If you are a regular advertiser on facebook, you’d have likely witnessed a steady and steep increase in advertising costs on the platform. We discuss a few factors which are driving this and what to expect on pricing for paid facebook ads & social media in general.
First off, facebook would continue to be a significant force (within social platforms) at least for 2015 in India. The numbers & time spent are significantly higher on facebook versus twitter, linkedin or instagram. Whatsapp & Hike are other disruptive platforms which could change the way social interactions between brands & consumers work. But not so fast! Maybe 2016 and beyond is when we could expect them to change the demand-supply dynamics for social ad-impressions.
Factors driving the costs up
Facebook advertising costs shot up 123% in Q3, 2014 versus the same quarter last year. That’s a steep rise in costs. The number of ad-impressions went down 25% which is a significant decrease in the number of ad-opportunities despite the growth in the number of users of the platforms. What should advertisers expect on this front in 2015?
Factors driving costs down
Thankfully, there are a few things working in favor of pushing costs down:
Net-net, do the costs go up?
Unfortunately, yes, the costs go up. The factors driving costs up far outweigh the impact of those driving these down. At least in 2015!
So, how about ROI? Shouldn’t that go down?
The upshot in this entire increasing ad-cost story is that the ROIs are increasing! A Kenshoo report suggests that while ad-cost (cost/impression) on an average rose 7x year on year in November 2014, the advertisers ROI doubled. How was that possible?
In fact, the same Kenshoo report states that CTRs rose five times year on year in November 2014.
Does social still work in terms of ROI?
Yes, it does. It is still a significantly cheaper form of communication versus other ATL channels. It is measurable. It is two way and interactive. In fact, the ROIs are improving (see above) and should continue to remain attractive. To quote Tamara Gaffney, Principal Analyst at Adobe Digital Index, “Social media is still a bargain in every sense for brand marketers so increases in ad rates will come from new dollars flowing in.”