Brands ramp up ad spend on Facebook Stories by 124%, study finds

Brief:

Advertisers more than doubled (124%) their spending on Facebook Stories in Q4 2018 from the prior year, according to a Nanigans report shared with Mobile Marketer. Cost per mille (CPM) jumped 112%, click-through rates (CTRs) surged 52% and cost-per-clicks (CPCs) grew 39% for Facebook Stories.
Advertisers dedicated 61% of their overall ad budgets to video and spent the remainder on image-based ads, per the report. Video ads tend to boost CPMs while lowering CTRs, but continued investment in video suggests its ROI compensates for those trends.
Global CTRs on Facebook in Q4 returned to the Q2 level of 1.5% after dipping in Q3. Nanigans attributed the rise in click engagement to the effectiveness of dynamic ads delivered at scale among Facebook's user base, especially during the holidays.

Insight:

Facebook Stories, which the social network introduced after rival Snapchat made the format popular among young adults and teens, is showing positive performance trends that likely will encourage more brands and marketers to invest in the format. Facebook's News Feed is still the dominant way for marketers to reach a broad range of users on the social network, which continually experiments with ways to engage audiences, but the company has worked to make Stories an additional driver of ad revenue.

The adoption of Facebook Stories ads by marketers appears to be good news for the company. In the company's Q3 2018 earnings call, CEO Mark Zuckerberg warned analysts that ads in Stories would take time to become a significant driver of revenue growth. The company in May started testing the first Facebook Stories ads in the U.S., Mexico and Brazil before rolling it out worldwide in September.

Nanigans' data suggest that the format is making gains, even if it is dwarfed by the social network's more established News Feed. As the price of Stories ads rise and marketers put more money into the format, Facebook's overall revenue could grow, even as the social media industry matures and competition heats up. Not only is the Stories format popular among users, but they're proving to be an effective ad format from a marketing perspective as well. Sixty-two percent of people said they became more interested in a brand or product after seeing it in Stories, according to an Ipsos survey commissioned by Facebook IQ.