Facebook Ad Budget Growth Outpaces Paid Search

February 7, 2012

kenshoo-facebook-ad-growth-vs-paid-search-q3-4-2011.jpgFacebook ad budgets grew 109% month-over-month in Q4 2011, according to February 2012 data from Kenshoo, which analyzed 100 billion ads delivered on Facebook worldwide by its customers through Kenshoo Social. And while the company notes that some of the growth can be attributed to seasonality, the increase in global Facebook ad budgets compared well to search channels like Google, Bing, and Yahoo which, in aggregate, saw paid search ad budget growth of 27% globally on a quarter-over-quarter basis.

According to Facebook’s February 2012 IPO prospectus, its advertising revenue reached $3.15 billion in 2011, representing an increase of almost 69% from $1.87 billion in 2010, and accounting for 85% of its $3.71 billion in 2011 revenues.

Impressions, Clicks Also Rise

Kenshoo found that Facebook ads made strides in other metrics, too. Ad impressions grew by 47% quarter-over-quarter in Q4 2011, while clicks increased by more than double that rate (105%), indicating greater consumer acceptance of the ads. In fact, consumers clicked on ads in Q4 at a rate that was 27% higher than in Q3.

Search to Remain Dominant US Spend, Though

The bulk of US online ad spending is projected to remain with search, though, according to February 2012 estimates from eMarketer. The company projects the share of US online ad spending held by search to be 49.4% this year, dipping slightly to 46.9% in 2016 as online video ad spending rises from 7.9% to 15% in that timeframe.

In terms of growth rates, eMarketer predicts search ad spend growth to be 27% this year, before falling to 17.2% in 2013, and further down to 6.3% in 2016.

Mobile Search Surges in January

Meanwhile, mobile search will be the driving force behind 2012 search growth, according to February analysis from Performics. Mobile paid search accounted for 15.9% of all paid search impressions (computer and mobile) among its retailer clients in January, with tablets holding 40% share of those impressions. In fact, based on recent trends, Performics insight suggests that mobile impression share could rise to 20% over the next 6 months.

Performics data also shows that mobile paid search clicks continue to gain share, reaching 21.5% of all clicks in January, with tablets (39.6%) again a significant contributor. Considering the release of the iPad 3 and new Android tablets, the company predicts that mobile click share could rise to as much as 28% of all search clicks over the next 6 months.

Other Findings:

  • According to Performics, as of January 2012, mobile click-through rates (CTR) were 45% higher than computer CTRs.
  • Overall mobile costs per click (CPCs) are much lower than computer CPCs, though, with tablet CPCs around 20% less than desktop, and smartphone CPCs about 50% less.

About the Data: Growth in paid search advertising was culled from a collection of Kenshoo Enterprise and Kenshoo Local customers across verticals, covering more than 400 billion global paid search ad impressions on search engines like Google, Bing, Yahoo, AOL, Baidu, and Yandex.

eMarketer benchmarks its US online spending projections against the IAB/PwC data, for which the last full year measured was 2010.

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