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718 SW Alder St., Suite 200   www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                               1

	
  
Executive Summary
After Facebook released the ticker, timeline, and other changes, some brands
complained of a decline in organic impressions. Where is this occurring, and
how has the effectiveness of organic impressions trended against paid efforts?
Our research spans data from a 7-month time period from June 1, 2011 to
December 31, 2011:

                           •                          11,365 pages
                           •                          5,744,550 admin and user posts
                           •                          76,202,654 Facebook users spread over 75 countries
                           •                          91,009,142,252 organic impressions
                           •                          27,969,233,010 paid impressions
                           •                          1,142,652,653 viral impressions.
                           •                          120,111,027,915 total impressions

This is a continuation of BlitzLocal research performed in January 20111, now
with six times as much data and correlating organic data. Limitations of this
study are the exclusion of data from applications (“apps”) and open graph
objects, which likely have an effect on organic impressions.

According to our data, the following factors affect organic impressions:

                           •                          Engagement – Engagement affects a pages EdgeRank and how often
                                                      Facebook will show posts.
                           •                          Increased competition in the newsfeed – More objects in the newsfeed
                                                      means fewer people are seeing brand content.
                           •                          Content type – Some content types are more engaging.
                           •                          Post length – Post length affects how many people engage with a post.
                           •                          Post decay – Post timing is important as posts only live in the newsfeed
                                                      for so long.
                           •                          Sales related posts – Sales related posts drive less engagement and
                                                      impressions.

From our data we drew the following conclusions:
1.) As more users generate more content via more apps and devices, brand
messages get drowned out in the noise. Organic impressions per page are
down 33% due to a decrease in frequency, not reach. We did not detect any
adjustment by Facebook to force brands to have to advertise to reach their
users: there's just more "stuff" and Facebook has to apply a higher power filter.

2.) Content that used to live for a day, may now live minutes in a user's
news feed. This concept is evidenced by decreased frequency of exposure as
well as the "half life" of interactions. Facebook created several forms of

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
1	
  http://www.allfacebook.com/surprise-­‐timeliness-­‐boosts-­‐facebook-­‐engagement-­‐2011-­‐06	
  

718 SW Alder St., Suite 200                                                                                                                                         www.blitzlocal.com                                             www.facebook.com/blitzlocal
Portland, OR 97205                                                                                                                                                                                                                                               2

	
  
"Sponsored Stories", ad mechanisms, to directly combat the "EdgeRank"
problem (competing for attention) and the time window problem. These ads
are effective in growing fans and amplifying the brand's message. Facebook
metrics greatly underestimate the power of word of mouth.

3.) While brands with paid advertising saw positive benefits in fan growth
and organic exposure, the cost-effectiveness of Facebook ads declined,
even as brands advertised more heavily.




718 SW Alder St., Suite 200   www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                               3

	
  
Section 1: Organic Impressions are Declining

                                                                              From July to December 2011 organic coverage
                                             Highlights	
                     (number of organic impressions per 1,000 fans)
                                                                              decreased 33%, from 836.1 to 608.
• Organic	
  Coverage	
  is	
  down	
  
  33%	
  from	
  July,	
  while	
  paid	
  
                              Some social mechanics to understand: Brands can
  Coverage	
  was	
  up	
  141%	
  in	
  
                              increase their impressions by growing their reach
  November	
  and	
  121%	
  in	
  
                              (the number of fans that see their messages) or
  December.	
                 their frequency (how many times, on average, a
                              fan sees these messages). Frequency is down
• Post	
  decay,	
  increasing	
  
  competition	
  in	
  the	
  39.1%, while reach is up 12.5%, providing a net
                              effect of a 31.5% decrease in impressions.
  newsfeed,	
  sales	
  oriented	
  
                              Impressions per 1,000 fans are the product of reach
  posts,	
  and	
  changes	
  in	
  
                              times frequency divided by total fans. We saw that
  content	
  type	
  may	
  have	
  
                              the decline in frequency pushed impressions down
  contributed	
  to	
  a	
  decline	
  
                              by 34.5%, while reach pushed impressions up by
  in	
  engagement,	
  but	
  we	
  
                              less than 1.1% (Figure 1.1). In this same period,
  can’t	
  conclusively	
  make	
  
  this	
  assertion.	
        there was a spike in paid coverage driven primarily
                              by the holiday season resulting in 934.3 paid
                              impressions per 1,000 fans in Novght,ember (a
   141% increase from October) and 691.9 paid impressions per 1,000 fans in
   December (a 121% increase from October).




                                                               Reach                           Frequency Declines, but Reach Increases
                                                                                                                         Figure 1.1
                                           100                                                                                                    12
          Unique Users/1,000 Impressions




                                                                                                                                                       Total Impressions per User




                                            80                                                                                                    10

                                                                                                                                                  8
                                            60
                                                                 Correlation=-­‐0.79	
                                                            6
                                            40
                                                                                                                                                  4
                                            20                                                                                                    2

                                                                                                                                                  0
                                                  July, 2011   August, 2011     September, 2011   October, 2011   November, 2011 December, 2011




   718 SW Alder St., Suite 200                                 www.blitzlocal.com          www.facebook.com/blitzlocal
   Portland, OR 97205                                                                                                                                                               4

   	
  
There is a -0.56 correlation between organic and paid impressions (Figure 1.2).
We expect this correlation to get stronger as Facebook rolls out ads in the
newsfeed, which will squeeze out organic impressions.




Organic Impressions: Impressions in the news feed, ticker, and from fans visiting a brands page.
Paid Impressions: Number of ad impressions.



Why the Drop in Organic Coverage?

Engagement may be decreasing: Our analysis should show the decrease in
engagement rate to be seasonal, but without a full year of data on the new
metrics this cannot be judged conclusively. While engagement rate isn’t
definitively down, impressions are down – meaning that Facebook is better at
filtering users' news feeds. In other words, Facebook is showing fewer
impressions but still getting the same level of feedback.

Facebook’s EdgeRank rewards pages in the news feed based on how many
interactions they receive. Interactions are the number of likes, posts, and
comments a page has. For pages with more than 100,000 fans, engagement
declined 21% from 3.8% to 3% between October and December 2011. For
pages with fewer than 100,000 fans, engagement also fell 26.0% from 16.0%
to 11.8% (Figure 1.3). In this same period, active users fell by 27.3%.




718 SW Alder St., Suite 200   www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                                                 5

	
  
Has Engagement Rate By Month Declined?
                                                   Less Than 100,000 Fans                                        Figure 1.3
                                                   100,000+ Fans


       December, 2011                                                                                                       Correlation=0.57


       November, 2011

                   October, 2011

   September, 2011

                          August, 2011

                                            July, 2011

                                       June, 2011

                                                         0%    2%       4%         6%      8%      10%     12%        14%     16%    18%       20%

Engagement Rate: Total Interactions/fan count over a 30 period.


A shift towards sales-related posts in October, November, and December was a
possible contributing factor to the drop in engagement and increase in fan
removals. Matching words like “buy,” “sale,” and “purchase”, we saw an 11%
increase in sales-related posting in October, a 26.5% increase in November, and
a 13.2% increase in December (Figure 1.4).

                                                  Sales Related Posts Rise in October, November, and
                                                                       December
                                            7%                                 Figure 1.4
       Percentage of Posts That Are Sales




                                            6%

                                            5%
                   Related




                                            4%

                                            3%

                                            2%

                                            1%

                                            0%
                                                 June, 2011   July, 2011 August, 2011 September,      October,    November,     December,
                                                                                         2011          2011         2011          2011


Another possible contribution to the decrease in engagement was an increase
in page sizes. There is a -0.12 correlation between page size and engagement
718 SW Alder St., Suite 200                                   www.blitzlocal.com        www.facebook.com/blitzlocal
Portland, OR 97205                                                                                                                                   6

	
  
(Figure 1.4). Despite the common perception that engagement tends to
         decline as page size increases, the low value of this correlation suggests a weak
         relationship between page size and engagement. It is possible that the first
         fans of a page are the most loyal. When the page gains mainstream presence it
         may have a more general audience, contributing to lower engagement.

            3.0                                            Larger Pages Have Slightly Less Engagement
                                                                                       Figure 1.5
            2.5
            2.0
                                                                                     Correlation=-­‐0.12	
  
            1.5
            1.0
            0.5
            0.0




         The data does not conclusively say engagement is down; rather it has gone up
         in the Fall and down in the Winter. Fourth quarter sales-oriented messaging
         may account for the drop, but without year-over-year data we are unable to
         confirm or disprove this hypothesis. If engagement is steady in light of
         impressions dropping, it may be a sign that Facebook's algorithms are doing a
         better job in selecting what to show users. Clearly there is a lot more content,
         but Facebook's filtering mechanism has improved.

         It is interesting to note that despite a decrease in engagement rate, there are
         more people than ever talking about brands. Between July and December 2011
         there has been a 15.3% increase in People Are Talking About This (Figure 1.6).
         This could indicate a broader group of active users are interacting with pages,
         but less frequently.

                                             Different	
  Angles	
  to	
  Measure	
  Engagement	
  

                People	
  Are	
  Talking	
  About	
  This:	
  Total	
  number	
  of	
  people	
  who	
  have	
  had	
  a	
  brand-­‐
                related	
  action	
  show	
  up	
  in	
  their	
  newsfeed.	
  
                Coverage:	
  Total	
  number	
  of	
  impressions	
  per	
  1,000	
  fans.	
  	
  	
  
                Unique	
  Reach:	
  Total	
  number	
  of	
  people	
  seeing	
  impressions.	
  
                Engagement	
  Rate:	
  Total	
  interactions	
  over	
  a	
  30-­‐day	
  divided	
  by	
  fan	
  count	
  	
  
                Feedback	
  Rate:	
  Percent	
  of	
  people	
  who	
  saw	
  a	
  post	
  who	
  commented	
  or	
  liked.	
  
                      	
  
         Note: Facebook’s web insights provides up to 89 days worth of data, so brands must store history
da	
     themselves, use a 3rd party analytics like BlitzMetrics, or lose it forever.




         718 SW Alder St., Suite 200          www.blitzlocal.com          www.facebook.com/blitzlocal
         Portland, OR 97205                                                                                                            7

         	
  
More People Are Talking About Brands
                                                                                                                                                                                                                                                           Figure 1.6
           People Talking Are About This/1,000      8.2
                                                    8.0
                                                    7.8
                                                    7.6
                                                    7.4
                           Fans




                                                    7.2
                                                    7.0
                                                    6.8
                                                    6.6
                                                    6.4
                                                    6.2
                                                                                                    July,2011 August, 2011 September,                                                                                                          October,          November,   December,
                                                                                                                              2011                                                                                                              2011               2011        2011




Answering the Engagement Rate Question: Regardless of whether engagement
rate has declined or not, People are Talking About and engagement rates are
low no matter how you cut it. This is likely less about Facebook algorithmically
harming brands, and more about brands focusing on growing fans for the last
couple of years and only starting to focus on engagement recently. Year after
year we have seen a shift in attitudes and priorities of companies in regards to
Social Media. In 2009, 2010, and 2011 most companies fearfully expanded
social budgets in order to not be left behind by competitors.2 Companies who
planned social budgets for 2012 were looking heavily towards measurement and
engagement.3

Newsfeed Competition: Facebook cites 900,000,000 objects (events, pages,
community pages and groups) that users can interact with on Facebook.4 In
addition, there are 36.2 million user actions per hour showing up in the news
feed. 5

More and more content are competing for visibility, appearing in the available
impressions in a user’s news feed. Similarly, ranking on Google is more
challenging today than eight years ago, given that more pages are
competing for the first page of search results.



	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
2
     http://www.emarketer.com/blog/index.php/marketers-spending-social-media-wrong-reasons/
3
     http://www.emarketer.com/Article.aspx?R=1008667face
4	
  https://www.facebook.com/press/info.php?statistics	
  
5	
  http://www.jeffbullas.com/2011/04/28/50-­‐fascinating-­‐facebook-­‐facts-­‐and-­‐figures/	
  

718 SW Alder St., Suite 200                                                                                                                                         www.blitzlocal.com                                             www.facebook.com/blitzlocal
Portland, OR 97205                                                                                                                                                                                                                                                                       8

	
  
In addition to the amount of content generated on the Facebook wall each day,
we see another trend emerge from the data that could reduce organic
impressions. From October to December, the overall time spent on Facebook
dropped 15%, from 28:26 minutes to 24:43.6 With users spending less time on
Facebook, and more content elements competing for display, the natural
product of these two trends was a decline in organic impressions.

Post length could easily affect the number of organic impressions. On average
page posts are 157.7 characters, while user posts are 121.5 characters and
mobile posts average 104.9 characters. Posts between 140 and 159 characters
long are, on average, 13.3% less engaging than posts between 120 and 139
characters and 9% less engaging than posts between 100-119 characters. What
this demonstrates, is that the content many brands are competing against for a
spot in the news feed, is more engaging and readable (Figure 1.7).




                                                                                                                                                                                                                                        Longer Posts Perform Poorly
                                                             Questions                                                                                           Non Questions                                                                        Figure 1.7


                              160-179


                              140-159
       Character Length




                              120-139


                              100-119


                                              80-99


                                              60-79


                                                                          0.000%                                                                                                 0.005%                                            0.010%          0.015%          0.020%   0.025%
                                                                                                                                                                                                                                       Engagement




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
6	
  	
  http://www.alexa.com/siteinfo/facebook.com#	
  

	
  
718 SW Alder St., Suite 200                                                                                                                                         www.blitzlocal.com                                               www.facebook.com/blitzlocal
Portland, OR 97205                                                                                                                                                                                                                                                                   9

	
  
Changes in Content Type are Hurting Total Coverage: Some types of content
generate more impressions than other types. For example, status posts have
weaker coverage on average, at 29.1% for pages with less than 100,000 fans
and 54.8% for pages with more than 100,000 fans (Figure 1.8).

We also see link coverage is decreasing, while status coverage is increasing. A
post with a link in it is more likely to be a sales-oriented post, especially in
December. If true, then the increase in link posts may very well tie with
engagement dropping in December.

                                                                 Brands Are Posting Weaker Content
                              Status         Videos                               Figure 1.8
                              Photos         Links


       December, 2011

       November, 2011

         October, 2011

       September, 2011

          August, 2011

             July, 2011

            June, 2011

                                       100     200         300       400       500      600    700   800
                                                      Organic Impressions/1,000 Fans

                                                                                                                	
  

In the last 6 months there was an increase in the number of status posts. In
June, 43% of posts were status updates. At the same time the number of links
per month decreased 57%. On average, links have some of the highest
coverage, at 77% for pages with less than 100,000 fans and 69% for pages with
more than 100,000 fans (Figure 1.9). The decline in links and increase in
status posts affected overall organic impressions. Posting weaker
performing content ensured that fewer fans would see it.




718 SW Alder St., Suite 200     www.blitzlocal.com        www.facebook.com/blitzlocal
Portland, OR 97205                                                                                         10

	
  
Pages With Less than 100,000 Fans         Post Type Affects Organic Coverage
                                                    Pages With 100,000+ Fans                                      Figure 1.9


                                               Video



                                                Link



                                           Question



                                               Photo



                                               Status


                                                        0    100       200       300        400        500        600      700   800   900
                                                                                 Organic Impressions/1,000 Fans

Post Decay: Our analysis shows that 70% of interactions occur within 60
minutes of a post. In November and December of 2011 brands posted an
average of 1.19 and 1.17 times a day, respectively (Figure 1.9). In November
70% of interactions, on average, occurred within 71.4 minutes, and in
December 70% of interactions occurred within 70.2 minutes. Brands should be
posting more to reap the benefits of potentially missed interactions.

                                                                    Brands Are Posting More Often
                                                                             Figure 1.9
                                         1.4
       Average Number of Posts Per Day




                                         1.2

                                         1.0

                                         0.8

                                         0.6

                                         0.4

                                         0.2

                                         0.0
                                               June, 2011 July, 2011      August,    September, October, November, December,
                                                                           2011         2011     2011      2011      2011



718 SW Alder St., Suite 200                                 www.blitzlocal.com      www.facebook.com/blitzlocal
Portland, OR 97205                                                                                                                     11

	
  
Section 2: Paid Impressions Help

                                                         Over the last 6 months 82% of impressions were
                       Highlights	
                      organic, 17% were paid, and 1% were viral (Figure
                                                         2.1). Even if total paid impressions were to double,
         • 82%	
  of	
  impressions	
  are	
             it would not have much of an effect on news feed
           organic	
  and	
  17%	
  are	
  paid.	
       competition. Other factors such as the number of ad
         • 77%	
  of	
  pages	
  are	
  not	
            slots (which Facebook recently raised to 7) could
           advertising.	
                                also increase perceived competitiveness.
         • Large	
  pages	
  that	
  
           advertise	
  are	
  42.9%	
  more	
           Viral impressions have remained a small percentage
           engaging	
  than	
  pages	
  that	
           of total impressions. Over the last 6 months, their
           do	
  not.	
  	
  Small	
  pages	
  are	
     share has decreased 82%, from an average of 3.3% in
           21.2%	
  more	
  engaging.	
                  July to an average of .6% in December. When
                                                         compared with overall organic impressions, there is
         • There	
  is	
  a	
  strong	
  positive	
  
                                                         a 0.69 correlation. Viral impressions are dependent
           correlation	
  between	
  paid	
  
                                                         on fans seeing posts and sharing them. Because the
           impressions	
  and	
                          overall number organic impressions decreased in
           engagement	
  rate.	
                         November and December, the viral impressions
da	
                                                     decreased as well.

              A sizeable amount of what is listed as organic might be considered viral, too.
              When we run ads we see that the organic and viral components increase. In the
              same way, when we run TV ads, we see more people searching for the brand
              name in Google. Not detailed in this research is the impact that Facebook
              campaigns, organic or paid, have on other channels. The true incremental
              boost of any social marketing effort is not attributable at the user level, so we
              have to correlate traffic by channel.




              718 SW Alder St., Suite 200      www.blitzlocal.com   www.facebook.com/blitzlocal
              Portland, OR 97205                                                                           12

              	
  
The Majority of Impressions Are Organic
                                      Figure 2.1                           Viral Impressions,
                                                                                   1%
                                                                                    Paid Impressions,
                                                                                           17%




                                  Organic
                              Impressions, 82%




Only 23% of pages advertised on Facebook in the last 6 months, with the
remainder relying on organic fan growth and impressions (Figure 2.2).
Considering that only 17% of impressions are paid, this suggests that many
brands advertise only on a spot basis. Companies are running campaign-
oriented ads, as opposed to persistent word-of-mouth ads, which Facebook
recommends. In 2012, we will see whether Facebook can wean marketers from
a start/stop mentality, as is the case with most forms of advertising, and shift
to see Facebook ads as organic amplification with no end date.

                              Room for Growth: 3 in 4 Brands Are Not Advertising Yet
                                                                Figure 2.2
                                                                                    Brands
                                                                                Advertising, 23%




                            Brands Not
                          Advertising, 77%




718 SW Alder St., Suite 200      www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                                                      13

	
  
Pages with over 100,000 fans that have advertised in the last six months saw a
boost in engagement rate and organic power. There is a positive correlation of
0.47 between the number of paid impressions and engagement rate. Overall,
pages advertising with more than 100,000 fans had a 42.9% higher
engagement rate, while pages advertising with less than 100,000 fans had a
21.2% higher engagement rate than those not advertising (Figure 2.3).




                      Less Than 100,000 Fans             Advertise To Get More Engagement
                                                                          Figure 2.3




          Pages That Are Advertising




       Pages That Are Not Advertising




                                        0%     2%   4%     6%     8%     10%      12%   14%   16%   18%   20%



Interestingly, the effectiveness of advertising appears to be mostly linear.
There is a 0.70 correlation between paid Impressions per 1,000 fans and
engagement rate (Figure 2.4). The more a brand spends, the higher their
engagement. We should note that while paid activity does not affect organic
rankings in search engines, this does not hold true in Facebook.




718 SW Alder St., Suite 200   www.blitzlocal.com    www.facebook.com/blitzlocal
Portland, OR 97205                                                                                          14

	
  
Better paid Coverage Equals Better Engagement
                                                                                               Figure 2.4
                         14%

                         12%

                         10%
       Engagement Rate




                         8%

                         6%

                                                                                                Correlation=0.89	
  
                         4%

                         2%

                         0%
                               0      100     200      300        400        500       600       700       800         900   1,000
                                                         Paid Impressions Per 1,000 Fans


Pages that advertise get a 373% increase in organic impressions. This brings us
back to an earlier point: the way Facebook defines viral traffic understates the
power of word of mouth.




                          Share of Impressions For Pages That Advertise
                                                         Figure 2.5                  Viral Impressions,
                                                                                            0.4%




                                                                                                          Paid Impressions,
                                                                                                                44.7%
                                     Organic
                                   Impressions,
                                      54.9%




Note: Data includes ad impressions landing on external URLs.


718 SW Alder St., Suite 200                  www.blitzlocal.com         www.facebook.com/blitzlocal
Portland, OR 97205                                                                                                                   15

	
  
Section 3: The Cost-Effectiveness of Advertising is Decreasing

                                                                  Highlights	
                                                                                                                                                                  Facebook’s ad inventory is growing rapidly now
                                                                                                                                                                                                                                                that there are more users and more ads per page.
         •             Between	
  October	
  and	
                                                                                                                                                                                              They haven’t even begun to show ads on mobile,
                       December,	
  the	
  average	
                                                                                                                                                                                            which is 33% of all Facebook postings.7
                       CPC	
  increased	
  by	
  135%	
  
                       and	
  the	
  average	
  CPM	
                                                                                                                                                                                           The number of brands advertising is increasing
                       increased	
  by	
  55%.	
                                                                                                                                                                                                faster than Facebook is growing. As a result they
         •             Both	
  the	
  Social	
  CTR	
  and	
                                                                                                                                                                                    are driving prices up, decreasing the cost-
                       non-­‐social	
  CTR	
  have	
                                                                                                                                                                                            effectiveness of advertising. Traffic prices are
                       declined	
  by	
  56.8%	
  and	
                                                                                                                                                                                         going up only mildly, but the cost per click is
                       58%	
  respectively.	
                                                                                                                                                                                                   increasing at a faster rate than the cost of raw
                                                                                                                                                                                                                                                traffic because of lower CTR.
         •             Between	
  2010	
  and	
  2011	
  
                       the	
  average	
  CTR	
  rose	
  by	
                                                                                                                                                                                    From October to December 2011, the average
                       6%	
  and	
  the	
  average	
  CPC	
                                                                                                                                                                                     CPC increased by 135% and the average CPM
                       rose	
  by	
  34.8%.	
  	
  	
                                                                                                                                                                                           increased by 55% (Figure 3.1).
                        	
  
da	
                                     From October to December 2011, the ratio
             increased from 2.38 to 2.42 impressions per social impression. For 2011, Social
             ads were 56.7% more likely to be clicked on than non-social ads. Fewer social
             impressions brings down the average CTR, resulting in the increased CPC and
             CPM we see.

             Despite the Social CTR being much greater than                                                                                                                                                                                                                              CPM,	
  CPC,	
  and	
  CTR	
  
             the non-social CTR, both declined in the last
             three months of 2011. Between October and                                                                                                                                                                                                                                 There	
  is	
  a	
  direct	
  
             December, the Social CTR decreased by 56.8%                                                                                                                                                                                                                              relationship	
  between	
  
             and the CTR decreased by 58% (Figure 3.2). This                                                                                                                                                                                                                          CTR,	
  CPM,	
  and	
  CPC.	
  	
  
             change is explained by the effect that total paid                                                                                                                                                                                                                        Facebook	
  will	
  charge	
  
             impressions have on CTR, Social CTR and CPC.                                                                                                                                                                                                                             more	
  per	
  click	
  if	
  the	
  click	
  
             CTR has a -.77 correlation with paid impressions,                                                                                                                                                                                                                        through	
  rate	
  is	
  lower.	
  	
  
             Social CTR has a -0.84 correlation with paid                                                                                                                                                                                                                             Brands	
  have	
  an	
  incentive	
  
             impressions and CPC has a 0.86 correlation with                                                                                                                                                                                                                          to	
  be	
  relevant	
  and	
  social,	
  
             paid impressions. Note that Facebook’s recent                                                                                                                                                                                                                            while	
  maintaining	
  this	
  
             change in the number of ads displayed (six as of                                                                                                                                                                                                                         mechanism	
  also	
  makes	
  
             November) could contribute heavily to the                                                                                                                                                                                                                                Facebook	
  more	
  money.	
  	
  
             decline in CTR and the increase in impressions.
                                                        da	
  
                                                                                                                                                                                                                                                                                       	
  
                                                                                                                                                                                                                                                                 da	
  



             	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
             7
                     http://www.litmanlive.co.uk/blog/2011/05/twitter-facebook-mobile-stats/
             718 SW Alder St., Suite 200                                                                                                                                         www.blitzlocal.com                                                     www.facebook.com/blitzlocal
             Portland, OR 97205                                                                                                                                                                                                                                                                                                16

             	
  
It is possible that the decrease in CTR may be due to sales-driven ad copy that
will have lower CTR since it’s not engagement-driven. The fact that CPMs
increased only slightly relative to CPC increases, indicates that the price
increases are CTR-driven, not demand driven. A CPM increase means that ad
demand is outstripping Facebook’s white-hot inventory growth.


                          CPC          CPM             CPC and CPM Increasing
   $1.20                                                          Figure 3.1


   $1.00                  Correlation=0.97	
  


   $0.80

   $0.60

   $0.40

   $0.20

   $0.00
                     October, 2011                   November, 2011                  December, 2011

CPC: Cost Per Click.
CPM: Cost Per 1,000 Impressions.

                              CTR
                              Social CTR                A Decline in Social and Non-Social CTR
                                                                              Figure 3.2
   0.09%

   0.08%
                                                              Correlation=0.97	
  
   0.07%

   0.06%

   0.05%

   0.04%

   0.03%

   0.02%

   0.01%

   0.00%
                      October, 2011                  November, 2011                    December, 2011

Non-Social: Clickthrough Rate of all ads that are friend of fan targeting.
Social CTR: Clickthrough Rate of friend of fan ads.
718 SW Alder St., Suite 200     www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                                                      17

	
  
Though technically the cost of traffic is decreasing, it is still a bargain at $.34
CPM. On average, $1,000 of ad spend hits 658,823.5 unique users (reach times
frequency equals impressions).

Advertisers Suffer Ad Burnout

Unlike search ads, Facebook ads burn out quickly if brands are not refreshing
them weekly, if not daily. Because more than half of Facebook users log in
daily8, brands that practice "set it and forget it" show their ads dozens of times
to the same users. Of course these ads don't perform.

Though prices are increasing, not all industries fared the same. When split up
by category, CPC has a positive correlation of 0.41 with total impressions.
There is a negative correlation of -0.23 between impressions and CTR. This
appears to support a connection between impressions and CTR, as well as
impressions and CPC. For example, retailers had a 67% increase in CTR
between 2010 and 2011. Over the same period, total impressions declined
32.7%. Automotive companies, on the other hand, had a 66% decrease in CTR,
while seeing a 73% increase in impressions in the same period (Figure3.39). Big
brands do not do a better job in advertising compared to small biz, despite
their tools, bigger budgets, and general sophistication.

                                                                                                                                                                                         The Relationship Between CTR and Impressions
                            0.18%                                                                                                                                                                          Figure 3.3
                            0.16%
                            0.14%
                                                                                                                                                                                                                                                             Correlation=-­‐0.23	
  
                            0.12%
                            0.10%
       CTR




                            0.08%
                            0.06%
                            0.04%
                            0.02%
                            0.00%
                                                                            1                                                                                                     10                                                 100              1,000               10,000       100,000
                                                                                                                                                                                                                                   Impressions (In Millions)




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
8
 https://www.facebook.com/press/info.php?statistics
9
 Figure 3.5 is based on 4,202,841,334 ad impressions from earlier research in 2010 plus an additional
8,662,942,836 in 2011	
  
718 SW Alder St., Suite 200                                                                                                                                         www.blitzlocal.com                                                   www.facebook.com/blitzlocal
Portland, OR 97205                                                                                                                                                                                                                                                                               18

	
  
From 2010 to 2011 the cost of traffic increased as well. The average CPC of
2011 was up 34.8% from $0.69 to $0.93. Despite the increased CPC, the average
CTR increased by 6%. There were few exceptions:

              • Retailers in 2011 paid less than half the CPC of what they paid in 2010.
                This can be explained by a 67% increase in CTR due to an 89% increase in
                total social impressions. This reflects the introduction of sponsored like
                ads, making it easier for brands to utilize FOF targeting.
              • The CPC for telecommunications companies decreased by 21%, despite a
                7% decrease in CTR. Decreasing competition in this area led to fewer
                impressions, and less competition over ad inventory.
              • The CTR and CPC of restaurants remained the same between 2010 and
                2011. Decreasing competition demonstrated by fewer impressions
                balanced the natural increase in the cost of traffic.



       	
                                                        CTR
                        2011       2010                       Figure 3.4
                                    Overall
                         Tabloids and Blogs
                  Media and Entertainment
                               E-commerce
                                      Travel
                                Automotive
                                                                                     Correlation	
  Between	
  	
  
                                 Non-profit                                          3.4	
  and	
  3.5	
  =-­‐0.81	
  
                                 Cosmetics
                                   Retailers
                                 Restaurant
                 Consumer Packaged Goods
                                       Misc.
                              Local Services
                         Financial Services
                       Telecommunications
                    Conference and Events
                     Internet and Software
                                Health Care
                                             0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 0.12% 0.14% 0.16% 0.18%




718 SW Alder St., Suite 200      www.blitzlocal.com    www.facebook.com/blitzlocal
Portland, OR 97205                                                                                                       19

	
  
CPC
            2011              2010
                                                        Figure 3.5
                      Overall
                 Health Care
       Internet and Software
         Telecommunications
           Financial Services
               Local Services
      Conference and Events
                        Misc.
                   Restaurant
                     Retailers
   Consumer Packaged Goods
                    Cosmetics
                       Travel
                 E-commerce
                   Non-profit
                  Automotive
   Media and Entertainment
           Tabloids and Blogs
                                     $0.00    $0.20   $0.40     $0.60     $0.80     $1.00   $1.20   $1.40


Social Brands Fare Better

Though total impressions certainly played a part in changes to CTR and CPC in
both 2010 and 2011, the type of brand played a much larger role in the overall
CTR and CPC. Social brands like retailers, restaurants, tabloids and blogs had a
higher CTR and lower CPC. At the other end of the spectrum, non-social
brands such as Health Care providers and Telecommunications companies
continued to perform poorly in comparison.




718 SW Alder St., Suite 200      www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                                                          20

	
  
What Brands Are Saying

“Year over year the amount of content available on Facebook has increased
dramatically. More brands are beginning to leverage this channel and while the
number of consumers on Facebook continues to grow, it is going to get harder
for brands to attentively engage consumers. Here are some key points
highlighted in this report.

Successful brands need to focus on increasing interaction effectiveness with
their consumer base. You do this by increasing the frequency of exposure,
paying close attention to what is being discussed, and focused advertising.

Interactions with consumers will occur as you post and more than 70% of the
interaction occurs within the first hour. So keep up your efforts on posting
more often and monitoring right after you post versus posting and “going to
bed.” Also, a post with a “question” tends to drive increased interaction.

Don’t forget that advertising does work. Your engagement rate can go up by
21% to 43% by knowing what to say, when to say, and of course how you say
things on Facebook.

Brands have a significant opportunity to leverage social. The key to success is
to understand how much of the social data is public, how to collect the data
without alienating the consumer, and how best to quickly use the data that is
collected.”


                Sundeep Kapur, Author – www.emailyogi.com, Digital Evangelist -
                NCR



"This research by Dennis and his Blitzlocal team provides a measured view, and
helps makes sense, of what we already knew - we are drowning in data. It will
take the use of effective big data filtering platforms like Blitzmetrics to allow
brands to effectively sift through the data noise as well as successfully engage
with the right conversations and the right consumers."


                Lee Bogner, Consulting marketing technologist and social business
                analyst - @leebogner, Social Business Ambassadors and Board
                Director, Social Media Club LI. Reach




718 SW Alder St., Suite 200   www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                                21

	
  
“At Gordmans, we were able to capitalize on the low CPC in 2011 and run a
multitude of ads throughout the year. We found that our paid advertising acts
as a catalyst in driving additional organic impressions; because of this, we saw
an increase in both our organic and paid performance last year.”


                   Veronica Stecker, Manager of Converged Channel Advertising –
                   Gordmans




About the Data Set:
This report data spans a 7-month time period from June 1, 2011, to December
31, 2011:

       •   11,365 pages
       •   5,744,550 admin and user posts
       •   76,202,654 Facebook users spread over 75 countries
       •   91,009,142,252 organic impressions
       •   27,969,233,010 paid impressions
       •   1,142,652,653 viral impressions.
       •   120,111,027,915 total impressions

Limitations: It is important to note that this study lacked data on applications
and open graph data, which are increasing.
On January 18, 2011 Facebook announced the Open Graph going live on the
Facebook developers blog. In the coming months it will be interesting to see
their effects on organic impressions and engagement. Industry results were
based on categorizing campaigns in our dataset, which means some industries
had only a single brand and may not be representative of an industry’s
performance overall. Our analysis does not include premium ads, since they
are reported in separate systems.

For further questions about this research, please email
dennis.yu@blitzlocal.com or message us at facebook.com/blitzlocal

You can find some of our data on organic and paid impressions here:
https://blitzmetrics.com/dashboard/?account=wsj&page=wsj

About BlitzLocal
BlitzLocal is social analytics company founded in 2006 by Dennis Yu and
headquartered in Portland, Oregon with 32 people. Their product,
BlitzMetrics, measures social for brands in retail, CPG, and network TV.


718 SW Alder St., Suite 200   www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                                 22

	
  
Contributing Staff




Elliot Swan                                              Travis King
Interaction Designer                                     Manager of Facebook Marketing




Justin Dunlap                                            Carrie Medina
Director of Engineer                                     Editor




Dennis Yu                                               Ken Penny
Chief Executive Officer                                 VP of Operations


Glossary of Terms:
Coverage: Impressions per 1,000 fans
Engagement: Page interactions divided by page fan count.
Frequency: The number of times each user is seeing a post/page.
Organic Impressions: Impressions in the news feed, ticker, and from fans
visiting a brands page.
Paid Impressions: Number of ad impressions.
CPC: Cost Per Click.
CPM: Cost Per 1,000 Impressions.
CTR: Clickthrough Rate of all ads.
Social CTR: Clickthrough Rate of friend of fan ads.
Social Impressions: Impressions for friend of fan ads.




718 SW Alder St., Suite 200   www.blitzlocal.com   www.facebook.com/blitzlocal
Portland, OR 97205                                                                       23

	
  

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What 120 Billion Facebook Impressions Have Taught Us - Dennis Yu

  • 1. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 1  
  • 2. Executive Summary After Facebook released the ticker, timeline, and other changes, some brands complained of a decline in organic impressions. Where is this occurring, and how has the effectiveness of organic impressions trended against paid efforts? Our research spans data from a 7-month time period from June 1, 2011 to December 31, 2011: • 11,365 pages • 5,744,550 admin and user posts • 76,202,654 Facebook users spread over 75 countries • 91,009,142,252 organic impressions • 27,969,233,010 paid impressions • 1,142,652,653 viral impressions. • 120,111,027,915 total impressions This is a continuation of BlitzLocal research performed in January 20111, now with six times as much data and correlating organic data. Limitations of this study are the exclusion of data from applications (“apps”) and open graph objects, which likely have an effect on organic impressions. According to our data, the following factors affect organic impressions: • Engagement – Engagement affects a pages EdgeRank and how often Facebook will show posts. • Increased competition in the newsfeed – More objects in the newsfeed means fewer people are seeing brand content. • Content type – Some content types are more engaging. • Post length – Post length affects how many people engage with a post. • Post decay – Post timing is important as posts only live in the newsfeed for so long. • Sales related posts – Sales related posts drive less engagement and impressions. From our data we drew the following conclusions: 1.) As more users generate more content via more apps and devices, brand messages get drowned out in the noise. Organic impressions per page are down 33% due to a decrease in frequency, not reach. We did not detect any adjustment by Facebook to force brands to have to advertise to reach their users: there's just more "stuff" and Facebook has to apply a higher power filter. 2.) Content that used to live for a day, may now live minutes in a user's news feed. This concept is evidenced by decreased frequency of exposure as well as the "half life" of interactions. Facebook created several forms of                                                                                                                 1  http://www.allfacebook.com/surprise-­‐timeliness-­‐boosts-­‐facebook-­‐engagement-­‐2011-­‐06   718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 2  
  • 3. "Sponsored Stories", ad mechanisms, to directly combat the "EdgeRank" problem (competing for attention) and the time window problem. These ads are effective in growing fans and amplifying the brand's message. Facebook metrics greatly underestimate the power of word of mouth. 3.) While brands with paid advertising saw positive benefits in fan growth and organic exposure, the cost-effectiveness of Facebook ads declined, even as brands advertised more heavily. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 3  
  • 4. Section 1: Organic Impressions are Declining From July to December 2011 organic coverage Highlights   (number of organic impressions per 1,000 fans) decreased 33%, from 836.1 to 608. • Organic  Coverage  is  down   33%  from  July,  while  paid   Some social mechanics to understand: Brands can Coverage  was  up  141%  in   increase their impressions by growing their reach November  and  121%  in   (the number of fans that see their messages) or December.   their frequency (how many times, on average, a fan sees these messages). Frequency is down • Post  decay,  increasing   competition  in  the  39.1%, while reach is up 12.5%, providing a net effect of a 31.5% decrease in impressions. newsfeed,  sales  oriented   Impressions per 1,000 fans are the product of reach posts,  and  changes  in   times frequency divided by total fans. We saw that content  type  may  have   the decline in frequency pushed impressions down contributed  to  a  decline   by 34.5%, while reach pushed impressions up by in  engagement,  but  we   less than 1.1% (Figure 1.1). In this same period, can’t  conclusively  make   this  assertion.   there was a spike in paid coverage driven primarily by the holiday season resulting in 934.3 paid impressions per 1,000 fans in Novght,ember (a 141% increase from October) and 691.9 paid impressions per 1,000 fans in December (a 121% increase from October). Reach Frequency Declines, but Reach Increases Figure 1.1 100 12 Unique Users/1,000 Impressions Total Impressions per User 80 10 8 60 Correlation=-­‐0.79   6 40 4 20 2 0 July, 2011 August, 2011 September, 2011 October, 2011 November, 2011 December, 2011 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 4  
  • 5. There is a -0.56 correlation between organic and paid impressions (Figure 1.2). We expect this correlation to get stronger as Facebook rolls out ads in the newsfeed, which will squeeze out organic impressions. Organic Impressions: Impressions in the news feed, ticker, and from fans visiting a brands page. Paid Impressions: Number of ad impressions. Why the Drop in Organic Coverage? Engagement may be decreasing: Our analysis should show the decrease in engagement rate to be seasonal, but without a full year of data on the new metrics this cannot be judged conclusively. While engagement rate isn’t definitively down, impressions are down – meaning that Facebook is better at filtering users' news feeds. In other words, Facebook is showing fewer impressions but still getting the same level of feedback. Facebook’s EdgeRank rewards pages in the news feed based on how many interactions they receive. Interactions are the number of likes, posts, and comments a page has. For pages with more than 100,000 fans, engagement declined 21% from 3.8% to 3% between October and December 2011. For pages with fewer than 100,000 fans, engagement also fell 26.0% from 16.0% to 11.8% (Figure 1.3). In this same period, active users fell by 27.3%. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 5  
  • 6. Has Engagement Rate By Month Declined? Less Than 100,000 Fans Figure 1.3 100,000+ Fans December, 2011 Correlation=0.57 November, 2011 October, 2011 September, 2011 August, 2011 July, 2011 June, 2011 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Engagement Rate: Total Interactions/fan count over a 30 period. A shift towards sales-related posts in October, November, and December was a possible contributing factor to the drop in engagement and increase in fan removals. Matching words like “buy,” “sale,” and “purchase”, we saw an 11% increase in sales-related posting in October, a 26.5% increase in November, and a 13.2% increase in December (Figure 1.4). Sales Related Posts Rise in October, November, and December 7% Figure 1.4 Percentage of Posts That Are Sales 6% 5% Related 4% 3% 2% 1% 0% June, 2011 July, 2011 August, 2011 September, October, November, December, 2011 2011 2011 2011 Another possible contribution to the decrease in engagement was an increase in page sizes. There is a -0.12 correlation between page size and engagement 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 6  
  • 7. (Figure 1.4). Despite the common perception that engagement tends to decline as page size increases, the low value of this correlation suggests a weak relationship between page size and engagement. It is possible that the first fans of a page are the most loyal. When the page gains mainstream presence it may have a more general audience, contributing to lower engagement. 3.0 Larger Pages Have Slightly Less Engagement Figure 1.5 2.5 2.0 Correlation=-­‐0.12   1.5 1.0 0.5 0.0 The data does not conclusively say engagement is down; rather it has gone up in the Fall and down in the Winter. Fourth quarter sales-oriented messaging may account for the drop, but without year-over-year data we are unable to confirm or disprove this hypothesis. If engagement is steady in light of impressions dropping, it may be a sign that Facebook's algorithms are doing a better job in selecting what to show users. Clearly there is a lot more content, but Facebook's filtering mechanism has improved. It is interesting to note that despite a decrease in engagement rate, there are more people than ever talking about brands. Between July and December 2011 there has been a 15.3% increase in People Are Talking About This (Figure 1.6). This could indicate a broader group of active users are interacting with pages, but less frequently. Different  Angles  to  Measure  Engagement   People  Are  Talking  About  This:  Total  number  of  people  who  have  had  a  brand-­‐ related  action  show  up  in  their  newsfeed.   Coverage:  Total  number  of  impressions  per  1,000  fans.       Unique  Reach:  Total  number  of  people  seeing  impressions.   Engagement  Rate:  Total  interactions  over  a  30-­‐day  divided  by  fan  count     Feedback  Rate:  Percent  of  people  who  saw  a  post  who  commented  or  liked.     Note: Facebook’s web insights provides up to 89 days worth of data, so brands must store history da   themselves, use a 3rd party analytics like BlitzMetrics, or lose it forever. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 7  
  • 8. More People Are Talking About Brands Figure 1.6 People Talking Are About This/1,000 8.2 8.0 7.8 7.6 7.4 Fans 7.2 7.0 6.8 6.6 6.4 6.2 July,2011 August, 2011 September, October, November, December, 2011 2011 2011 2011 Answering the Engagement Rate Question: Regardless of whether engagement rate has declined or not, People are Talking About and engagement rates are low no matter how you cut it. This is likely less about Facebook algorithmically harming brands, and more about brands focusing on growing fans for the last couple of years and only starting to focus on engagement recently. Year after year we have seen a shift in attitudes and priorities of companies in regards to Social Media. In 2009, 2010, and 2011 most companies fearfully expanded social budgets in order to not be left behind by competitors.2 Companies who planned social budgets for 2012 were looking heavily towards measurement and engagement.3 Newsfeed Competition: Facebook cites 900,000,000 objects (events, pages, community pages and groups) that users can interact with on Facebook.4 In addition, there are 36.2 million user actions per hour showing up in the news feed. 5 More and more content are competing for visibility, appearing in the available impressions in a user’s news feed. Similarly, ranking on Google is more challenging today than eight years ago, given that more pages are competing for the first page of search results.                                                                                                                 2 http://www.emarketer.com/blog/index.php/marketers-spending-social-media-wrong-reasons/ 3 http://www.emarketer.com/Article.aspx?R=1008667face 4  https://www.facebook.com/press/info.php?statistics   5  http://www.jeffbullas.com/2011/04/28/50-­‐fascinating-­‐facebook-­‐facts-­‐and-­‐figures/   718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 8  
  • 9. In addition to the amount of content generated on the Facebook wall each day, we see another trend emerge from the data that could reduce organic impressions. From October to December, the overall time spent on Facebook dropped 15%, from 28:26 minutes to 24:43.6 With users spending less time on Facebook, and more content elements competing for display, the natural product of these two trends was a decline in organic impressions. Post length could easily affect the number of organic impressions. On average page posts are 157.7 characters, while user posts are 121.5 characters and mobile posts average 104.9 characters. Posts between 140 and 159 characters long are, on average, 13.3% less engaging than posts between 120 and 139 characters and 9% less engaging than posts between 100-119 characters. What this demonstrates, is that the content many brands are competing against for a spot in the news feed, is more engaging and readable (Figure 1.7). Longer Posts Perform Poorly Questions Non Questions Figure 1.7 160-179 140-159 Character Length 120-139 100-119 80-99 60-79 0.000% 0.005% 0.010% 0.015% 0.020% 0.025% Engagement                                                                                                                 6    http://www.alexa.com/siteinfo/facebook.com#     718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 9  
  • 10. Changes in Content Type are Hurting Total Coverage: Some types of content generate more impressions than other types. For example, status posts have weaker coverage on average, at 29.1% for pages with less than 100,000 fans and 54.8% for pages with more than 100,000 fans (Figure 1.8). We also see link coverage is decreasing, while status coverage is increasing. A post with a link in it is more likely to be a sales-oriented post, especially in December. If true, then the increase in link posts may very well tie with engagement dropping in December. Brands Are Posting Weaker Content Status Videos Figure 1.8 Photos Links December, 2011 November, 2011 October, 2011 September, 2011 August, 2011 July, 2011 June, 2011 100 200 300 400 500 600 700 800 Organic Impressions/1,000 Fans   In the last 6 months there was an increase in the number of status posts. In June, 43% of posts were status updates. At the same time the number of links per month decreased 57%. On average, links have some of the highest coverage, at 77% for pages with less than 100,000 fans and 69% for pages with more than 100,000 fans (Figure 1.9). The decline in links and increase in status posts affected overall organic impressions. Posting weaker performing content ensured that fewer fans would see it. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 10  
  • 11. Pages With Less than 100,000 Fans Post Type Affects Organic Coverage Pages With 100,000+ Fans Figure 1.9 Video Link Question Photo Status 0 100 200 300 400 500 600 700 800 900 Organic Impressions/1,000 Fans Post Decay: Our analysis shows that 70% of interactions occur within 60 minutes of a post. In November and December of 2011 brands posted an average of 1.19 and 1.17 times a day, respectively (Figure 1.9). In November 70% of interactions, on average, occurred within 71.4 minutes, and in December 70% of interactions occurred within 70.2 minutes. Brands should be posting more to reap the benefits of potentially missed interactions. Brands Are Posting More Often Figure 1.9 1.4 Average Number of Posts Per Day 1.2 1.0 0.8 0.6 0.4 0.2 0.0 June, 2011 July, 2011 August, September, October, November, December, 2011 2011 2011 2011 2011 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 11  
  • 12. Section 2: Paid Impressions Help Over the last 6 months 82% of impressions were Highlights   organic, 17% were paid, and 1% were viral (Figure 2.1). Even if total paid impressions were to double, • 82%  of  impressions  are   it would not have much of an effect on news feed organic  and  17%  are  paid.   competition. Other factors such as the number of ad • 77%  of  pages  are  not   slots (which Facebook recently raised to 7) could advertising.   also increase perceived competitiveness. • Large  pages  that   advertise  are  42.9%  more   Viral impressions have remained a small percentage engaging  than  pages  that   of total impressions. Over the last 6 months, their do  not.    Small  pages  are   share has decreased 82%, from an average of 3.3% in 21.2%  more  engaging.   July to an average of .6% in December. When compared with overall organic impressions, there is • There  is  a  strong  positive   a 0.69 correlation. Viral impressions are dependent correlation  between  paid   on fans seeing posts and sharing them. Because the impressions  and   overall number organic impressions decreased in engagement  rate.   November and December, the viral impressions da   decreased as well. A sizeable amount of what is listed as organic might be considered viral, too. When we run ads we see that the organic and viral components increase. In the same way, when we run TV ads, we see more people searching for the brand name in Google. Not detailed in this research is the impact that Facebook campaigns, organic or paid, have on other channels. The true incremental boost of any social marketing effort is not attributable at the user level, so we have to correlate traffic by channel. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 12  
  • 13. The Majority of Impressions Are Organic Figure 2.1 Viral Impressions, 1% Paid Impressions, 17% Organic Impressions, 82% Only 23% of pages advertised on Facebook in the last 6 months, with the remainder relying on organic fan growth and impressions (Figure 2.2). Considering that only 17% of impressions are paid, this suggests that many brands advertise only on a spot basis. Companies are running campaign- oriented ads, as opposed to persistent word-of-mouth ads, which Facebook recommends. In 2012, we will see whether Facebook can wean marketers from a start/stop mentality, as is the case with most forms of advertising, and shift to see Facebook ads as organic amplification with no end date. Room for Growth: 3 in 4 Brands Are Not Advertising Yet Figure 2.2 Brands Advertising, 23% Brands Not Advertising, 77% 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 13  
  • 14. Pages with over 100,000 fans that have advertised in the last six months saw a boost in engagement rate and organic power. There is a positive correlation of 0.47 between the number of paid impressions and engagement rate. Overall, pages advertising with more than 100,000 fans had a 42.9% higher engagement rate, while pages advertising with less than 100,000 fans had a 21.2% higher engagement rate than those not advertising (Figure 2.3). Less Than 100,000 Fans Advertise To Get More Engagement Figure 2.3 Pages That Are Advertising Pages That Are Not Advertising 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Interestingly, the effectiveness of advertising appears to be mostly linear. There is a 0.70 correlation between paid Impressions per 1,000 fans and engagement rate (Figure 2.4). The more a brand spends, the higher their engagement. We should note that while paid activity does not affect organic rankings in search engines, this does not hold true in Facebook. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 14  
  • 15. Better paid Coverage Equals Better Engagement Figure 2.4 14% 12% 10% Engagement Rate 8% 6% Correlation=0.89   4% 2% 0% 0 100 200 300 400 500 600 700 800 900 1,000 Paid Impressions Per 1,000 Fans Pages that advertise get a 373% increase in organic impressions. This brings us back to an earlier point: the way Facebook defines viral traffic understates the power of word of mouth. Share of Impressions For Pages That Advertise Figure 2.5 Viral Impressions, 0.4% Paid Impressions, 44.7% Organic Impressions, 54.9% Note: Data includes ad impressions landing on external URLs. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 15  
  • 16. Section 3: The Cost-Effectiveness of Advertising is Decreasing Highlights   Facebook’s ad inventory is growing rapidly now that there are more users and more ads per page. • Between  October  and   They haven’t even begun to show ads on mobile, December,  the  average   which is 33% of all Facebook postings.7 CPC  increased  by  135%   and  the  average  CPM   The number of brands advertising is increasing increased  by  55%.   faster than Facebook is growing. As a result they • Both  the  Social  CTR  and   are driving prices up, decreasing the cost- non-­‐social  CTR  have   effectiveness of advertising. Traffic prices are declined  by  56.8%  and   going up only mildly, but the cost per click is 58%  respectively.   increasing at a faster rate than the cost of raw traffic because of lower CTR. • Between  2010  and  2011   the  average  CTR  rose  by   From October to December 2011, the average 6%  and  the  average  CPC   CPC increased by 135% and the average CPM rose  by  34.8%.       increased by 55% (Figure 3.1).   da   From October to December 2011, the ratio increased from 2.38 to 2.42 impressions per social impression. For 2011, Social ads were 56.7% more likely to be clicked on than non-social ads. Fewer social impressions brings down the average CTR, resulting in the increased CPC and CPM we see. Despite the Social CTR being much greater than CPM,  CPC,  and  CTR   the non-social CTR, both declined in the last three months of 2011. Between October and There  is  a  direct   December, the Social CTR decreased by 56.8% relationship  between   and the CTR decreased by 58% (Figure 3.2). This CTR,  CPM,  and  CPC.     change is explained by the effect that total paid Facebook  will  charge   impressions have on CTR, Social CTR and CPC. more  per  click  if  the  click   CTR has a -.77 correlation with paid impressions, through  rate  is  lower.     Social CTR has a -0.84 correlation with paid Brands  have  an  incentive   impressions and CPC has a 0.86 correlation with to  be  relevant  and  social,   paid impressions. Note that Facebook’s recent while  maintaining  this   change in the number of ads displayed (six as of mechanism  also  makes   November) could contribute heavily to the Facebook  more  money.     decline in CTR and the increase in impressions. da     da                                                                                                                   7 http://www.litmanlive.co.uk/blog/2011/05/twitter-facebook-mobile-stats/ 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 16  
  • 17. It is possible that the decrease in CTR may be due to sales-driven ad copy that will have lower CTR since it’s not engagement-driven. The fact that CPMs increased only slightly relative to CPC increases, indicates that the price increases are CTR-driven, not demand driven. A CPM increase means that ad demand is outstripping Facebook’s white-hot inventory growth. CPC CPM CPC and CPM Increasing $1.20 Figure 3.1 $1.00 Correlation=0.97   $0.80 $0.60 $0.40 $0.20 $0.00 October, 2011 November, 2011 December, 2011 CPC: Cost Per Click. CPM: Cost Per 1,000 Impressions. CTR Social CTR A Decline in Social and Non-Social CTR Figure 3.2 0.09% 0.08% Correlation=0.97   0.07% 0.06% 0.05% 0.04% 0.03% 0.02% 0.01% 0.00% October, 2011 November, 2011 December, 2011 Non-Social: Clickthrough Rate of all ads that are friend of fan targeting. Social CTR: Clickthrough Rate of friend of fan ads. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 17  
  • 18. Though technically the cost of traffic is decreasing, it is still a bargain at $.34 CPM. On average, $1,000 of ad spend hits 658,823.5 unique users (reach times frequency equals impressions). Advertisers Suffer Ad Burnout Unlike search ads, Facebook ads burn out quickly if brands are not refreshing them weekly, if not daily. Because more than half of Facebook users log in daily8, brands that practice "set it and forget it" show their ads dozens of times to the same users. Of course these ads don't perform. Though prices are increasing, not all industries fared the same. When split up by category, CPC has a positive correlation of 0.41 with total impressions. There is a negative correlation of -0.23 between impressions and CTR. This appears to support a connection between impressions and CTR, as well as impressions and CPC. For example, retailers had a 67% increase in CTR between 2010 and 2011. Over the same period, total impressions declined 32.7%. Automotive companies, on the other hand, had a 66% decrease in CTR, while seeing a 73% increase in impressions in the same period (Figure3.39). Big brands do not do a better job in advertising compared to small biz, despite their tools, bigger budgets, and general sophistication. The Relationship Between CTR and Impressions 0.18% Figure 3.3 0.16% 0.14% Correlation=-­‐0.23   0.12% 0.10% CTR 0.08% 0.06% 0.04% 0.02% 0.00% 1 10 100 1,000 10,000 100,000 Impressions (In Millions)                                                                                                                 8 https://www.facebook.com/press/info.php?statistics 9 Figure 3.5 is based on 4,202,841,334 ad impressions from earlier research in 2010 plus an additional 8,662,942,836 in 2011   718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 18  
  • 19. From 2010 to 2011 the cost of traffic increased as well. The average CPC of 2011 was up 34.8% from $0.69 to $0.93. Despite the increased CPC, the average CTR increased by 6%. There were few exceptions: • Retailers in 2011 paid less than half the CPC of what they paid in 2010. This can be explained by a 67% increase in CTR due to an 89% increase in total social impressions. This reflects the introduction of sponsored like ads, making it easier for brands to utilize FOF targeting. • The CPC for telecommunications companies decreased by 21%, despite a 7% decrease in CTR. Decreasing competition in this area led to fewer impressions, and less competition over ad inventory. • The CTR and CPC of restaurants remained the same between 2010 and 2011. Decreasing competition demonstrated by fewer impressions balanced the natural increase in the cost of traffic.   CTR 2011 2010 Figure 3.4 Overall Tabloids and Blogs Media and Entertainment E-commerce Travel Automotive Correlation  Between     Non-profit 3.4  and  3.5  =-­‐0.81   Cosmetics Retailers Restaurant Consumer Packaged Goods Misc. Local Services Financial Services Telecommunications Conference and Events Internet and Software Health Care 0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 0.12% 0.14% 0.16% 0.18% 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 19  
  • 20. CPC 2011 2010 Figure 3.5 Overall Health Care Internet and Software Telecommunications Financial Services Local Services Conference and Events Misc. Restaurant Retailers Consumer Packaged Goods Cosmetics Travel E-commerce Non-profit Automotive Media and Entertainment Tabloids and Blogs $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 Social Brands Fare Better Though total impressions certainly played a part in changes to CTR and CPC in both 2010 and 2011, the type of brand played a much larger role in the overall CTR and CPC. Social brands like retailers, restaurants, tabloids and blogs had a higher CTR and lower CPC. At the other end of the spectrum, non-social brands such as Health Care providers and Telecommunications companies continued to perform poorly in comparison. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 20  
  • 21. What Brands Are Saying “Year over year the amount of content available on Facebook has increased dramatically. More brands are beginning to leverage this channel and while the number of consumers on Facebook continues to grow, it is going to get harder for brands to attentively engage consumers. Here are some key points highlighted in this report. Successful brands need to focus on increasing interaction effectiveness with their consumer base. You do this by increasing the frequency of exposure, paying close attention to what is being discussed, and focused advertising. Interactions with consumers will occur as you post and more than 70% of the interaction occurs within the first hour. So keep up your efforts on posting more often and monitoring right after you post versus posting and “going to bed.” Also, a post with a “question” tends to drive increased interaction. Don’t forget that advertising does work. Your engagement rate can go up by 21% to 43% by knowing what to say, when to say, and of course how you say things on Facebook. Brands have a significant opportunity to leverage social. The key to success is to understand how much of the social data is public, how to collect the data without alienating the consumer, and how best to quickly use the data that is collected.” Sundeep Kapur, Author – www.emailyogi.com, Digital Evangelist - NCR "This research by Dennis and his Blitzlocal team provides a measured view, and helps makes sense, of what we already knew - we are drowning in data. It will take the use of effective big data filtering platforms like Blitzmetrics to allow brands to effectively sift through the data noise as well as successfully engage with the right conversations and the right consumers." Lee Bogner, Consulting marketing technologist and social business analyst - @leebogner, Social Business Ambassadors and Board Director, Social Media Club LI. Reach 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 21  
  • 22. “At Gordmans, we were able to capitalize on the low CPC in 2011 and run a multitude of ads throughout the year. We found that our paid advertising acts as a catalyst in driving additional organic impressions; because of this, we saw an increase in both our organic and paid performance last year.” Veronica Stecker, Manager of Converged Channel Advertising – Gordmans About the Data Set: This report data spans a 7-month time period from June 1, 2011, to December 31, 2011: • 11,365 pages • 5,744,550 admin and user posts • 76,202,654 Facebook users spread over 75 countries • 91,009,142,252 organic impressions • 27,969,233,010 paid impressions • 1,142,652,653 viral impressions. • 120,111,027,915 total impressions Limitations: It is important to note that this study lacked data on applications and open graph data, which are increasing. On January 18, 2011 Facebook announced the Open Graph going live on the Facebook developers blog. In the coming months it will be interesting to see their effects on organic impressions and engagement. Industry results were based on categorizing campaigns in our dataset, which means some industries had only a single brand and may not be representative of an industry’s performance overall. Our analysis does not include premium ads, since they are reported in separate systems. For further questions about this research, please email dennis.yu@blitzlocal.com or message us at facebook.com/blitzlocal You can find some of our data on organic and paid impressions here: https://blitzmetrics.com/dashboard/?account=wsj&page=wsj About BlitzLocal BlitzLocal is social analytics company founded in 2006 by Dennis Yu and headquartered in Portland, Oregon with 32 people. Their product, BlitzMetrics, measures social for brands in retail, CPG, and network TV. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 22  
  • 23. Contributing Staff Elliot Swan Travis King Interaction Designer Manager of Facebook Marketing Justin Dunlap Carrie Medina Director of Engineer Editor Dennis Yu Ken Penny Chief Executive Officer VP of Operations Glossary of Terms: Coverage: Impressions per 1,000 fans Engagement: Page interactions divided by page fan count. Frequency: The number of times each user is seeing a post/page. Organic Impressions: Impressions in the news feed, ticker, and from fans visiting a brands page. Paid Impressions: Number of ad impressions. CPC: Cost Per Click. CPM: Cost Per 1,000 Impressions. CTR: Clickthrough Rate of all ads. Social CTR: Clickthrough Rate of friend of fan ads. Social Impressions: Impressions for friend of fan ads. 718 SW Alder St., Suite 200 www.blitzlocal.com www.facebook.com/blitzlocal Portland, OR 97205 23