Facebook is scheduled to release its fourth quarter earnings report on Jan. 27 after closing bell, and early user engagement metrics suggest that a strong report is coming. Wall Street is expecting the social network to post adjusted earnings of 67 cents per share and revenue of $5.36 billion.
Advertisers getting their money’s worth
Nanigans, which offers advertising automation software, released its fourth quarter benchmark report on user engagement this morning and found that retail advertisers are seeing strong returns from their ad spending on Facebook. As a result, it’s easy to see why advertisers are increasing their ad spend on the social network, and it’s not just retailers.
Marketers in all sectors are seeing value from advertising there, with a “significant majority” of Nanigans users upped their spending during the fourth quarter. The firm reports that same-advertiser spend grew by an average of 11% quarter over quarter. That is a slight deceleration from the previous quarter, however, which saw a 16% sequential increase.
Retailers reaping the benefits of Facebook advertising
A recent survey from the National Retail Federation indicates that online retailers had their expectations set high during the all-important holiday shopping quarter. Nanigans reports that same-advertiser purchase rates, average order value and return on ad spend from Facebook climbed in the double digits among its biggest e-commerce clients.
Return on ad spend surged 87% quarter over quarter, while purchase rates climbed 68% and the average order value jumped 49% sequentially.
Video becoming more and more important
Analysts from multiple firms have been emphasizing the importance of online video advertising, and this latest batch of data from Nanigans backs up those comments. Video ad adoption continues to climb, particularly on mobile devices and internationally. Facebook recently added call-to-action buttons, making it easier for marketers to convert their ads to sales.
According to Nanigans, total video ad spend grew 41% quarter over quarter, while mobile video ad spend climbed 44%. Non-U.S. video ad spend grew 85%, and mobile non-U.S. video ad spend surged 94% compared to the third quarter.
Dynamic Product, Carousel Ads going strong
As Facebook looks for new ways to continue growing, it has rolled out some new ad formats to attract more advertising dollars. Two of the newer formats are Dynamic Product ads and Carousel ads, and Nanigans found that both appeared to do well during the fourth quarter. Dynamic Product ads are real-time personalized ads, and the firm found that adoption skyrocketed quarter over quarter, climbing 210% among its clients.
Adoption of Carousel ads is also on the rise, although at a slower pace. The firm reports that spending on these ads increased 34% from the third to the fourth quarter, continuing the trend noted in the third quarter. Carousel ads are interactive, scrollable ads that are used to show off more than one product, video or image.
Neither of these rapidly growing ad products are the most popular, however. Together, Unpublished Page Post ads, Mobile App Install ads and Domain ads made up 96% of ad spend through Nanigans during the fourth quarter:
Click-through rates still rising
Another metric that’s important for all digital ad companies, including Facebook, is the click-through rate, which climbed 17% sequentially and 62% year over year to reach 1.12%. As you can see, this metric has been rising steadily over the last couple of years:
The fourth quarter marked the first time that e-commerce marketers using Nanigans saw their click-through rate surpass 1%, reaching 1.06%. As is typically the case, the fourth quarter usually brings retailers higher engagement rates because of the holiday shopping period.
Cost per click stable in Q4
The firm found that Facebook’s cost per click was steady in the fourth quarter with a 6% sequential increase as a result of similar increases for click-through rates and cost per impression. This metric was 57 cents during the quarter, marking a slight decline from last year’s fourth quarter.
Cost per impression grew on Facebook grew for the second consecutive quarter, although the growth marked a deceleration from past increases. The 62% growth rate in click-through rate has outpaced the 45% growth in cost per impression, and Nanigans analysts suggest that this is the result of “more expensive, but more engaging video and mobile advertising.”
“With Facebook continuing to deliver strong return on ad spend, cost increases have not deterred brands from investing heavily in the channel,” they wrote.
Facebook shares were up 2.07% at $99.53 per share as of this writing.
All graphs in this article are courtesy Nanigans.