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November 2, 2011

The State of Advertising On Facebook :5 Charts That Tell The Story

The Wall Street Journal published this infographic featuring a comScore analysis of the breakdown of large and small advertisers for the top three advertising publishers in the U.S. – Facebook, Yahoo! Sites, and Microsoft Sites. In Q3 2011, Yahoo! and Microsoft shared a similar profile with smaller advertisers delivering around 21 to 23 percent of ad impressions on these properties. In contrast, 62 percent of ads delivered through Facebook came from smaller advertisers.
This chart shows that Facebook appeals greatly to small advertisers, likely due to its intuitive advertising interface minimizing any barriers to entry. It is important to note, however, that Facebook is still competitive with Yahoo! and Microsoft when vying for ad dollars from large brand advertisers. In Q3 2011, Facebook served more ad impressions for the Top 100 advertisers than Microsoft did and only slightly less than Yahoo! did.

The Above data is from a Webtrends survey of more than 11,000 Facebook advertisements.
Click-Through-Rate (CTR) is the measure of the number of clicks divided by the number of impressions of a given advertisement

  • Google AdWords program considers 2% to be a good CTR. However, competitive ads will get a lower CTR due to many players offering ads for the same thing – with many available ads, each individual ad will get less attention.
  • The banner ad is diminishing in popularity for a variety of reasons. 0.25% to 0.5% CTR is the current metric.
  • Video ads may get 1% to 2% CTR which is also in decline as the novelty of ads in videos is wearing off.
  •  0.25% CTR is considered good for Facebook ads.( source : Pixarsolutions)

For the first time, the largest share of US display ad revenues will go to Facebook, eMarketer estimates. The social network’s 80.9% growth in display ad revenues, to $2.19 billion this year, will mean Facebook sees 21.6% of all US display ad dollars.

Facebook's U.S. ad spending per user is tiny, when you compare it to other big ad-reliant industries, as you can see in this chart from Nanigans, a Facebook marketing company.This chart isn't perfect since Facebook is just one company, and the rest of the chart is made up of entire industries. But, the essential point of this chart remains: Facebook has an opportunity to capture many more ad dollars in the future.