Ads on Facebook cost more but got fewer click-throughs in 2010 compared to 2009, and performed about half as well as traditional banner ads, according to a new survey.
A study conducted by Webtrends looked at more than 11,000 campaigns on Facebook to try to establish benchmarks for brands looking to advertise on the platform.
According to Webtrends, the average click-through rate (CTR) for Facebook ads in 2009 was 0.063% and 0.051% in 2010 — half as much as industry standard of .1%. The cost per click (CPC) was also $0.27 and $0.49 for those periods, respectively.
Webtrends also detailed the cost-per-thousand (CPM) and cost per fan (CPF):
According to the study, not all visitors to Facebook interact with ads the same way. “The older we get, the more we click,” the survey notes, adding that there’s a falloff, however, after age 65. Women and men click at pretty much the same rate.
Similarly, there are few geographic variations, except for Hawaii, whose residents click through at almost half the average and North Dakota and Wyoming, whose residents click at double and triple the average rate.
Not surprisingly, users are also more apt to click on an ad for a category they consider fun, like media and entertainment or blogs, categories that trounce laggards like health care and software.
As the report notes, Facebook is projected to post $4 billion in advertising this year. Part of the appeal, aside from the network’s huge base of users, is the ability to get friends of targeted consumers to give their thumbs up. That apparently combats ad burnout. According to the study, ads targeting friends of fans last three times longer than standard ads because new fans keep coming on board, adding more friends and thus more potential ad targets.
The takeaway? Facebook ads may not get a lot of click-throughs, but for the moment, friends’ recommendations make them last longer.
Google appears to be testing display ads in Gmail. I discovered the following image ad in my own Gmail account this morning, and Google has since confirmed a test.
Image ads have made their way into paid search on Google.com and various other properties on Google. But this was really jarring for me to encounter. It’s the only such ad I saw (next to an email from a clothing retailer in my inbox) after purposely looking for others.
I’m sure it’s a test to see how users react and what the response rates are. Gmail is formally a part of the “Google Display Network“:Your text, image, rich media, and video ads can appear across YouTube, Google properties such as Google Finance, Gmail, Google Maps, Blogger, as well as over one million Web, video, gaming, and mobile display partners.
I’m not sure how long this test has been running; it’s the first time I’ve seen it and I use Gmail as my primary email address.
Postscript: A Google spokesperson provided the following comment:We’re always trying out new ad formats and placements in Gmail, and we recently started experimenting with image ads on messages with heavy image content.
Mozilla, the developer of the Firefox browser, is working a feature that will allow users to opt-out of online behavioral advertising.
The goal is to give users "a deeper understanding of and control over personal information online," Mozilla's head of privacy said in a blog posted on Sunday [see pic below].
The feature will allow users to configure their Firefox browser to tell websites and advertisers that they would like to opt-out of any advertising based on their behavior, Alex Fowler [cq] wrote in his blog post. The user's preference is communicated to websites and third party ad servers using a new "Do Not Track HTTP header", which is sent with every click or page view in Firefox.
Borrell Associates is forecasting a moderate increase in overall ad spending for 2011, but continued strong growth for online advertising, including mobile. Overall, advertisers will increase their spending next year by less than 5% above this year's projected level, bringing U.S. ad spending totals to $238.6 billion.
We're expecting total online ad spending to grow almost 14%, from $45.6 billion, in 2010, to $51.9 billion, in 2011. The fastest-growing segments of online advertising are the local sector, anything targeted, and everything involving social media.
By next year, local online advertising should grow by almost 18%, from $13.7 billion, in 2010, to $16.1 billion, in 2011.The big driver will be targeted display (such as banner ads) advertising, which we expect to grow almost 60% in 2011, reaching $10.9 billion for national and local combined. While national advertisers will increase their use of targeted display by nearly 50%, local advertisers will outperform even that. Use of targeted display by advertisers local to the markets where their ads run will more than double, reaching more than $2.3 billion next year.
However, the Web's initial darling –run-of-site display– continues to lose luster. Sales of run-of-site display ads will continue to decrease, dropping nearly 14% from this year's level – from $9.5 billion to $8.2 billion for both local and national. This early online format has simply been overshadowed by newer, more productive ad formats, and competition has pushed display unit prices down. Most of the spending decease will come from national advertisers. Local run-of-site ads are forecast to decrease less than 3% next year.
The national paid search ad format will experience a double-digit spending decline next year, moving down 11.3%. This drop will be caused by lower pricing and churn, but will be mitigated by a local advertiser increase of more than 10%. (In general, local online advertiser trends tend to lag those of the larger national advertisers by about two years, and that is certainly the case for paid search.) Local spending decreases in paid search are sure to follow, perhaps as soon as 2012.
Email advertising will see moderately strong growth in 2011, up 9% to $16.0 billion for national and local. Growth in this format is almost all from national advertisers; only 3% is local. White paper marketing is a major contributor to its popularity – especially among B2B advertisers.
The streaming video format is expected to continue its dramatic growth, increasing more than 60% to $5.6 billion next year. More DIY and less expensive tools put this ad format within the budgets of even small advertisers. Because of this, two out of every five streaming video ad dollars will come from local advertisers next year. Streaming audio, on the other hand, looks to remain a footnote. Though it too will enjoy double-digit ad spending increases in 2011, streaming audio has yet to pass the $1 billion ad spending level.
Unlike legacy marketing, where promotions overshadows advertising, online advertising has historically gotten far more attention from marketers than online promotions. But changes are coming. Online promotions will top $24 billion next year, up 10% from this year's totals. Much of this increase will be due to the rising use of online couponing, forecast to grow almost 14%, to $9.1 billion, in 2011. Proximity advertising is also on the rise, up 11% next year. Mobile devices that can tell users when a particular merchant is in their immediate vicinity continue to sell briskly, and advertisers are expressing interest in this form of advertising.
Mobile marketing continues to grow, fueled by ubiquitous apps, user-friendly browsers and 3G/4G speeds. As smartphone ownership now comprises 25% of all cellphone ownership, mobile ad sales will enjoy growth of more than 20 cents of every online ad dollar spent next year.
The Federal Trade Commission is considering proposing a do-not-track mechanism that would allow consumers to easily opt out of all behavioral targeting, chairman Jon Leibowitz told lawmakers on Tuesday.
Testifying at a hearing about online privacy, Leibowitz said the FTC is exploring the feasibility of a browser plug-in that would store users' targeting preferences. He added that either the FTC or a private group could run the system.
Leibowitz said that while Web users on a no-tracking list would still receive online ads, those ads wouldn't be targeted based on sites that users had visited in the past.
Three years ago, a coalition of privacy groups including the World Privacy Forum, Center for Digital Democracy and Center for Democracy & Technology proposed that the FTC create a do-not-track registry, similar to the do-not-call registry. At the time, the online ad industry strongly opposed the idea of a government-run no-tracking list.
Currently, many people who want to opt out do so through cookies, either on a company-by-company basis or through the Network Advertising Initiative's opt-out cookie (which allows users to opt out of targeting from many of the largest companies). But those opt-outs aren't stable because they're tied to cookies, which often get deleted.
The Network Advertising Initiative recently rolled out a browser plug-in that enables consumers to opt out of targeted ads by NAI members.
Leibowitz also told lawmakers that he personally favored opt-in consent to behavioral targeting, or receiving ads based on sites visited. "I think opt-in generally protects consumers' privacy better than opt-out, under most circumstances," he said. "I don't think it undermines a company's ability to get the information it needs to advertise back to consumers."
Online ad companies say that behavioral targeting is "anonymous" because they don't collect users' names or other so-called personally identifiable information, but Leibowitz said that it might be possible to piece together users' names from clickstream data. He told lawmakers about AOL's "Data Valdez," which involved AOL releasing three months' of "anonymized" search queries for 650,000 users. Even though the company didn't directly tie the queries to users' names, some were identified based solely on the patterns in their search queries. Several lawmakers expressed concerns with behavioral advertising during Tuesday's hearing. Sen. Claire McCaskill (D-Mo.) said she was "a little spooked out" about online tracking and ad targeting.
McCaskill said that after reading online about foreign SUVs, she noticed that she was receiving ads for such cars. "That's creepy," she said, likening it to someone following her with a camera and recording her moves.
She added that if an "average American" were to learn that someone was trailing him around stores with a camera, "there would be a hue and cry in this country that would be unprecedented."
Sen. Jay Rockefeller (D-W. Va.) and Sen. John Kerry (D-Mass.) both expressed concern that privacy policies weren't giving Web users enough useful information about online ad practices.
Rockefeller proposed that some companies were burying too much information in lengthy documents that consumers don't read. "Some would say the fine print is there and it's not our fault you didn't read it," he said, adding, "I say, that's a 19th-century mentality."
Kerry added that he didn't know that consumers understood how companies use data. "I'm not sure that there's knowledge in the caveat emptor component of this," he said.