Contents

02 Introduction

Advertisers make huge savings

03 in the United States and Canada

CTR almost doubles in the

04 United States in one quarter

Advertisers in the United States

05 are making the most of News Feed

Advertisers in the United States

06 are making the most of News Feed continued…

Facebook users find Page Post Ads

07 highly engaging

© 2012 TBG Digital Page 1

 Introduction

Welcome to TBG Digital’s Global Facebook Advertising Report for Q3 2012. This
report examines trends and changes in the performance of Facebook advertising
campaigns managed by TBG Digital. We believe our data provides a strong insight
into the market and is therefore useful for advertisers who want to know what
works well and what kind of results to expect.

We have included actual values for costs and performance metrics throughout the
report but it should be noted that TBG Digital optimizes its activity to move metrics
such as sales and advocacy. With many brands now recruiting large volumes of fans,
focused messaging that enables maximum engagement, social reach and increased
awareness is paramount.

As an independent agency, TBG Digital works with global brands to define, refine and
manage their social value. Measuring the real value of our clients’ social connections
allows TBG’s media and creative services to recruit the right fans, enable meaningful
advocacy and move the metrics that matter to each advertiser’s business.

Our team of experts have delivered more than 685 billion impressions and over 87
million social connections with a focus on ROI. Our activity is supported by
proprietary technology and benchmarked against a data store of more than one
trillion events.

We have offices in London, San Francisco, New York, Chicago, Atlanta, Hamburg,
Amsterdam and Manila.

In this report we measured:

520 BILLION impressions

in more than 190 countries

for 282 clients

from Q1 2011 to Q3 2012

The Cambridge University Psychometrics Centre has verified the results, graphical
illustrations and methodology used in this report based on the data provided by TBG Digital.

© 2012 TBG Digital Page 2

 Major territory analysis
Advertisers make huge savings
in the United States and Canada
Average CPCs drop to 2010 levels

Insights
Last quarter’s Global Facebook Advertising Report showed the United States and Canada’s average Cost per
Click (CPC) rise to over $1 for the first time. Both countries have seen large reductions in average CPCs this
quarter with the United States dropping by 40% and Canada falling by 27%. The United States has had a
greater impact on the average CPC, which reduced by 34%, as a large percentage of this data set’s impressions
were delivered in that territory. The United Kingdom saw a slight decrease of 2% whereas Germany and France
both increased by 15% and 19% respectively.
Point of View
Average CPCs have dropped to 2010 levels; Q3 2012 CPCs are only 5% more than Q2 2010’s CPCs. As discussed
in last quarter’s report, Facebook’s Marketplace advertising is based on an auction bidding model i.e. how
much an advertiser is willing to pay for an impression or click. If, however, the CPC and Click Through Rates
(CTRs) of an ad are not high enough, Facebook will not publish it because the ad’s effective CPM will not be
enough to secure inventory. The Facebook ad ecosystem attempts to create a balance between Facebook’s
earning potential and the cost to advertisers. Facebook uses CPC and CTR metrics to calculate CPM (what they
earn per ad served). Last quarter, we attributed the increase in CPCs to advertisers bidding more to ensure
their ads were delivered. This quarter the high CTRs provided by News Feed ad placements has meant that
advertisers do not have to spend as much to ensure Facebook earns their target CPM per ad impression. This
may have had a positive effect on CPCs. We expect to see CPCs rise as competition for inventory increases.

Figures based on 367 billion impressions served in the United States, United Kingdom, Canada, France and Germany from January 2011 to
September 2012 inclusive. CPC values were calculated by dividing total ad spend by the total number of clicks.

© 2012 TBG Digital Page 3

 Major territory analysis
CTR almost doubles in the
United States in one quarter
New ad placements see ad engagement sky rocket

Insights
Click Through Rates (CTRs) are an indication of how engaging and relevant users find adverts on
Facebook. Last quarter saw an average increase of 11%. This quarter, the average CTR rate of the five
major territories measured have increased by 81%. By far the largest increase has been seen in the United
States with a 99% increase, followed by Canada with a 37% increase. Germany saw an 8% increase in CTR.
United Kingdom and France both experienced a decrease in Click Through Rates with 4% and 25%
respectively.
Point of View
Q3 2012 is the first full quarter since Facebook provided advertisers with access to its Mobile user base
which may have had an effect on ad engagement in the United States. This territory has seen the biggest
uptake in the new Mobile ad placement targeting. In an unchanging environment, a rise in Click Through
Rates could be attributed to improvements in ad creative and its targeting. Other countries have not
seen such a large increase in CTR, possibly due to those territories having a higher percentage of Offsite
campaign impressions.

Figures based on 367 billion impressions served in the United States, United Kingdom, Canada, France and Germany from January 2011 to
September 2012 inclusive. CTR values were calculated by dividing the total number of clicks by the total number of impressions.

© 2012 TBG Digital Page 4

 News Feed analysis
Advertisers in the United States
are making the most of News Feed
Advertiser costs are low and Users are engaged

Mobile News Feed only

CPC Index: 100.4% - Lower impressions with higher CPCs
CTR: 1.290% - Good for Sponsored Stories ads,
Mobile app installs & Page Post Ads

No Placement Targeting
CPC Index: 100% - High impressions with higher CPCs
(Baseline) - Good for Offsite, Application and
CTR: 0.049% Fanning campaigns
- Higher CPCs

Desktop News Feed + Right Hand Side panel

CPC Index: 90.4% - High impressions and high CPCs
CTR: 0.057% - Good for Sponsored Stories ads
& Page Post Ads

Desktop News Feed only

CPC Index: 54.4% - Lower impressions with lower CPCs
CTR: 1.285% - Good for Sponsored Stories ads
& Page Post Ads

Desktop + Mobile News Feed

CPC Index: 29.0% - Lower impressions with low CPCs
CTR: 1.468% - Good for Sponsored Stories ads
& Page Post Ads with access to Mobile

© 2012 TBG Digital Page 5

 News Feed analysis

Insights
In last quarter’s Global Facebook Advertising Report, it was noted that Mobile News Feed ads were
receiving Click Through Rates that were 14 times that of targeting both Desktop News Feed and ads on
the Right Hand Side panel together.

When monitoring Fanning and Application campaigns in the United States only, this quarter sees Mobile
News Feed ads receiving CTRs almost 23 times that of “Desktop News Feed + Right Hand Side” ads
(1.290% versus 0.057%). Targeting Desktop and Mobile News Feed together fares even better with a CTR
of 1.468%.

The CPC (Cost per Click) of ads targeted to Mobile News Feed are 3.4 times that of Desktop and Mobile
News Feed targeting, which has the lowest CPC of all placement targeting options.

Point of View
What is very apparent here is that News Feed targeting seems to be working well for all involved but,
before we focus on why and how, it should be noted that, although the results for News Feed are very
strong, the majority of impressions are provided by ads on the Right Hand Side panel.

Advertisers, in particular, are finding lower CPC costs in the News Feed, especially with the “Desktop +
Mobile News Feed” placement. On first look it would be expected that this placement’s ad costs would
fall somewhere between Desktop News Feed and Mobile News Feed but, in fact, the average CPCs for
“Desktop + Mobile News Feed” are much lower than any other placement. The cheaper Cost per Click
values seem to derive from the fact that targeting both placements together opens up more inventory
with less competition (“Mobile News Feed only” is already a very popular targeting option). Please note
that targeting both Desktop and Mobile New Feed with low bids may deliver fewer impressions on
Mobile.

We are also continuing to see high CTRs on Desktop News Feed and Mobile News Feed which would
indicate that users are very engaged with ads in these locations. There may be an issue with accidental
clicks due to the size of the action buttons in Mobile ads so advertisers will have to monitor engagement
rates closely. We would expect any unintentional interactions to decline over time as users become more
used to seeing ads in the Mobile News Feed.

Figures based on 13.4 billion Fanning and Facebook Application impressions served in the United States between July 2012 and September
2012 inclusive.

© 2012 TBG Digital Page 6

 News Feed analysis
Facebook users find Page Post Ads
highly engaging
Advertisers receive reduced CPCs as a result

Placement Type CTR CPC Index

No Placement Targeting 0.074% 100%

(baseline)

Mobile News Feed only 2.429% 92.2%

Desktop News Feed only 1.213% 84.4%

Desktop News Feed +
0.077% 69.8%
Right Hand Side panel
Desktop + Mobile News Feed 2.176% 53.2%

Insights
Investigating the success of News Feed further, a global deep dive into Page Post Ads has shown the
relatively new ad format to be delivering average Click Through Rates above 2%, specifically 2.429% on
Mobile News Feed and 2.176% when targeting Desktop and Mobile News Feed together.

The cheapest CPCs for Page Post Ads are available when targeting “Desktop + Mobile News Feed” which are
47% less than those with no placement targeting.

Point of View
Page Post Ads are proving to be popular with users as they are receiving CTRs much higher than average on
the network. Page Post Ads on Mobile are larger in format and can include a sizeable image together with
the promoted post’s messaging and additional social context. It is very difficult for a user to miss these ads
on their device’s small screen which might be why we are seeing such high Click Through Rates. These high
CTRs are further compounded by the fact that brands are beginning to understand how to deliver engaging
brand messages through their Facebook Page. It should also be noted that the introduction of Dark Posts
has allowed advertisers to create posts that are not published to their Facebook Page but can be converted
to Page Post Ads and therefore tailored and targeted to different groups of users. This new method of
creating Page Post Ads has also probably improved Click Through Rates on Right Hand Side Panel ads.

Figures based on 3.4 billion Page Post Ad impressions served globally between July 2012 and September 2012 inclusive.

© 2012 TBG Digital Page 7

 TBG Digital offers
Smart Social at Scale
1. Recruit
Recruit a community of quality users
 Build your base of connections
 Use Marketplace ads & recruitment apps
 Focus on quality at scale
3. Reach
Reach further and amplify message
 3Drive virality with social apps
 Use social context ads to leverage
endorsement
 Create impact with Premium buys
© 2012 TBG Digital
2. Engage
Engage using passion centers
 Create many lightweight interactions
 Tailor messages in ads and apps
 Build value with ‘always on’
content platforms
4. Measure Value
Measure and optimize to real value
 Measure what is important to you
(including advocacy, preference & sales)
 Move the metrics that matter
Page 8
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