How Facebook is winning with mobile advertising

Facebook’s mobile advertising has only been around for a few months, but it has made a strong impression (or strong CPM anyhow). TBG Digital released a study yesterday detailing how Facebook’s targeted mobile advertising generated far greater click-through (CTR) than Twitter or even the Facebook site (1.14%, .27% and .82% respectively). If validated by Facebook’s financials on July 24, this would be a huge signal to shareholders that Facebook (NASDAQ: FB) can effectively advertise to its huge audience.

There are some potential biases in the report, but my hunch is that it is probably accurate in its message. This data is not an infallible endorsement of mobile advertising on Facebook, though. These results are drawn from TBG Digital work only, and despite the high number of impressions (the slides repeatedly state impressions in the billions) the sampling error is probably more than 2% given that the population is targeted (and not random). That said, assuming that the campaigns for Facebook and Twitter were targeting the same audiences the effectiveness of Facebook digital advertising is in most likelihood true. A study like this is only going to be relevant when targeting populations with high smart-phone usage, and there are some risks for small businesses that I discuss later.

Also a good signal for Facebook was increase is CPM costs in the U.S. and Canada. TBG also noted in their report an observation that CPM cost has increased in the U.S. and Canada. Because advertising is done by auction, this would appear to be a positive sign that advertisers have increased, particularly in light of the additional mobile advertising option. The international stagnation of CPM may be a concern, but I expect that any positive signals are welcome for Facebook, and at least ad costs are not decreasing.

For smaller businesses advertising on Facebook – this underpins the need to measure the effectiveness of ad spends. With CPM for mobile approaching $10 and clickthrough slightly above 1%, an ad spend without very meticulous metrics and management could be quite ineffective. A frugal tactic might be to do some A/B testing of your campaigns where CPM is less than 50 cents and clickthrough rate around .8%.

This is just the tip of the iceberg for Facebook’s improved advertising products. Future improvements include monitoring (external) mobile app usage to tailor ads to users, development of GEO “push” ads, and expanding the capability for brands to co-op the pages of their fans (where it appears that brand fan shares a link which is actually posted by a brand).

Facebook shareholders may have reason to celebrate, but it will be interesting to see how tolerant users are of their monetization efforts.

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Jim Dougherty

Writer and chief of miscellany at leaderswest.com

I aspire to give people something to think about rather than tell them what to do. My favorite Google Alert is “social media research,” I am increasingly compelled by Gen Z, and I appreciate good writers agnostic of where they write. At one time I was Kred’s 12th most influential social media blogger and Klout’s most influential person on the topic of David Hasselhoff. Transplant from Seattle living in Cincinnati. Haven’t entirely adopted the local sports teams yet.