Contents

02 Introduction

CPM rates increase by 58%

03 in twelve months

04 Ad engagement increases by 11%

05 Increases in global ad costs slow to 9%

06 Sector Click Through Rate Top 10

07 Sector Cost per Click Top 10

Sponsored Story ads are 53%

08 more engaging than standard ads

Facebook mobile ads are over 4x

09 more engaging than Twitter ads

© 2012 TBG Digital Page 1

 Introduction

Welcome to TBG Digital’s Global Facebook Advertising Report for Q2 2012. This
report examines trends and changes in the performance of Facebook advertising
campaigns managed by TBG Digital. We have a wide range of clients running Offsite,
Fanning and Facebook Application campaigns so we believe our data provides a strong
insight into the market.
This report, for the first time, includes actual values for costs and performance
metrics. You will read that ad costs have risen again this quarter, as have Facebook’s
earnings per ad served. These metrics are important but not as important as the real
value that Facebook traffic and connections bring to our clients. Whilst this report is a
good indication of the Facebook ad market as a whole, it is important to understand
the data in context. Our clients, upon our advice, are now willing to pay more for
quality clicks and fans. Focus is shifting toward measurable engagement and the
difference Social Media connections are making to their bottom line.
TBG Digital is a Social Media specialist helping global brands to advertise and engage
through Facebook and Twitter.
Our team of experts has delivered more than 610 billion impressions and over 60
million social connections with a focus on ROI. We create custom social experiences
that are amplified through targeted media. All our activity is supported by proprietary
technology and benchmarked against a data store of more than one trillion events.
We have offices in London, San Francisco, New York, Chicago, Atlanta, Paris, Hamburg,
Amsterdam, Manila and Sydney.

In this report we measured:

406 BILLION impressions

in more than 190 countries

for 276 clients

from Q2 2011 to Q2 2012

The Cambridge University Psychometrics Centre has verified the results, graphical
illustrations and methodology used in this report based on the data provided by TBG Digital.

© 2012 TBG Digital Page 2

 Major territory analysis

CPM rates increase by 58%

in twelve months
The US sees a 25% increase in one quarter alone

Insights
In TBG Digital’s previous Global Facebook Advertising Report we showed a 41% increase in Cost per
Thousand Impressions (CPM) rates year on year. That gap has increased to a 58% difference in CPM
between Q2 2011 and Q2 2012. In the five major territories analyzed, Germany saw the largest increase
of 31% from quarter to quarter. The United States saw the next highest increase with 25%. Canada’s
CPM rates increased by 21% and the United Kingdom’s CPM rates increased by 7%.

Point of View
CPM rates are a good indication of Facebook’s earnings per Marketplace ad served. The increases are
definitely great news for Facebook as they signify that their inventory continues to work better for them.
Increases in CPM could be attributed to more clients utilizing Sponsored Stories, as these receive higher
CPMs (see page 8), together with the introduction of mobile ads which are also providing Facebook with
higher CPM rates (see page 9). Where Click to Conversion rates are proportionately higher for both
Facebook Page / App based campaigns or ‘Offsite’ (off Facebook) campaigns, this should be of no great
concern to advertisers.

Figures based on 292 billion impressions served in the United States, United Kingdom, Canada, France and Germany from April 2011 to
June 2012 inclusive. CPM values were calculated by dividing the total ad spend by the total number of impressions / 1000.

© 2012 TBG Digital Page 3

 Major territory analysis

Ad engagement increases by 11%

All territories see increase for the first time since Q3 2011

Insights
Click Through Rates (CTR), which indicate how relevant and interesting ads are to users, have increased
by 11% this quarter in the five major territories analyzed. This compares to a 6% decrease last quarter.
Germany saw the greatest leap of 44%. The United States and United Kingdom follow with a 11%
increase and 9% increase respectively. Canada saw an increase of 8% and France an increase of 2%.

Point of View
The launch of Facebook’s mobile ad targeting feature in early June 2012 may have had a positive effect
on Click Through Rates (see page 9). In fact, Click Through Rates in the United States jumped 31%
between May 2012 and June 2012. Also worthy of note is that this data set saw a 7% increase in Social
Impressions (where the ad shown included social context e.g. John Smith likes this) from quarter to
quarter. So, it would appear that Facebook is doing something right here; social context continues to
make a difference to ad engagement and mobile targeting is positively affecting Click Through Rates. The
increase of 11% in engagement could also be partially due to a general improvement in targeting
techniques and ad creative. Please note that Germany’s increase in average CTR can be attributed to a
large increase in the number of Fanning impressions in that territory.

Figures based on 292 billion impressions served in the United States, United Kingdom, Canada, France and Germany between April 2011 to
June 2012 inclusive. CTR values were calculated by dividing the total number of clicks by the total number of impressions.

© 2012 TBG Digital Page 4

 Major territory analysis

Increases in global
ad costs slow to 9%
CPCs hit dollar mark for first time in US and Canada

Insights
TBG Digital’s Global Facebook Advertising Report in Q1 2012 documented a quarterly increase of 23% in
Cost Per Click for the five major territories tested. The comparative increase in Q2 2012 is now 9% and, in
fact, only the United States and Canada have risen. Both countries have CPCs of over $1 for the first time
with the United States increasing by 13% to $1.04 and Canada increasing by 12% to $1.02. The European
countries analyzed saw a reduction in CPCs with the United Kingdom reducing by 2%, Germany reducing
by 9% change and France reducing by 10%.

Point of View
Facebook’s Marketplace advertising is based on an auction bidding model i.e. how much an advertiser is
willing to pay for an impression or click. If, however, the CPC and CTR of an ad are not high enough,
Facebook will not publish it because the ad’s corresponding CPM will not be enough to secure its place on
the page when compared to other ads. Facebook uses CPC and CTR metrics to calculate CPM (what they
earn per ad served). As targeting increases, so does the CPM that Facebook charges. Advertisers therefore
have to increase their bid prices to ensure ads are delivered. More advanced markets such as the US and
Canada are focusing on delivering highly targeted traffic at huge scale, measuring it against basket value,
type of Facebook fan recruited, etc. which is probably why we have seen an increase in CPCs for those
markets. A general increase in competition has also pushed max bid prices up in these territories.

Finally, it should be noted that advertisers who have low daily spend levels are unlikely to experience such
high CPCs. Some of TBG Digital’s clients can spend more than $100,000 per day so CPCs increase as we
compete in the auction to maximize traffic levels.

Figures based on 292 billion impressions served in the United States, United Kingdom, Canada, France and Germany between April 2011 and
June 2012 inclusive. CPC values were calculated by dividing total ad spend by the total number of clicks.

© 2012 TBG Digital Page 5

 Sector analysis

Sector Click Through Rate Top 10

Insights
Entertainment has dropped three places since Q1 2012 to make room for Health, Pets & Animals and Not
for Profit. Health is a regular in the top five but Not for Profit has jumped four places and Pets & Animals
is a new entry.

Point of View
There aren’t many things that people feel more passionately about than charities and pets. This just goes
to show in our Pets & Animals category which has shot into the Top 10 at number 2 and likewise with Not
for Profit as Charities make up the majority of this sector.

Our learnings in these sectors have led us to integrate ‘passion centers’ into our Facebook strategies for
clients. For example, one of our clients is a leading US retailer and has seen engagement rates shoot up
for Page Post Ads that have pet images. Likewise, we designed an app and its supporting media /
engagement campaign around music for an international PC manufacturer as its target market were
passionate about festivals and live events. The campaign saw phenomenal engagement rates.

Figures based on 71 billion impressions served between April 2012 and June 2012 inclusive. CTR values were calculated by dividing the total
number of clicks by the total number of impressions.

© 2012 TBG Digital Page 6

 Sector analysis

Sector Cost per Click Top 10

Insights
Jobs & Education has jumped four places to hit the top spot with an average CPC of $1.42, pushing
Finance and Retail both down one place. Computers & Electronics has overtaken Games and ranks 4th,
while Games trails in 5th position.

Point of View
It should be noted that the top five sectors include clients that direct users off Facebook to their own
web properties and require highly targeted ad campaigns at scale. As we’ve mentioned before, this has
the effect of increasing CPCs. For example, the Jobs & Education sector’s targeting is extremely niche,
matching user demographics and locations to specific job types or courses. Please note that the cost of
delivering traffic is not as important as the quality of traffic that is delivered since better targeting
should increase conversion rates proportionately. All activity should deliver an appropriate return on
investment.

Figures based on 71 billion impressions served between April 2012 and June 2012 inclusive. CPC values were calculated by dividing total ad
spend by the total number of clicks.

© 2012 TBG Digital Page 7

 Sponsored Stories analysis

Sponsored Story ads are 53% more

engaging than standard ads
Page Like ad

Page Like Story ad

Insights
A previous study by TBG Digital in April 2011 investigated the differences between standard ads and the
then new Sponsored Stories. The analysis of 2 billion impressions over a period of 10 days for 3 clients
found that Sponsored Stories received a 46% higher Click Through Rate, a 20% lower Cost per Click and 18%
lower Cost per Fan than Facebook standard ASU ads. Multiple Sponsored Story types were tested.

For this report, we analyzed 13.8 billion impressions delivered in Q1 and Q2 2012 using Page Like ads and
Page Like Story ads. Both ad formats are used to increase the number of fans of a Facebook Page. They
both serve the same purpose but the Page Like Story ads do not include tailored ad copy and are only shown
when the user’s friend has liked the Page being advertised. This analysis is therefore comparing the same
function (Page Likes) against a Sponsored Story and standard ad format.

The average Click Through Rates of the Page Like Story ads were 53% more than that of the Page Like ads
(an increase of 15% since the previous study). Cost per Fan also improved with this data showing 39%
cheaper acquisition costs for Page Like Story ads. However, this analysis saw a 6% higher CPC and 62%
higher CPM for Sponsored Stories, compared to standard ads.

Point of View
These findings are very positive for Facebook and advertisers alike as it shows the Sponsored Story ad
format is even more engaging than our previous study indicated and, even though ad costs and Facebook’s
earnings per ad delivered have increased, fan acquisition costs are even cheaper than before. The increases
in ad costs are probably due to more competition on the platform and more sophisticated targeting on
Sponsored Stories as we demand better quality for our clients.
Figures based on 13.8 billion impressions served between January 2012 and June 2012 inclusive.

© 2012 TBG Digital Page 8

 Sponsored Stories analysis

Facebook mobile ads are over 4x

more engaging than Twitter ads
and have a 14x higher CTR than Facebook desktop ads

Insights
Facebook’s recently released Newsfeed targeting options are delivering significantly better Click Through
Rates, with mobile ads receiving CTRs 14 times that of ‘Desktop’ ads, on average. ‘Desktop’, which
includes Newsfeed ads and the ads on Facebook’s right hand side panel, saw the lowest CTR at 0.083%.
For Desktop Newsfeed ads only, the CTR was more than seven times higher at 0.588%. By far the most
impressive was Mobile Newsfeed which received an average CTR of 1.140%.

In a recent TBG study of 24 million Twitter impressions across multiple clients and sectors we saw an
average CTR of 0.266% which would indicate that Facebook Mobile ad CTR is four times more than that of
Twitter.

Point of View
New ad types, whether on Facebook or anywhere on the web, tend to generate a high CTR initially that
can decline over time. However, we also know from our Twitter studies that mobile ad placements are
highly engaging and the fact that Facebook have opened up this precise targeting can only be a good
thing. We believe that Facebook’s mobile ads are more engaging than Twitter’s ads because they can be
targeted demographically and are Sponsored Stories so include a social endorsement.

Mobile Newsfeed targeting also suggests great earning potential for Facebook which received $9.86 for
every thousand mobile ads served (CPM), 13 times more than it received for ‘Desktop’ ads. The high CPM
does not3 disadvantage advertisers. Mobile Newsfeed ad placements saw savings of 29% for Cost per Fan
when compared to ‘Desktop’ ads. Facebook is earning money and brands are making savings. A win-win
situation.

Figures based on 278 million impressions served in June 2012.

© 2012 TBG Digital Page 9

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