2012 facebook-ad-report

The 2012

Report
PRODUCED BY

Jason Keath
CEO, Social Fresh

Thanks to our research partners:

socialfresh

Table of Contents
Each segment of this report will include research from our 2012 Facebook Ad Survey, as
well 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

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Intro
i. Methodology
This 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 survey

ii. Partners
Thank 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. BlitzLocal

iii. Industry Experts
Additional 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.


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iv. About This Report

About 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. 20

The roles that Facebook advertisers play in their companies are varied, but focused on
mid-level marketing positions. We took the job titles of all those who filled out the
survey, and created the below word cloud. The larger the word, the more people had it
in their job title.

The most common roles were manager, director, strategist, and specialist. We also saw
CEO and intern a little more than we expected.

It is clear that Facebook ads are being managed by a large range of marketers — from
small business owners, to PR professionals.


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v. Facebook Ads - Then and Now
When Facebook ads launched as a new feature in November
2007, Mark Zuckerberg announced it to an audience of
advertising executives, in New York City.

“Facebook Ads represent a completely new way of advertising
online,” Zuckerberg told them.

“For the last hundred years, media has been pushed out to
people, but now marketers are going to be part of the
conversation. And they’re going to do this by using the social
graph, 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 — they
experiment, and constantly iterate, improving it.

Since they have launched, Facebook Ads have been one of the most powerful online
marketing tools available to small and large businesses alike. The information that is
volunteered by Facebook users allows marketers to do things that are not possible
anywhere else online.

And today we are beginning to see Zuckerberg’s vision, as Facebook puts more and
more emphasis on sponsored stories. Ads that are not actually ads, but content,
delivered to the social graph.


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vi. Adoption and Growth
Facebook 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 and
focused on the benefit of information. The ads are simple- an image, a couple
sentences, and a link- however, the options to advertisers to create those ads are
anything but simple.

Facebook offers unmatched targeting options to advertisers. We asked advertisers how
often they used the 15 unique targeting criteria available to them when creating a
Facebook ad (gender, city, language, etc). See p. 11 for their answers.

Many of these criteria also have additional sub-criteria and additional options. One of
the barriers to continued Facebook ad growth, is the complexity of the tool. It is easy to
use, 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 a
couple criteria that are not being used as much as they could be.


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vii. About Social Fresh

socialfresh
Social Fresh is a social media education company. We produce advanced social media
training for marketers through conferences, online training, and through our blog, at
socialfresh.com.


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1. Goals
We start where all marketing starts — what are the goals of Facebook advertisers?

44% of respondents surveyed spend most of their
Facebook ad budget on audience growth.
Facebook ads are generally used for one of four goals:
1. Awareness
2. Engagement
3. Conversion
4. Audience Growth

We asked advertisers two questions about their goals:

We wanted to see which goal types were used most often, and which goal types
received the most budget. Budget is a key indicator of where a business is focusing its
marketing dollars.


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i. Most Popular Goals by Frequency
Respondents listed awareness and fan growth as their most common reasons for
running Facebook ads.

The graph above displays the percentage of advertisers that use each Facebook
ad goal “always” or “often.” They could choose from always, often, sometimes,
rarely, or never.


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ii. Most Popular Goals by Budget
But when it came to which goal received the most budget, 44% of respondents spent
the most money on audience growth.


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2. Targeting
i. Targeting Criteria

The 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 Criteria
Age 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. Gender
One notable demographic option that ranked in the bottom of the list was gender, 9th in
popularity 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 Media


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iv. Geography

Country 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 are
putting large emphasis on narrow geographic targeting. And almost one in five
advertisers are targeting zip codes, a large portion of the time.


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v. Connections
“Connections” was the 6th most popular criteria at 37%. This is the criteria that allows
advertisers to target fans and friend of fans. Or exclude fans. Targeting fans for loyalty
and friends of fans for audience growth are beginning to emerge as best practices, but
these 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 Webtrends

Targeting was selected least often (2.8%), as the biggest Facebook advertising
challenge.


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vi. Total Segments Per Ad

79% of respondents are targeting 1 to 5 audience
segments.
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 be
a limitation. We also know that 85% of respondents are not using management software
that 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.



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3. Creative
i. Image, Headline, and Copy
Facebook ad creative usually includes an image, headline and ad copy.

There is a lot of guesswork about which types of Facebook ad images, headlines, and
copies work. There is also a lot of research that has produced some strong tactical
suggestions. These ad creative tips can be useful, but what is more useful, is to split
test different ad creative against each other.

66% of respondents are split testing their ad creative.


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It 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 of
marketers that use Facebook ads, put up one ad, and do not test it against other
images, headlines, ad copies, landing pages, or targeting options.


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ii. Ad Lifespan
Another key to getting ad creative to perform optimally is to refresh your creative every
few days. Facebook recommends all advertisers “update your ads regularly with new
images 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-through
rate during the first 72 hours, after going live. This is important, because advertisers pay
more for each click, as the click-through rate declines. Yet, over two-thirds of
respondents run their ads for longer than 3 days. Most are paying too much for their
ads, 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.



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This is likely a resource issue, for most advertisers.

Asking the average business to create multiple versions of an ad, and then change out
those ad versions every 3 days can be a high demand on their resources. The larger
the scale of your Facebook advertising, the more these optimization techniques should
be considered and implemented.


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iii. Sponsored Stories

55% 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 most
successful ad types on Facebook, when it comes to click-through rate and user
engagement, because they are content focused and do not look and feel like
traditional 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 Likeable

Sponsored stories are also an easier option, because the ad creative problem is
reduced.

Since sponsored stories are essentially promoted status updates, for most advertisers,
they require less new creative work, drawing from an existing stock of Facebook page
content.


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4. Management
i. Biggest Challenges

46% of respondents listed their
biggest challenge as ROI.
Tracking ad success with analytics was the second most popular challenge, listed
by 22% of respondents.


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ii. Ad Management Software
Not every business can afford to work with an agency, vendor, or software solution
to improve their Facebook ad performance. Our goal is not to encourage you to hire
anyone or spend more money, but to provide the data that can help you make those
decisions.

85% of respondents do not use ad
management 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 the
Facebook ad process.

Agencies and vendors work with Facebook advertisers to make the process easier, by
giving 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.



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iii. Agency and Vendor Partners

70% of respondents do not work with an agency.
Just as software can be a useful aid for Facebook advertisers, agencies and Facebook
API 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.


For those that do work with agencies, 31% are working with a digital agency, more than
any other agency type. 21% are working with social media agencies, and 20% work with
an ad agency.


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iv. Using A Facebook Ad Rep
When we talk about the concept of a Facebook ad rep, we are talking about an
undefined concept. In general, if you spend enough money with Facebook, there are
representatives who will give you their time, to help you use the platform better and
create 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, you're better off
running your own ads. I suppose the exception is if you're a big brand and you
want access to the latest things in beta, such as offers.

– Dennis Yu, CEO of BlitzLocal

When it comes to working with a Facebook ad rep, we saw 2 small benefits reported by
respondents.


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Advertisers 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.


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Advertisers who worked with Facebook ad reps reported a higher average click-through
rate at 0.05%, compared to advertisers that did not work with a rep, 0.04%.


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v. CPC vs CPM

83% of respondents use CPC pricing most of the time.
CPC (cost per click) and CPM (cost per thousand views) are the two pricing options for
Facebook ads. Each has advantages over the other, and even more important,
marketers have strong preferences about which option they prefer to use. Respondents
overwhelmingly prefer paying per click, for Facebook ads.

CPM is useful in audiences under 1,000 — where Facebook's ad
algorithm has trouble matching inventory.

– Dennis Yu, CEO of BlitzLocal

Respondents see an average CPC of $0.80.


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5. Review
Identify ads with the highest performance, and review their target audiences, to
determine which segments are most receptive to your message.

- Facebook for Business

i. Pricing and Performance
Respondents 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 all
respondents at .041%, and brand employees reported a slightly lower CTR at .038%.

70% of respondents are more likely to point ad traffic
to a Facebook app.
In addition, 75% of respondents said their ads are more likely to support a Facebook
page 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. Research
from TBG Digital showed that ads pointing on Facebook saw a 29% to 45% CPC cost
savings, in 2011.

Respondents that point their ads off of Facebook.com reported a 50% higher cost per
click, than respondents that point their ads on Facebook.com.


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Facebook has also said that when ads point to Facebook.com, they see a 50%
improvement on ROI. Facebook vendors like Pagemodo and Webtrends have
confirmed similar numbers through their client performance.

Recent Facebook Timeline changes allow apps that were once limited to a narrow 520
pixel width to display at a broader 810 pixel width. This means that many websites and
landing pages that exist off of Facebook.com can more easily be incorporated as a
Facebook app, without many adjustments.


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ii. Learning From Analytics
Built-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 give
it 3 days to get enough data to learn from.

Another tip is to use your Facebook page Insights, to compare to the ad performance
data you are seeing.

Marketers need to make sure they're looking at all of the data available to
them. You can't just look at data around ad performance, but instead you must
focus on everything available via the Insights API. If you're not taking a holistic
view of your paid, owned, and earned content on Facebook, you're not driving
the highest ROI.


62% of respondents do not use 3rd party analytics.
Most advertisers are relying on the built-in Facebook ad analytics to judge the success
of their campaigns. ROI and analytics combine to represent 68% of the biggest
Facebook ad challenges, listed by respondents.

If 62% are not using third party analytics on their Facebook ads, it's 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.


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 Media


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Closing Thoughts
Thank you for reading the 2012 Facebook Advertising Report. The data we collected is
not only insightful for you the reader, but will help us understand where the Facebook
advertiser needs help.

Social Fresh conducts research on industry topics, in order to produce better social
media education content for marketers.

Reports like this one, allow us to build content specifically designed to meet the
challenges social marketers are facing.

Facebook advertising is one of the largest investments social marketers are making
today, 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, about
Facebook marketing and Facebook advertising, please subscribe to SocialFresh.com.

If you did not enter your email address to receive this report, go to
SocialFresh.com/fb12 to opt-in to future updates on this topic.

Thank you for reading,

Jason Keath
CEO, Social Fresh


2012 facebook-ad-report

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