The iPhone Is Crushing Android by 1,790% in Facebook Advertising Returns
A new report from the marketing firm Nanigans looks at profits from facebook ads on iPhones versus Android.
According to a new study of over 200 billion Facebook (NASDAQ:FB) ads, published by marketing company Nanigans, mobile ads on Apple's (NASDAQ:AAPL) iPhone generate a staggering 1,790% more return on investment than ads on Google's (NASDAQ:GOOG) Android. Adding major insult to injury, the study found that advertising on the Android OS costs more to advertisers than it returns.
Nanigans, one of the biggest purchasers of Facebook ads, specializes in what it calls predictive lifetime value: Its SaaS platform measures, predicts, and optimizes ad spending for lifetime ROI, on both desktop and mobile.
The study, which focuses on retailers, found that Facebook's desktop ads have seen a 375% increase in click-throughs, and that the overall return on investment has increased by 152%.
These numbers should be music to the ears of Facebook investors, but what was really interesting in the Nanigans study was the amazing discrepancy between Android and iOS when it came to mobile ROI. According to the report, there is only a slight premium for placing Facebook ads on iPhones: It costs $4.99 per thousand impressions (CPM) as compared to the slight discount of $4.87 for Android. On the other hand, average cost per click (CPC), which is the amount that an advertiser will pay when a user clicks on ad, is $0.40 for iOS compared to Android's $0.18.
The disparity doesn't stop there. As the report read, "Retailers are realizing significantly greater return from audiences on iOS than audiences on Android. For the first three quarters of 2013, RPC on iOS averaged 6.1 times higher than Android and ROI on iOS averaged 17.9 times higher than Android." The latter number is more dramatic, but both figures express the same finding: that retailers advertising on Facebook can simply make more money by placing those ads on iPhones.
Perhaps even more surprising, the report found that Facebook ads on Android yield negative ROI, meaning it actually costs advertisers more money to place the ads on Facebook than the ads will make for them. The average was a 10% loss. In Apple Land, iOS brings back, on average, 160% returns.
The report doesn't speculate on why there's a such an ROI gap between the two operating systems, but pundits and tech followers like me are happy to. The iPhone is on the premium end of the smartphone market; iPhone users make more money, and in turn, spend more money. They are more valuable to advertisers, so the slightly higher CPM of iOS is by no means a deterrent. As Dan Slagen, a senior vice president at Nanigans, told VentureBeat, "Audiences cost more on iPhone, and the reason is that it's worth it. Typically, we're not looking to acquire one-time customers, we're looking to invest over time...so we pay more up front for better long-term results." The $0.12 discrepancy in CPM between iOS and Android is certainly a small cost to pay for 1,790% better ROI.
Slagen admitted the company was "on the fence" about publishing the report, given how controversial it would be. (Google announces its latest quarterly earnings today.) However, the executives at Nanigans decided to release their findings and let the data do the talking. Some in the space have advocated on the behalf of Android and the phone makers that run it, like Samsung (OCTMKTS:SSNLF), claiming that Android can offer more real estate, as there are currently more new activations of Android than there are of iOS devices. Supporters of phablets (phone + tablet, a large screened smartphone), like Samsung's Galaxy Note II, have said that larger screens provide more value to advertisers.
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