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A look at Facebook’s carousel ad and the latest pricing trends on the network
Columnist Andrew Waber delves into data that shows how the social network is changing and how marketers should adjust their advertising strategy to take advantage of the trends.
In a rather under-the-radar update earlier this year, Facebook dropped its hard and fast 20 percent text limit for ad images. During that now-lapsed policy, ads with more than 20 percent text were typically rejected or quickly paused by Facebook. The new system theoretically gives more leeway to advertisers, but it also spells out the potential impact of image text on audience reach.
Currently, Facebook points advertisers to a testing page with a four-tier grading system regarding likely ad reach based on the share of text within the image. To this end, you’ll still want to minimize the amount of text included within the ad image.
However, the latest changes also better codify what kind of in-image text is okay (e.g., logos, movie posters, album covers) and what is not (e.g., product descriptions, discount language).
While a seemingly innocuous change, it does reflect Facebook’s continuing balancing act between keeping users engaged and advertisers happy. Regarding the latter point, recent data highlights aspects of how the Facebook ecosystem is changing and provides hints as to how advertisers can best adjust to achieve optimal results.
Carousel is making waves
Almost since it launched, carousel has been a popular ad type for e-commerce marketers on Facebook. It allows companies to show off multiple products within a single unit, is more interactive than traditional link-based ads, and most importantly, has helped improve click-to-purchase conversion metrics (email registration required) for many advertisers.
A more recent development is the advent of carousel mobile app install (MAI) ads, which have increasingly caught on with gaming advertisers. In our most recent quarterly benchmark report, 29 percent more game developer ad spend on Nanigans was dedicated to carousel MAI compared with the prior quarter.
And like e-commerce advertisers, gaming companies are finding these more multi-faceted ad units have helped boost conversions (email registration required) — in this case, installs.
Performance and the increasing importance of mobile seem to be driving adoption of these units. We’ve seen mobile metrics for traditional carousel and carousel MAI ads generally outpace other similar ad units at a high level, and spend on both is heavily weighted towards mobile users.
Facebook CPM increases are slowing…
As Facebook has steadily improved its targeting options over the years, CPMs have understandably risen. However, over the past year, Facebook CPMs have trended more gradually upward, averaging a 10-percent increase each quarter. This contrasts starkly with the 36-percent average quarterly CPM increases seen over 2013 and 2014.
This new trend of less dramatic price increases should continue, outside of the typical CPM bumps observed during the Q4 holiday season. Facebook expanding the reach of its Audience Network to more inventory sources and non-Facebook users will likely play a sizable role here going forward.
… while budgets, returns on Facebook aren’t
As evidenced by Facebook’s continuing revenue growth, advertisers certainly aren’t shying away from the channel due to those aforementioned CPM increases. The trade-off has always been that Facebook needed to continue delivering substantial value to justify higher ad prices. Looking at the aggregate metrics, Facebook has not missed a beat on its end of the bargain.
Among 20 of the highest-spending e-commerce and game advertisers using Nanigans over the past year, return on ad spend (ROAS) rose by an average of 75 percent year over year in Q2 2016. Greater returns helped unlock more ad spend on the channel, as advertisers increased quarterly budgets by an average of 200 percent over the same time frame.
This kind of advertiser growth and success is driven by Facebook’s ability to keep users coming back and engaged over the years. While algorithmic tweaks have sometimes elicited a mixed reception, the hard numbers in terms of active user growth bear out Facebook’s “stickiness” with consumers. It’s critical for advertisers going forward to follow much of Facebook’s lead here.
Facebook provides those image-text guidelines and reach estimates to make advertisers understand which ads perform best and which don’t. More recently, the company shut off desktop ad blockers but opened up the ability for users to opt out of certain ads.
The implication is that advertisers need to create engaging, useful and well-targeted ads or risk users themselves giving them the boot. This challenge represents a moving target for marketers, but creative and technical tips can keep you pointed in the right direction.
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