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Facebook Ad Budgets Rose 11 Percent In Q4 On Higher ROAS [Study]
Advertisers spent more on Facebook video ads, dynamic product ads and carousel ads during the holiday shopping quarter.
Retailers continued to increase their ad budgets on Facebook in Q4. Campaign management platform Nanigans released Q4 2015 performance stats of its clients — primarily e-commerce and gaming advertisers — running Facebook mobile and desktop ads.
Overall, ad budgets rose 11 percent from Q3 and Q4. That rate of increase was lower than the 16-percent increase Nanigans saw from Q2 to Q3 2014. Yet return on ad spend jumped 87 percent, on average, in Q4; purchase rates increased 68 percent, and the average order value rose 49 percent in the holiday shopping quarter when compared to Q3.
Dynamic Product Ads & Carousel Ads Prove Popular
After early positive results, Nanigans said advertiser adoption of Dynamic Product Ads on Facebook jumped by 210 percent in the fourth quarter from the previous quarter. Carousel ads have also proven popular, with adoption rising 34 percent quarter over quarter. Among e-commerce advertisers, spend on carousel ads increased by 55 percent from Q3 levels.
Not surprisingly, the majority of ad spend went to performance ad formats, with 96 percent of ad spend going to unpublished page post ads (Link, Photo, Video and Carousel Unpublished Page Post Ads), mobile install ads and external link ads that display in the right rail.
Video Ad Usage Increases
Nanigans says integrated call-to-action buttons and the visual format of Facebook video ads led to a 41-percent increase in video ad spend from the third quarter. Mobile video ad spend rose 44 percent quarter over quarter.
Outside of the US, these investment increases were even more dramatic: up 86 percent overall and up 94 percent for mobile in Q4 compared to Q3 2015.
CTRs And CPCs Rose For E-Commerce Advertisers
According to the report, Nanigans clients saw a 62-percent increase in click-through rates (CTR) year over year and a 17-percent increase over the third quarter of 2015 on Facebook. For e-commerce campaigns, CTRs rose 37 percent compared to Q4 2014 and 10 percent quarter over quarter.
With an aggregated average CTR of 1.06 percent, Q4 marked the first time Nanigans e-commerce advertisers had an overall average CTR above one percent.
Average cost per click (CPC) increased six percent from the previous quarter, but a drop in CPCs among gaming advertisers drove the average year-over-year CPC down 11 percent. E-commerce CPCs were up 21 percent from Q3 and up nine percent from Q4 2014. That’s a smaller bump up than was seen in Q4 2014. Average e-commerce CPCs reached $0.63 in the fourth quarter, up from $.49 in the third quarter of 2015. CPMs for e-commerce campaigns reached $7.35, up 33 percent from Q3 and 49 percent from Q4 2014.
Gaming CPCs were off 19 percent from the previous quarter and down 14 percent year over year. Gaming CPCs returned to levels Nanigans observed in Q2 2015, when they averaged $0.63. CPMs among gaming campagins increased one percent quarter-over-quarter and were off five percent from the previous year.
Below is a look at how these metrics varied by region in Q4.
The report does not include Facebook Exchange data. The full report is available here.