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5 Major Takeaways from Facebook’s Q1 Performance

Published: April 21, 2016

Author: Brad O'Brien

We’re about to release our findings from Facebook’s Q1 data. If you’d like the VERY abbreviated version: mobile, spend, performance, Instagram: boom.
Oh, you’d like to hear more? Here are our major takeaways (and stay tuned for a full report in coming days):

1)    Advertisers are spending more on Facebook.

This isn’t breaking news, but the level of increase is. We’re well past the point where tons of new companies are choosing to adopt the platform (although Instagram is seeing that phenomenon), but even companies that have been advertising on Facebook for years are racheting up spend. Our clients showed, on average, a 101% increase in spend from Q1 2015 to Q1 2016, thanks in part to a 98% average increase in cost per impression and a 12% increase in cost per click.

2)    Performance keeps trending up.

There’s a reason advertisers are spending more on Facebook: it’s working. Even with the CPM and CPC increases, cost per acquisition was down 15% year over year. Targeting continues to get better, advertisers are becoming savvier at using the platform for performance advertising, and user behavior is that much more adjusted to seeing ads and taking action on them from Facebook – all evidenced by a 27% year-over-year increase in click-through rate.

3)    It’s hard to overstate the rise of mobile.

Our clients spent an average of 53% on mobile vs. desktop in Q1 2015. They spent an average of 80% on mobile in Q1 2016. That’s not a trend; it’s a sea change. Add the fact that mobile traffic is generally cheaper than desktop traffic, and the jump in per-advertiser spend becomes even more dramatic.

4)    Lead gen and video ads were huge growth drivers.

Neither lead gen nor video ads debuted last quarter, but performance (and spend) for each ad type accounted for a ton of growth in 2016, thanks in large part to feature improvements – including CRM integration, desktop placements, and video format for lead gen ads and enhanced segmentation and captioning available for video ads.

5)    Advertisers are loving Instagram – and it’s costing them.

Amongst 3Q Digital’s portfolio of clients, there was a shift towards Instagram QoQ, representing a 215% higher investment in the platform. As more advertisers flooded the space, CPMs rose 92% and CPCs a whopping 436% QoQ. Instagram was a very inexpensive advertising platform in Q4, since it just opened its doors to all advertisers. Now, we see costs very similar to, and sometimes even more expensive than, those of Facebook’s mobile News Feed.
As for performance, CPAs more than doubled quarter over quarter as competition soared. Expect a slew of targeting and feature improvements over the coming months to make the platform more ROI-friendly for all adopters.

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