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FACEBOOK'S RISE TO DOMINANCE

THE STATE OF VIDEO ADVERTISING

An in-depth look at Facebook video ad performance metrics and market forces that are shaping the ways marketers advertise in 2015.

THE STATE OF VIDEO ADVERTISING: FACEBOOKS RISE TO DOMINANCE Page 2 of 20

1. Introduction

2. Measuring Success & Campaign Ownership

3. Facebook Video Ad Campaigns: The Basics

4. Facebook Video Ad Case Studies

5. Conclusion

6. About the Survey

CONTENTS

of 18THE STATE OF VIDEO ADVERTISING: FACEBOOKS RISE TO DOMINANCE

AbstractVideo is the fastest growing format on the Internet. According to Cisco Systems, video will represent 80-90% of global consumer Internet traf-fic by 20181. Consumer generated video sites such as Googles YouTube, Vimeo, and the like are now joined by Facebook, Instagram, Twitter, and the other leading social networks who are all vying to be the undisputed leader of video consumption. Premium publishers and video players such as Netflix, Hulu, HBO, and more are leading the transition from traditional programming content to exclusive and proprietary content delivery. All of these video networks are not only changing where consumers are spending their time watching video, but they are also giving rise to new opportunities for advertisers who want to reach those audiences.

Facebook, in particular, has been a fast emerging player in video having rocketed into a leadership position. In August of last year, comScore found that for the first time Facebook had more video views than You-Tube on desktop. Since that time, the two have been battling it out month by month for the top spot. Facebooks meteoric rise is driven by their growth in video views per person, which have nearly doubled year-over-year from January 2014 compared to January 2015. With Face-books reported video views exceeding three billion per day in January of 2015, a figure that had tripled since September of 2014, that means comScores desktop numbers only represent one tenth of Facebooks total video views.

As is the case with emerging channels, marketers will eventually follow to reach these new video audiences.

NOTE: A video is defined as any streamed segment of audiovisual content, including both progressive downloads and live streams. For long-form, segmented content, (e.g. television episodes with ad pods in the middle) each segment of the content is counted as a distinct video stream. Video views are in-clusive of both user-initiated and auto-played videos that are viewed for longer than 3 seconds

VIDEOS VIEWED - BILLIONS

Jan2014

Feb2014

Mar2014

Apr2014

May2014

Jun2014

Jul2014

Aug2014

Sep2014

Oct2014

Nov2014

Dec2014

Jan2015

Feb2015

Jan2014

Feb2014

Mar2014

Apr2014

May2014

Jun2014

Jul2014

Aug2014

Sep2014

Oct2014

Nov2014

Dec2014

Jan2015

Feb2015

Facebook YouTube

0

3

6

9

12

15

0

30

60

90

120

150

VIDEOS VIEWED ON DESKTOP

FACEBOOK vs. YOUTUBE

9.6

11.9

9.4

107.4

69.5

4.9

82.1

Source: comScore, Desktop Video Metrics, Jan 2014 Feb 2015FACEBOOK VS. YOUTUBE

VIDEOS PER PERSON ON DESKTOP

58.7

91% increase in video views per person on Facebook, compared to 9.9% decrease for YouTube

JAN 15 vs JAN 14


IntroductionVideo has been an important advertising format ever since the first TV commercial in 1941. The rapid adoption and wide penetration of social networks has made Facebook and its peers desirable platforms for advertising since their inception. However, mature video advertising offerings on social have only been made available by these emerging players in recent years. The importance of the video format and the desire of advertisers to reach consumers on social channels converged in 2014 when, for the first time, Facebook had more video views than Google on the desktop.

A recent survey done by Mixpo of 125 agencies, brands, and publishers provides deeper insights into the trend, and shows how advertisers are driving a shift. This report also includes two case studies on recent Facebook video campaigns from major national brands, sharing lessons on the effectiveness of differing targeting strategies for video on social.

Source: Mixpo Survey 2015NONE

0

100%

50

How Advertisers And Agencies Are Using And Plan To Use Video

Plan to run a video advertising campaign or video promotional content in the next year

Ran a video advertising campaign or video promotional content in the last year

More advertisers plan to run video ads on Facebook than any other network.

Facebook Overtaking GoogleLast year more of our respondents ran a video ad campaign on YouTube (77.8%) than they did on Facebook (63%).

In 2015, however, our respondents are indicating that more of them will run a campaign on Facebook (87%) than will on YouTube (81.5%).

Facebook taking over as the top property on which advertisers are intending to run video ads is a significant development. Also significant is the substantial jump in interest to run video ads on Instagram, Twitter, and LinkedIn.

THE STATE OF VIDEO ADVERTISING: FACEBOOKS RISE TO DOMINANCE Page 5 of 20


PLANNING RESPONSIBILITY IS SHIFTING TO DIGITAL MEDIA TEAMS

Clicks

CTR

Engagement with interactive elements

Impressions

Shares

Total time spent watching

Views

Conversions

NA

Other

47%

43%

40%

38%

34%

30%

19%

13%

9.4%

3.8%

THE MOST IMPORTANT METRICS

DIGITAL TEAM 56.6%SOCIAL TEAM 17%

OTHER 3.8%

BRAND 22.6%

Respondents chose their top 3 metrics when running a video ad on social

Respondents identified the team responsible for planning social campaigns

Measuring SuccessTo better understand the metrics that advertisers are focused on for video ads run in social, we asked our respondents to list the three met-rics most important to them. Surprisingly, video views; a traditional video metric; was ranked 5th most important. Ahead of time spent viewing videos and video views were three metrics: engagement, shares, and conversions.

This indicates that the expectation for a video ad run in social is to deliver more than just a video view. In fact, conversions were ranked as higher importance than a view itself. In social, video ads must work harder to satisfy advertisers than in other channels.

Social Campaign OwnersSeveral years ago, social campaigns were all about generating earned media through viral content. These campaigns were primarily managed by people with the word social in their title. Only recently have the paid media offerings of the social networks truly matured, which their advertising revenue growth reflects. In 2014, social advertising spending grew 40% to $8.5 billion3. Accordingly, 60% of social campaigns; which are now mostly paid; are falling under the purview of digital media teams rather than social teams. In fact, social teams only drove the primary planning for social campaigns for 17% of the respondents.

In 2014, social advertising spending grew 40% to $8.5 billion.


Survey ConclusionsAcross different types of companies, clients, and objectives; advertisers are flocking to video advertising on social media. One of the most significant trends in our study is Facebook overtaking YouTube as the most planned video ad buy in 2015. Interestingly, even though over 80% of our respondents considered social advertising to be important or very important, were still seeing a disproportionately low percentage of digital budgets going toward social compared to how much time users are spending in social (almost half of our respondents spend less than 10% of their digital media budget in social). Perhaps the emergence of video advertising in social will help close that gap. To better understand how advertisers are leveraging Facebook video ads today, lets take a closer look at a few campaigns.


Facebook Video Ad Campaigns: The Basics


While Facebook has offered video ads and posts for some time, its only been in the last year that Facebook has offered native video advertising. Here are some key things to know about Facebooks native video ads.

Also available for an upfront buy, but video content must be pre-approved

All ads start as auto-play with audio off

A video play is considered a view if played for three seconds

User must click/tap to turn audio on

Advertisers can create remarketing audiences from video watchers

Available to buy in their auction marketplace


The People-Based AdvantagePerhaps the most significant differentiator of video ads on Facebook and Twitter is their people-based marketing advantage.

People-based marketing is the ability to leverage individual user IDs for targeting and attribution, without having to actually provide the user data to the advertisers. Some of the key advantages to this approach are:

Retargeting that works across devices, without dependency on 3rd party cookies that expire or get deleted

Persistent behavioral data at the individual level from inside and out-side of Facebook that drives more effective lookalike modeling

True attribution based on view through and/or click through; even in mobile including mobile apps

No personally identifiable information (PII) is created by or passed to the advertiser, eliminating liability for privacy protection

In an Adweek article, Jonathan Nelson, CEO of Omnicom Digital, really captured the significance of the people-based marketing advantage, When you have that much known information, tied to analytics and an ad server, you can start doing messaging in a way no ones ever done before. Thats marketing nirvana.4

When you have that much known information, tied to analytics and an ad server, you can start

doing messaging in a way no ones ever done before. Thats marketing nirvana.

- Jonathan Nelson, CEO of Omnicom Digital


CASE STUDY: National TV Tune-In Campaign

* Lookalike audiences are built based on data Facebook has about its users. Any site with a Facebook like but-ton has Facebook cookies, enabling Facebook to collect data about user behavior outside of facebook.com.

GOALDrive viewership to a series of live premieres for a top Entertainment brand.

OVERVIEWTo drive viewership, the advertiser used their 30-second TV spot to run a series of video ads on Facebook. Two seed audiences were created using interest and geographic targeting. Four additional audiences used more complex targeting methods.

Facebook enables the creation of audiences that look like a group of people with a certain characteristic or behavior. In this case, we created such a lookalike audience based on existing fans of the brand page. These are people who have similar online behavior, in terms of the content they choose to consume, to those in reference groups.* Three of the four more complex audience groups were remarketing audiences so that the advertiser could achieve higher frequency. The remarketing audiences were: (1) viewers of the brands pre-vious Facebook campaign, (2) viewers who had seen the same ad on premium publishers across the web, and (3) viewers who had already seen the ad on Facebook as part of the other five audiences.

97% of video views came from auto-play. These are people who viewed the video by scrolling through their feed, and paused to view at least three seconds of the video. On average these people saw 36% of the video (or 11 seconds). 14% of the people in this group likely finished the video, watching at least 95%.

The remaining 3% clicked to play the video, and they viewed, on average, 80% of the video (or 24 seconds). 64% of this group likely finished the video, watching at least 95%. This higher average percent viewed rate is to be expected from an audience that chose to engage with the video. Unfortunately, Facebook does not currently provide data on viewers who turn on sound.

1,426,113IMPRESSIONS

$33.99CPM

3.45%CTR

$0.98CPC

25.5%VIDEO VIEW RATE

$0.13COST PER VIEW

CAMPAIGN SNAPSHOT

79.7%

35.5%

AUTO-PLAYED

Avg. % of Video Viewed

CLICKED-TO-PLAY

3%

97%

AUTO-PLAYED

Video View Type

CLICKED-TO-PLAY


TARGETING KPI COMPARISONEach of the six audience groups yielded differing performance rates, with CTRs ranging from 3.5% to 7.6% and video view rates ranging from 22% to 31%.

CPM CTRVideo

View RateCost per

Video View

Interests $16.59 7.64% 24% $0.07

Geo $37.71 3.49% 26% $0.14

Fan Lookalikes $21.20 6.73% 22% $0.10

Remarketing - Previous Campaign

$67.31 7.52% 28% $0.24

Remarketing - Video Watchers

$36.60 4.05% 31% $0.12

Lookalike - Previous Campaign

$29.81 5.76% 27% $0.11

CASE STUDY: National TV Tune-In Campaign

CONCLUSIONThe higher CPMs among these targeting methods are driven by the types of targeting. CPMs can be as low as $15 for broad targeting, and for our most narrowly retargeted campaigns, we saw CPMs that were over $100. Average costs per video view by targeting are:

Broad: 5-10

Narrow: 10-15

Hyper: 20-25

It is interesting to note that the higher performing targeting methods are not the most expensive. Remarketing to video watchers yielded the highest completion rate (though a comparatively low CTR of 4%), but this audience had a relatively low CPM of $36.60. This is not to say that this audience will always perform best at a cost savings, however, it demonstrates the need for an involved audience creation strategy to determine how to optimize media budgets.


GOAL Drive consumers to sign up for home security service.

OVERVIEWIn one of the first campaigns we ran using the new Facebook video unit, our client wanted to understand how to best incorporate it into their media mix. To help them answer that question, we tested three strategies for driving conversion:

1. No video used (Link Ads)

2. Video ads with a call to action button (Video Ads with Link Button)

3. Video ads, then retargeted for offer

The ads leveraged a 30 second TV spot. Each scenario used the same seed audiences for all three ad types. Our seed audi-ences included an existing customer list, a lookalike audience of existing customers, and a geo-targeted audience based on high priority markets that also suppressed the existing customer list. For the third scenario, we created a remarketing audience for those who chose to watch the video with an offer. Our hypoth-esis was that an audience who saw our video would be more likely to convert on the offer.

The performance of each of these three tactics can be seen in the following chart.

TACTICAL KPI COMPARISON

Links ads $12.82 1.10% 0.25%

CPM CTR CPAConversion

Rate

$32.83 2.35% 0.02%

$30.15

$459.28

$7,692.40

$1,378.42*2.14% 0.10%

Video Ads with Link Button

Remarketing - video watchers

CONCLUSIONCost per acquisition (CPA) was the cheapest with no video. CPA was highest with video and link. Overall CPA was in the middle for retargeted video watchers, but lowest if you exclude video ad spend and just calculate CPA from money spent on retargeting. Key take awaydont carve out video ad dollars from your direct response budget, but you should absolutely be building retargetable video audiences with your brand budgets.

We havent yet analyzed the impact of video ads on direct response campaigns over a quarterly or annual time range, which could drive further performance gains on direct response campaigns.

CASE STUDY: Customer Acquisition Campaign

690,370IMPRESSIONS

$33.77CPM

2.41%CTR

$1.40CPC

31%VIDEO VIEW RATE

$0.11COST PER VIEW

CAMPAIGN SNAPSHOT

* The CPA for retargeted video watchers excluding video media cost is $245.62

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ConclusionThe top social networks are becoming the leading digital video con-sumption channels. For advertisers, video represents more than just an opportunity to distribute their TV spots in more channels; social networks also deliver interaction, retargeting, lookalike targeting, and people-based attribution.

Perhaps the biggest challenge facing advertisers who want to tap the value of social video ads is the lack of best practices and mature tech-nologies around the management of video campaigns. Advertisers that want to take advantage of the new capabilities from Facebook, Twitter, and other people-based marketing platforms require new approaches to planning, execution, and management. Advertisers who are simply looking for more video views will miss out on the audi-ence creation capabilities as well as attribution across the customer journey. In other words, advertisers solely focused on video views will be throwing away audience and attribution equity. Yet, advertisers who want to leverage these new capabilities will quickly feel the pain of audience management and people-based attribution strategies.

These are the challenges were solving for at Mixpo. We, along with a new breed of technology companies, are building on the people-based marketing foundation necessary for unlocking the value of the new video advertising ecosystem. Please tap, click, or call us if youd like to learn more about how we can help.

THE STATE OF VIDEO ADVERTISING: FACEBOOKS RISE TO DOMINANCE

CONCLUSION


BRAND 9.3%CREATIVE AGENCY 27.8%MEDIA AGENCY 31.5%DIGITAL AGENCY 31.5%

B2B 14.8%BOTH EQUALLY 24.1%B2C 61.1%

NOT IMPORTANT 1.9%

SOMEWHAT IMPORTANT 16.7%IMPORTANT 33.3%VERY IMPORTANT 48.1%

TYPE OF COMPANY

MARKETING RELATIONSHIP

IMPORTANCE OF SOCIAL ADVERTISING

About the SurveyWe surveyed over 125 U.S. agency, brand, and publisher executives to gain insight into their plans and views related to video advertising on Facebook, Twitter, and other major social properties.

In the last year, 96% of agency executives ran a social advertising campaign, up from 91% in 2014, and 87% in 2013.

Our survey included a 60/40 mix of companies with B2C and B2B clients.

As this report focuses on social video advertising, we wanted to know how important is social advertising in general to the respondents. Over 80% of

respondents indicated that social advertising was important to them and almost half said that it was very important to them. Less than 2% felt that social advertising was not important to them.

Clearly the respondents are signaling that social ads are important to their digital media mix, but how much of their budget are they actually allocating to social? Today, about half of the respondents are spending less than 10% of their digital advertising budgets in social. And, nearly three quarters of them are spending less than 25% of their budgets in social.


93% RUN THE CAMPAIGN DIRECTLY THROUGH FACEBOOK

RUN THE CAMPAIGN DIRECTLY THROUGH TWITTER

LEVERAGE THIRD PARTY TOOLS TO RUN AD CAMPAIGNS ON FACEBOOK

LEVERAGE THIRD PARTY TOOLS TO RUN AD CAMPAIGNS ON TWITTER

N/A

OTHER

OF RESPONDENTS RAN BRAND ADVERTISING CAMPAIGNS

63% OF RESPONDENTS RAN DIRECT RESPONSE ADVERTISING CAMPAIGNS

PERCENT OF DIGITAL BUDGET SPENT ON SOCIAL CHANNELS

PRIMARY ADVERTISING OBJECTIVES

< 10%

11-25%

26-49%

81.1%

49.1%

43.4%

20.8%

1.9%

1.9%

NO IDEA

$

ADVERTISERS WERE MORE LIKELY TO RUN CAMPAIGNS DIRECTLY THROUGH THE NETWORKS

In addition to the types of company and clients our respondents represent, we also wanted to know their primary advertising objectives. Over 90% of our respondents have branding objectives and over 60% have direct response objectives.

Our respondents also shared with us whether they ran their campaigns directly through Facebook and Twitter, or if they worked with a third party. Advertisers are more likely to run their Facebook ads directly through Facebook than they are on Twitter. And, for both social networks, advertisers were more likely to run campaigns directly through the networks than they are to work with a third party.


Appendix1. Cisco Systems, Inc. Cisco Visual Networking Index: Forecast and Methodology. 10 June 2014

2. Sloane, Garrett. Facebook Just Shared Insane Q4 Mobile Numbers and Ad Sales Its smartphone promos alone did $2.5 billion Adweek. 28 January 2015

3. Hoelzel, Mark. The Social-Media Advertising Report: Growth Forecasts, Market Trends, and the Rise of Mobile Business Insider. 2 December 2014

4. Sloane, Garrett. Facebooks New People-Based Ad Technology Is Marketing Nirvana Pepsi and Intel are early testers as social net unleashes data Adweek. 29 September 2014

APPENDIX


About MixpoMixpo enables advertisers and publishers to build, deliver, and measure ad campaigns across display and social. Mixpo boosts the performance of social ad campaigns by connecting the channels, campaign components, and campaigns between themselves. Through these critical campaign connections Mixpo enables better measurement, bid optimization, retargeting, and lookalike targeting.

In 2014 and 2013, Mixpo was selected by Forbes as one of Americas Most Promising Companies. To learn more visit http://www.mixpo.com.

Request a demo:

http://mixpo.co/SocialDemoRequest

CONTACT US FOR A DEMO OR TO LEARN MORE.

www.mixpo.com | 888.962.1110

Our ads management team can help manage your ad spend to get the most lift out of your ads for the lowest cost. As part of our ads management services, we also provide additional reporting and insights to help you achieve your goals.

Why Work with MixpoOur Social Performance Marketing Solution is able to deliver outstanding results because of our ability to streamline and manage incredibly complex tracking pixel integrations and to use the associated data to inform performance-driven audience creation and media buying practices.

Easily created and deployed social-mobile optimized ad landing pages through our landing page creation platform

Management of complex remarketing and conversion pixel programs to connect individual viewer behavior tracking to Facebooks action-optimized media buying option

Expertise in audience creation and execution strategy for driving optimal results

$

2015 Mixpo Inc. All rights reserved.

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