Today marks an impor­tant mile­stone for Effi­cient Fron­tier and Con­text Optional with the release of our first joint quar­terly State of Dig­i­tal Mar­ket­ing Report for Q2 2011. While Effi­cient Frontier’s quar­terly reports have long been a trusted source of data in the dig­i­tal mar­ket­ing indus­try, we are excited to add even more valu­able insights to our social media analy­sis, using data gleaned from Effi­cient Frontier’s clients as well as Con­text Optional’s client index rep­re­sent­ing more than 15 adver­tis­ers and 20 mil­lion fans from a mul­ti­tude of ver­ti­cals includ­ing retail, enter­tain­ment, CPG and finance.

Many key find­ings this quar­ter indi­cated how com­pet­i­tive Face­book is becom­ing in the dig­i­tal mar­ket­ing sphere, and show that the longer brands take to engage on Face­book, the more it will cost them in the long run. We also found that adver­tis­ers are focus­ing more on Return on Invest­ment (ROI) than on vol­ume, which resulted in slower growth com­pared to Q1 of last year. In addi­tion, Bing/Yahoo’s ROI con­tin­ues to improve, result­ing in them gain­ing a per­cent­age of Google’s cov­eted spend share. 

Key high­lights in the Q2 report include:

  • Search spend growth slowed to 8%, down from 17% year on year in Q1 of last year. We believe this is due to adver­tis­ers focus­ing on ROI instead of vol­ume, as well the slower than expected eco­nomic recovery.
  • Face­book adver­tis­ing con­tin­ues to get more com­pet­i­tive, with CPCs increas­ing 22% from Q1. This means that the longer brands wait to engage con­sumers on Face­book, the more expen­sive it will become to acquire fans.
  • Brands are increas­ingly focused on fan acqui­si­tion and engage­ment on Face­book. Between Octo­ber 2010 and 2011, brands in our index are on track to dou­ble their Face­book fans. Con­sumers on Face­book are also increas­ing their engage­ment with brands. Our analy­sis reveals that one post made by a brand leads to 100 com­ments from con­sumers on average.
  • Bing/Yahoo! gained 3.4% points of spend share from Google since Q4.

For the 2011 out­look, we predict:

  • Face­book CPCs will con­tinue to rise at a double-digit pace, and as a result, brands should not waste any time increas­ing their under­stand­ing and use of the chan­nel, acquir­ing new fans and exploit­ing new ad for­mats such as Spon­sored Stories.
  • Con­tin­ued test­ing and invest­ment in Face­book will see adver­tis­ers eval­u­ate and likely increase their spend. Look­ing ahead, we believe that adver­tis­ing dol­lars will shift from offline media to search, Face­book and dis­play. While we believe all online adver­tis­ing chan­nels will con­tinue to grow, the Face­book chan­nel will show the strongest growth in the months ahead.
  • Bing/Yahoo! will ben­e­fit if ROI improve­ments continue.

To get the full story, down­load our State of Dig­i­tal Mar­ket­ing Report for Q2 2011.

Dr Sid­dharth Shah
Sr. Direc­tor, Busi­ness Analytics