketing company.
“- Facebook continues to be where marketers are placing new bets by adding advertising spend with a focus on fan acquisition,” said Bonny Trolle, Business Developer, Interactive Solutions. “- Mobile search advertising is also an area of significant investment, growing to 7-8 percent from 2 percent a year ago. We should expect both channels to grow significantly in 2012.”
Additional report highlights:
• Google maintains 80 percent spend share in Q4. Yahoo/Bing clicks yielded 14 percent more revenue per click (RPC) than Google while also having 9 percent more Return on Investment (ROI) than Google. Yet Google increased click share by 2.5 percent YoY indicating the necessity for volume and reach from advertisers, primarily retailers, in Q4.
• Mobile spend specifically tablets, is becoming increasingly important for marketers as tablets account for 50 percent of mobile search spend and 50 percent of click share.
• Display spend remains flat QoQ. However, Google’s Doubleclick increases exchange display market share by 19 percent YoY. Due to both inventory constraints and shifting strategies by Yahoo for their Right Media Exchange, Google extended significant share gains in biddable display.
• European markets showed strong growth in search spend YoY. France increased search spend 70 percent YoY and Germany 47 percent YoY indicating heavier investments into online advertising in 2011.
The UK has been leading the online marketing industry in Europe and continues to increase search spend 19 percent YoY.
Outlook for Q1 2012:
• Facebook spend will reach 5 percent of all online advertising spend by the end of 2012. As marketers improve their ability to acquire and engage Facebook fans, brands will continue to pump incremental spend into Facebook.
• Mobile search spend will make up 16-22 percent of all paid clicks by the end of 2012. As more mobile devices with full Internet browsing capabilities enter the market, mobile experiences become more robust. This is driving a shift of consumer usage from desktops to mobile devices, ultimately causing mobile advertising to become a key focus for marketers in 2012.
• Search spend will increase 15-20 percent in 2012 in the United States. Similar growth is expected internationally, however, the macro economic conditions in Europe may significantly affect this growth.
• Search CPCS will further decrease by 4 percent. The increase of mobile advertising and mobile search spend will contribute to this reduction. Search engine innovations by Google to provide more effective ad delivery will also continue to decrease CPCs.
• Yahoo/Bing will continue to pursue more ad inventory. Although Yahoo/Bing clicks continue to have better RPC (Return-Per-Click) and ROI, the search engine still needs to increase reach to improve market share. Advertisers are eager to take full advantage of the higher performance Yahoo/Bing provides, but are still looking to do so at scale.
• Development in other social platforms such as Google+ and LinkedIn will have a positive impact on social spend and the growth of this competitive space. However, Facebook will still remain the dominant social network and social publishers for advertisers in 2012.
This analysis was completed based on data from Efficient Frontier search engine marketing customers and the resulting Efficient Frontier Customer Index. The Efficient Frontier Customer Index represents a subset of Efficient Frontier clients who have spend data for six consecutive quarters or more whose resulting SEM metrics are then normalized to average industry category contributions established by multiple third party data providers. The Efficient Frontier Customer Index consists of a fixed sample of large scale U.S. search engine advertisers across multiple sectors, including finance, travel, retail and automotive. The Efficient Frontier Customer Index sheds light on trends in search engine spending and performance on a year-over-year (YoY) and quarter-over-quarter (QoQ) basis.
The analysis of Facebook performance was based on data from both the Efficient Frontier and Context Optional platforms. A client index representing over 15 advertisers and 20 million fans from a multitude of verticals including retail, entertainment, CPG and Finance was built from a subset of advertisers, brands and fans managed through the platforms. Advertiser and user behavior was then analyzed for three quarters beginning Q4 2010.