As revenues from social ads rocket and organic reach on Facebook declines, what are the opportunities for marketers?


By Chris Lee

In its new infographic, the Kenshoo Search and Social Snapshot: Q1 2014*, software company Kenshoo illustrates how advertiser revenues from social (Facebook) ads have increased 191 per cent year-on-year in Q1 2014, while search advertiser revenue increased 12 per cent.

The analysis also shows that paid search still represents the biggest share of digital marketing investment but Facebook social ad spend is growing at the faster rate of 37 per cent year-on-year, compared with spend on search advertising growing year-on-year at a rate of 10 per cent.

Facebook ads appear to reap dividends

With Facebook talking openly that the chances of appearing organically in users’ newsfeeds are diminishing, is this leading a drive towards paid ads on Facebook?

Todd Herrold, Senior Director, Product Marketing, Kenshoo, believes that marketers should not look at Facebook in isolation, but take a holistic approach to marketing.

“It is true that as organic reach declines on Facebook it increases the importance and necessity of paid advertising. However rather than looking at advertising in isolation, tying paid, owned and earned media together to create an integrated programme becomes even more valuable,” he told NMK.

Herrold explained that this is a three stage process:

· Firstly, advertisers are increasingly tracking bottom line sales and revenue of their organic posts and optimising their activity towards the posts that drive the most revenue and get the most organic reach

· Secondly, they amplify these as paid ads to extend the reach of the most successful posts and maximise performance

· Finally, advertisers are increasing advertising budgets and leveraging Facebook’s ‘unpublished page post’ ads to reach the right consumers

Herrold added: “Our own figures show the results this delivers – advertisers running ads on Facebook consistently over the last 12 months grew revenue by 191 per cent and increased budgets by close to 40 per cent year-on-year. This was down to both paid/owned/earned integration and increasingly optimised creative and targeting. So the decline of organic reach actually opens up new opportunities for brands to engage with consumers on Facebook.”

What is driving the rise on social ad spend?

According to Kenshoo’s Chief Marketing Officer, Aaron Goldman, there are two big reasons for the uplift in Facebook ad take-up and performance.

“Firstly, social is not as mature a channel as search so it is expected that growth rates will be higher. Paid search represents more than 50 per cent of marketers’ spend so it would be tough to grow at more than 30 per cent year-on-year,” he explained. “Secondly, marketers have finally figured out how to use Facebook to drive direct response results. The fact that revenue is up triple-digits means that marketers are tracking and attributing much more online sales to social media than they were a year ago.”

*The data analysed by Kenshoo for its Q1 infographic reflect all advertisers and agencies actively using Kenshoo Search and Kenshoo Social for the past five quarters and cover more than 500 billion total global ad impressions. 

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