With an increasingly robust international user base, and more direct response-type ad products available than at any point in its history, Facebook has increasingly become a go-to channel for advertisers directly selling physical products. Fashion retailers, flash-sale sites and subscription services all have significant presences on the site.
In this environment, marketers not only have had to keep up with creative best practices to stay ahead of an increasingly wider array of competitors, they also have needed to keep abreast of the platform’s technology changes that are designed to improve performance.
Already, companies like Wayfair (disclosure: client) treat their advertising as a science, looking for any and all technological advantages to make the best use of their customer data for cost-effectively driving purchases.
My work at Nanigans involves studying performance and ad spend data across the hundreds of brands that use our advertising automation software — many of which are among the largest e-commerce advertisers, both domestically and internationally. Recently, both the data and signals from Facebook have pointed to several important trends e-commerce marketers need to take into account as they continue to shape their 2016 advertising strategy.
1. Facebook mobile, not desktop, now a primary channel for e-commerce
Mobile, assuredly, is not new. What is new is the e-commerce sector’s much more vigorous spend levels on the format.
In prior years, desktop was an old gift that kept on giving to e-commerce advertisers — most noticeably in North America, where desktop penetration is relatively high. Sure, click-through rates were lower, but impressions were substantially less expensive (registration required), and purchase rates were slightly higher.
Yet these trends no longer hold true in the first quarter of 2016.
In 2014, North American e-commerce desktop CPMs were more than double comparative mobile CPMs. In this most recent quarter, that difference has shrunk to roughly 40 percent. Meanwhile, North American mobile e-commerce CTRs are now more than 200 percent higher than desktop figures, and large advertisers are seeing mobile purchase rates catch up or surpass those of desktop.
Combined with mobile-heavy international markets and the overall consumer shift to mobile, 60 percent of Facebook e-commerce ad spend was mobile-targeted in Q1 2016 — a 15-percent jump from the prior quarter.
2. Dynamic product ads helping to drive increased returns
Dynamic product ads (DPA) are arguably among the highest-profile new ad units from Facebook — allowing for new use cases like the retargeting of users with related products or taking a second crack at converting a user who had previously abandoned their cart on the website. These units have been a hit, particularly with retailers who deal with a variety of products, as they can automatically populate the “carousel-like” unit with personalized, available products.
While not appropriate for every e-commerce business, advertisers that have adopted DPA have seen noticeable improvements in performance compared with their ads using website custom audience (WCA) — a legacy means of targeting specific users on Facebook.
3. FAN expansion creates opportunity for e-commerce advertisers
Back in January 2016, Facebook announced that its Audience Network product — which allows for Facebook native ads to be placed on a wide variety of mobile apps — was dramatically expanding to access mobile Web inventory.
Unlike gaming advertisers who turned on Audience Network at fairly substantial rates, e-commerce advertisers have been slower to adopt the product. This latest expansion should be an impetus for that latter group of marketers to test out Audience Network.
Outside of the obvious reach benefits, Facebook has thus far done a great job in coaxing similar, if not better, performance with these outside inventory sources, as seen in our 2015 study on a variety of gaming advertisers.
4. Video continuing to make inroads
Much like Audience Network, direct response-focused e-commerce advertisers initially lagged behind their gaming counterparts when it came to deploying video ads on Facebook. However, with video ads helping boost conversion rates and return on ad spend, while also minimizing overall CPAs for e-commerce advertisers, the format is one of the fastest-growing for the vertical.
Moving forward, expect Facebook to continue to maximize its ability to deliver video inventory, both domestically and internationally. In Nanigans’ Q1 2016 benchmark report (registration required), the share of mobile spend going to video inventory increased by double-digit percentages quarter over quarter, and Facebook itself has harped on the promise of video on many occasions.
Not every e-commerce advertiser will necessarily need to take advantage of all of these trends. However, in the interest of always having an eye on improving performance, all e-commerce advertisers should at least look into testing new approaches.
In the case of Audience Network, video and DPA in particular, there is a possibility to extract a lot more value out of your existing Facebook ad budgets.
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