By Chantal Tode
January 9, 2013
Facebook is making more money from mobile ads
Advertisers are allocating 20 percent of their spend on Facebook to mobile, while the ads themselves command a 70 percent price premium over desktop, according to a new report from Kenshoo.
The results show that the demand for mobile advertising on Facebook is healthy and growing. While iOS ads represented 97 percent of the tablet ad spend of brands on the Facebook platform, when it comes to smartphones, Android accounts for 71 percent of spend.
“Twenty thirteen is going to be the year of mobile, particularly on Facebook,” said Todd Herrold, senior director of product marketing at Kenshoo, San Francisco. “From a Facebook corporate standpoint, there has been a lot of criticism and discussion around Facebook and its mobile strategy.
“What we are seeing is that over a nine-month period, Facebook has gone from zero dollars on mobile to 20 percent on mobile - that is huge,” he said. “It speaks to the amount of resources and investment that Facebook has on mobile and getting it right.
“If the last six months is any indication, we can safely presume that the mobile percentage will continue to grow for Facebook advertising.”
Ramping up in mobile
Last year, Facebook faced a lot of questions from the investment community as its user based continued to move to mobile yet Facebook did not have a mobile monetization strategy in place.
The social network launched its mobile advertising business last spring and while it took a few months to pick up, the Kenshoo report is the latest to suggest that Facebook’s mobile advertising business is quickly ramping up.
In December, eMarketer released a report revealing that Facebook has emerged as the leader in mobile display advertising as marketers shift ad spend to the platform much quicker than expected. EMarketer forecasts that Facebook would generate $339 million in mobile ad revenue in 2012, up significantly from previous estimates of $45-$100 million, and have an 18.4 percent share of mobile ad display revenue for the year compared with Google's 17 percent.
“If you look back at Facebook’s quarterly report from October, they were around 14 percent for mobile advertising,” Mr. Herrold said. “In just two short months, it has grown by almost 50 percent – that’s quite a dramatic growth rate.”
Supply and demand
One of the issues facing companies dependent on advertising revenue is that mobile ads typically cost less than desktop ads.
However, Facebook appears to be defying this trend, according to the data from Kenshoo. Per the report, cost-per-click for Facebook ads was $0.81 for desktop ads and $1.38 for mobile ads.
The report reveals that leading global brands are spending more than $1 out of every $5 spend on Facebook advertising targeting mobile devices.
“We’ve seen that mobile on average on Facebook has commanded a premium,” Mr. Herrold said. “We attribute it primarily to available inventory.
“If you think about using Facebook on desktop, you have multiple ad placements along the right hand side and in the newsfeed,” he said.
“On mobile, they’ve been very cautious about the frequency and the number of ads shown during a session so it comes down to a supply and demand issue.”
The mobile mindset
Kenshoo analyzed more than two million Facebook ad clicks and conversions delivered in November and December 2012 for the report. Ads were delivered across a wide range of verticals including retail, financial services, software, game, entertainment and travel.
The results also point to best practices for advertising on the social network.
“One of the ways to make sure that mobile campaigns are most effective is to really focus on mobile and desktop campaigns separately and uniquely,” Mr. Herrold. “What we see in many cases is that marketers who are doing run of device placements are really missing out on the mobile opportunity.
“People who are using mobile devices are in a different mindset than when they are at their desk in front of a desktop,” he said. “Tailoring messages and targeting to folks when in the mobile mindset is hugely important.”
Chantal Tode is associate editor on Mobile Marketer, New York