Study: How cost-efficient is Facebook advertising?

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Even as the cost of Facebook advertising rises, is the social network’s offering the most efficient for marketers? According to a new study by Neustar, Facebook advertising in Q2 beat out other avenues (network, portal and exchange) in terms of reach efficiency and average cost.

Neustar’s study shows that Facebook’s cost efficiency in Q2 indexed 70 percent cheaper than the industry average. It was also the only channel that out-performed the indexed average for reach efficiency, beating ad portals by 286 percent.

Two of the major reasons for Facebook advertising’s popularity? Mobile and video. Rob Gatto, Neustar’s Senior Vice President of Media and Advertising, feels that we’ve only started to see video’s potential:

One interesting thing I see in video is that most advertisers are content to buy it simply with age and gender as an overlay. After all, that’s typical of how you buy television.

But in the digital world, you can buy video with a far deeper level of audience, attribution and behavior. Advertisers aren’t yet taking advantage of that.

There are all sorts of opportunities for sequential messaging with video: creative that moves a customer along at different touchpoints, aligned to the buyer journey. We already do a lot of these things in the display world, but haven’t yet duplicated them into video.

While it might seem slightly odd to call Facebook advertising “cost-efficient,” Neustar examined the CPM, CPC and CPA for Facebook, ad networks, ad portals and ad exchanges in Q2, finding that it was actually the cheapest.

Screen Shot 2014-09-03 at 9.54.05 AMFacebook (shown in the report as social) ad costs actually dropped 32 percent from Q1. Neustar attributed the rise of ad network costs to the World Cup, where advertisers bought big on contextual video advertising around soccer sites and content.

While Facebook advertising might be the most cost-effective option, an ad exchange is the best way to find quality users who can be reached more than once. Facebook is growing in this regard and performed better than the industry average (up 67 percent quarter-over-quarter).

Screen Shot 2014-09-03 at 9.57.55 AMFacebook advertising proved to be much more efficient than ad exchanges in the way of funnel attribution, coming in second to ad networks. Neustar noted that Facebook has grown as an ad platform for conversions, largely due to increased paid reach in Q2.

Screen Shot 2014-09-03 at 10.00.35 AM

 

Top image courtesy of Shutterstock.

 

 

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