Ecommerce brands boost Facebook ad spend as CPMs, CPCs rise but CTRs dip

If the third quarter is a warmup exercise for ecommerce advertisers plotting their fourth-quarter spending spree, then it should be a happy holiday season for Facebook.

Ecommerce advertisers, on average, spent 20 percent more money on Facebook ads in the third quarter of 2017 than they did in the same period last year, according to a report published on Tuesday by Nanigans, a company that provides software for brands to automate their Facebook ad buys and that is a part of Facebook’s Marketing Developers program. A Nanigans spokesperson declined to say how many advertisers were included in the study.

While ecommerce brands are pushing more money into the social network in general, they are particularly purchasing more mobile video ads and retargeted ads from Facebook. These marketers spent, on average, 40 percent more money on Facebook’s mobile video ads in Q3 2017 than in Q3 2016. And the share of their ad spend that went to Facebook’s Dynamic Ads — its product catalog-promoting ad format that retargets the people who browsed a brand’s site or app — increased by 284 percent year over year.

While the share of ecommerce brands’ budgets going to Dynamic Ads grew, it’s unclear how big (or small) a piece of those budgets the ad format accounts for. The Nanigans spokesperson declined to say what was the actual share of ecommerce brands’ budgets spent on Dynamic Ads.

Interestingly, ecommerce advertisers increased their spending on Facebook despite an increase in the social network’s ad rates and a decrease in its ads’ performance for these brands.

Ecommerce advertisers typically paid $8.40 for every thousand times their ads were served across Facebook and its Audience Network ad network of third-party sites and apps (Nanigans’ study did not include Instagram campaigns). That’s a 69 percent higher CPM than ecommerce brands paid a year ago and corresponds with a 57 percent year-over-year increase among all advertisers to $9.31.

While ecommerce brands paid a premium for impressions, clicks were significantly cheaper at $0.46 on average. That CPC has similarly swelled over the past year, but ecommerce brands also pay less money per click than the average Facebook advertiser that paid $0.55 per click in Q3 2017, a 54 percent increase year over year.

At the same time Facebook’s ad rates have risen, its ads’ performance has dipped. In Q3 2017, people clicked on ecommerce brands’ Facebook ads about 1.84 percent of the time, down 4 percent compared to a year ago. However, that’s still a better click-through rate than the average advertiser saw on Facebook. In Q3, Facebook’s worldwide click-through rate averaged 1.69 percent, up 2 percent compared to a year ago but down 4 percent compared to the previous quarter. That marked the first time Facebook’s average global click-through rate declined from Q2 to Q3, according to Nanigans, though the company’s spokesperson said that shift “is unlikely to be indicative of a larger directional change in the market.”