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Q3 Reports: Facebook continues to see significant ad spend growth

Advertisers are seeing higher engagement rates, even as CPCs trend down.

Ginny Marvin on October 26, 2016 at 1:28 pm

Advertisers keep increasing investment in Facebook, third-quarter reports from Kenshoo and Merkle both found.

According to Kenshoo data released this week, advertisers on the campaign management platform increased spending on Facebook (including Instagram and Facebook Audience Network) by 45 percent year over year in Q3. Click-through rates across the Facebook ecosystem have steadily risen over the past three quarters, increasing by 14 percent year over year in Q3. Kenshoo attributes the higher engagement rates to more specialized ad types and better targeting.

The growth was driven by dynamic product ads — Facebook’s retargeting ad format that shows users products from sites they have visited previously. Dynamic product ads (DPAs) accounted for 42 percent of ad clicks and 21 percent of ad spend on Facebook among Kenshoo customers. That’s up from just 15 percent click share and eight percent spend share for DPAs a year ago.

Kenshoo also saw advertisers increase investment in video advertising on Facebook in Q3. Video ad spend rose 155 percent year over year.

Mobile ad spend across Facebook properties increased 61 percent as mobile impressions rose 47 percent and clicks increased 79 percent.

In Merkle’s Q3 Digital Marketing Report, the agency said clients increased ad spend on Facebook by 63 percent year over year. With Facebook Exchange (FBX) soon shutting down, Merkle says most advertisers have reallocated FBX spend to other targeting opportunities on Facebook.

Both reports found Facebook CPCs have been falling and CPM rising.

According to Kenshoo, average CPCs on Facebook returned to levels seen a year ago (and declined from a peak of $0.35 in Q4 2015) to $0.25 in Q3 2016. CPM, however, has risen steadily, increasing 25 percent year over year to $3.54 in Q3.

Merkle reported Facebook CPCs decreased 22 percent year over year, while CPM rose 38 percent year over year.

“Despite the overall decline in CPC, Facebook investment continues to increase rapidly for advertisers, as traffic has grown substantially over the past year,” said Merkle.

Last week, Nanigans released data showing similar trends in rising investment in Facebook advertising. The firm attributed much of that growth to the Facebook Audience Network.

About The Author

Ginny Marvin

Ginny Marvin is Third Door Media's Editor-in-Chief, managing day-to-day editorial operations across all of our publications. Ginny writes about paid online marketing topics including paid search, paid social, display and retargeting for Search Engine Land, Marketing Land and MarTech Today. With more than 15 years of marketing experience, she has held both in-house and agency management positions. She can be found on Twitter as @ginnymarvin.