Before getting to those numbers, though, it’s worth asking what’s behind the big jump in Facebook’s ad business. Ad revenue rose 41% from a year ago, 23% of it from mobile advertising, up from 14% in the third quarter.
The reason is actually pretty basic, says Jared Belsky, executive VP at digital ad agency 360i. Yes, everyone, including Facebook, likes to talk about the appeal of social ads, the relevance of “native” ad formats like Sponsored Stories and news feed ads, and so on. But really, advertisers mainly like the fact that through Facebook, they can reach an entirely new audience that doesn’t simply duplicate the reach of every Web ad network out there, which all are offering access to the very same people, or at least the very same consumer profiles.
In other words, Facebook offers a greenfield of new audiences, with an overall reach large enough that they can target narrowly and still reach millions of people. And with the Facebook ad exchange, they can reach them using their own data on consumers as well. Belsky says they’re also starting to find that Facebook ads do work–especially with a new conversion tracking tool from Facebook that helps them determine if a Facebook ad led to a sale, a sales lead, or another desired action. Facebook’s own analytics are getting better, he says, enabling marketers to track the impact of their Facebook ad spend.
Apropos of that, here are those stats from Facebook:
For brand marketers, Facebook is now working with every one of the Ad Age Global 100 advertisers. Wal-mart used this target block over the Thanksgiving weekend to deliver 50 million mobile ads to their existing and potential customers. Michael Kors used Facebook to launch a new line of sneakers. Many of the sneakers sold out online and in stores, and they achieved a 16-point increase in awareness of the new sneaker among the 36 million people that the campaign reached on Facebook. That’s the equivalent of 5.8 million new people in the brand’s target audience who are now aware of the new line of shoes.
For direct marketers, tools including Offers, Custom Audiences and FBX are fueling growth. Nearly 42 million unique users are claiming an Offer. Costs per redemption compare favorably to those from email, newspaper, paid search, and display media based on data from the Direct Marketing Association. JackThreads, an online shopping site for men, used Custom Audiences to target specific segments of its customer database and target them with ads for products in categories the company knew were most relevant to them such as sneakers. As a result, the company achieved a 30% lower cost per acquisition than other platforms and saw a 6x return on advertising spend. And despite only becoming available to all marketers in September, by December, FBX served nearly one billion impressions daily and supported over 1,300 advertisers each day.
Revenue from local businesses was particularly strong in the fourth quarter: local business Pages that advertise on Facebook nearly doubled since the beginning of 2012, fueled by Promoted Posts, which makes it easier for businesses to create and purchase ads directly from their Facebook Page. Almost 500,000 Pages have used Promoted Posts. About 30% of those are new advertisers to Facebook and more than 70% have become repeat customers.
Developers are seeing success with mobile app install ads, launched in October and already being used by 20% of the top 100 grossing iOS apps to accelerate growth. According to research conducted by comScore in December, Facebook is the top driver of awareness of new mobile app downloads and, among people who learn about new apps on Facebook, 48% click directly from the Facebook app to download new mobile apps. A new game, Car Town Streets broke into the Top 10 Games list on iOS in many countries while achieving a 40% lower cost per installation compared to their other advertising with mobile app install ads.
Sandberg also provided numbers on the effectiveness of Facebook’s advertising:
Research from Aggregate Knowledge showed that Facebook is an increasingly powerful tool to help marketers reach more people and drive sales. In a study of fourth quarter marketing campaigns, they found that media plans that included Facebook reached people who would not have seen the campaigns otherwise. In fact, 45% of those reached were reached exclusively through Facebook. The study also found that Facebook had a 68% lower cost per acquisition and drove 24% more new sales than other online channels.
Facebook built a deep relationship with PepsiCo, working with its Lay’s brand to drive sales significantly ahead of plan and a 5x return on advertising spend for their “Do Us A Flavor” campaign on Facebook.
65% of Facebook’s advertisers are now using ads in news feed, which run on both desktop and mobile, up from 50% at the end of the third quarter. Measurement work with Datalogix has shown that ads in news feed also drive more than 8x the incremental offline sales than ads on the right hand side.