Strong Performance And Soaring Prices Explain The Explosion In Spending On Social Media Ads

BIISocial-mobile ad spending will boom by over 70% this year.

The social media ad industry is having a record year, with spending on social ads that appear on mobile devices exploding over 70% in annual terms, according to .

What's behind this surge? The story comes down to two factors, prices (which are tripling) and performance.

Consider:

• . During the second quarter, click-through rates (CTRs) on Facebook averaged 0.36% globally during the second quarter of 2014, rising from 0.14% one year earlier, based on a selection of advertisers studied by Nanigans.
• , particularly mobile app-install ad units, which analysts suggest could account for anywhere from one-quarter to more than one-half of Facebook's mobile ad revenues.
• , according to data gathered by BI Intelligence. Just as an example, Facebook's mobile app-install ads sell for as much as $20 per ad on Facebook, according to The Wall Street Journal.
• , according to Nanigans.
• . For instance, Facebook posts with more than 5,000 interactions (likes, shares, comments) saw an average of 86.6-times higher number of impressions when promoted using paid ads, a much higher "multiplier" than posts with poor organic performance.

Our finds that US social-media ad spend will top $8.5 billion this year and reach nearly $14 billion in 2018, up from just $6.1 billion in 2013. The report gives a five-year CAGR for the industry.

In the report and associated PowerPoint presentation, BI Intelligence looks at all the numbers and explores the drivers of social ad adoption.

In full, the report:

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