January 29, 2013, 10:54 AM

Location matters when it comes to Facebook ads

News feed ads have a click-through rate 45 times greater than display ads.

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Facebook Inc.’s various ad units are a bit like real estate—location determines their value. That is, the social network’s ads that appear in users’ news feeds, which display the actions of consumers’ connections, vastly outperform display ads that appear on the right side of Facebook.com pages, according to a new report from Facebook advertising software provider Nanigans.

Nanigans says that Facebook’s page post ads—an ad format previously called a Premium ad unit that enables a Facebook page operator to promote its status update, a video, photo, question, link or event in an ad that appears in the news feed—have click-through rates 45 times higher than the social network’s display ads, which are also called marketplace or domain ads.

The report is based on more than 975 million ad impressions delivered on behalf of multiple retailers in December 2012 and January 2013.

Page post ads generate a 14% better return on investment than Facebook’s display ads, the report says. For that report, Nanigans attributed revenue generated from purchases made within three days of a consumer viewing an ad in its return-on-investment calculation.

Page post ads generated, on average, a 68% lower cost-per-click than the display ads. The average cost-per-click for page post ads ranged from 14 cents to 26 cents.

Facebook’s display ads appear only on desktop users’ screens. The only ads that Facebook’s 604 million mobile active users see are those appearing in their news feeds.

Comparing the performance of page post ads that appear in desktop users’ news feeds with those that appear in mobile users’ screens, Nanigans found that the mobile ads had a click-through rate 190% higher than the same ads when they appeared on a desktop. The mobile ads’ cost-per-action also cost 46% less than the same ads on a desktop.

Despite the reports’ findings, Facebook’s display ads remain popular. 29.1% of retailers in a recent Internet Retailer survey featured in the Social Media 300 said they use the ad format, compared to 17.4% that use an array of different Facebook ad formats that includes page post ads.

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