August 27, 2012, 11:31 AM

Facebook ad budgets grow faster than search spending

Kenshoo’s clients increased Facebook ad spend 32% in the first half of 2012.

Zak Stambor

Managing Editor

Lead Photo

Marketers increased their Facebook ad budgets 32% in the first half of the year compared with the same period in 2011, according to a new report from Kenshoo Inc., whose software helps to manage paid search and online marketing programs. The report is based on data from Kenshoo’s clients, which include 10 retailers in the Internet Retailer Top 500 Guide. Among them are Zappos, a subsidiary of Amazon.com Inc. which is No. 1, and Sears Holdings Corp., No. 8. The report also includes data from Kenshoo’s clients in other industries, such as entertainment and finance.

The growth rate for social ad spending outpaced the 12% growth rate for paid search ad spending during the first half of 2012, Kenshoo says. The report offers no spending figures, although a Kenshoo spokesman acknowledged that clients spend more on paid search than social ads.

The increased social ad spending comes as Facebook has rolled out a slew of new ad formats this year, including its first mobile ad formats. Those ads appear in a Facebook user’s news feed, which displays the actions of a consumer’s connections on the social network; the feed dominates the page a Facebook user sees when logging on to Facebook on a mobile device. The social network in June began enabling marketers to target consumers based on the device they are using to view Facebook.

“Marketers are opening their pocketbooks as Facebook continues to innovate with new ad formats and targeting options,” says Aaron Goldman, Kenshoo’s chief marketing officer.

Facebook also in June announced plans to roll out a system for real-time bidding for ad space on the social network called Facebook Exchange. And Facebook last week launched Sponsored Results, which enables marketers to buy ads in search results that link to another page or application within Facebook.com.

Goldman says those types of offerings will likely push marketers to continue increasing their spending on Facebook ads. “Emerging opportunities like Facebook Exchange and Sponsored Returns will only increase the demand for Facebook ad products and the effectiveness of social media advertising in terms of achieving business results,” the report says.

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