Archives

Categories

Facebook monetises at 20% of the online average

There are articles on Techcrunch and AdAge this morning reporting the following estimates for Facebook ad revenues:

image

Beyond the fantastic growth the interesting thing about this for me is reflecting on their 4.7% market share by revenue last year in the context of reports last November that their share of ad impressions was around 1 in 4, or 25%.  Putting these numbers together tells us that Facebook’s is able to sell impressions at around 20% of the average for all online media in the US.

It is well known that social media (or more broadly communication services) doesn’t monetise as well as many content sites, particularly premium content – this data gives us a benchmark for the difference.

There is another factor worth mentioning here, and that is Facebook’s sales model.  Around two thirds of their sales come via their self serve system, largely from SMEs, and one third from large brands via direct sales.  Most social media sites don’t have the scale to operate a self serve system (I believe you need enough scale that your brand is strong enough to pull in SMEs like a magnet) and the sales model is a mix of premium sales and sales on remnant exchanges.  I haven’t seen the data but I suspect that Facebook does better via its self serve system than it would pushing the inventory out to Right Media or Advertising.com, which suggests that other social media sites will be doing well if they match Facebook’s 20% of the average.

A couple of qualifications on the data (which might cancel each other out):

  • Facebook accounted for 25% of ad impressions in November, but they were growing faster than the market and were probably below 25% for the whole year, which implies they might well be monetising each impression at slightly better than 20% of the average
  • Facebook doesn’t clutter its pages with ads and my guess is that they have fewer ad impressions per page served than average, which implies the monetisation per page view might be slightly worse than 20% of the average
Enhanced by Zemanta
  • http://blog.alexguest.me Alex Guest

    Hi Nic

    Interesting observation that you need scale to operate a self-serve system. On the flip-side, I suspect that without a very user-friendly self-serve system, Facebook would be hard-pressed to fill its inventory and monetise at anything like the rate it does. Although pages don’t appear to be cluttered, you can get up to four ads on a page. Four years ago, it was one or two. So the number of impressions has grown exponentially. During that time, Facebook has attracted vastly more users, pageviews per user and ads per pageview.

  • http://www.theequitykicker.com brisbourne

    Interesting point – I guess the scale argument goes both ways. You need to scale to operate a self service system and if you have scale then self service might be only way to go. And you are right that it needs to be a user friendly and powerful self service system.