Twitter’s smaller ad inventory means higher ad rates than Facebook

Market Realist

Why more competition from digital media hurts TV ad sales (Part 5 of 6)

(Continued from Part 4)

Higher CPC and CPM rates on Twitter than Facebook

In the last couple of articles in this series, we discussed that although larger-reach new ad formats helped drive higher advertising growth in Facebook (FB) than Twitter (TWTR) in 2013, sectors such as retailer and consumer services drove higher advertising growth on Twitter in Q4 2013. Here, we’ll discuss why Twitter manages to demand higher CPC (cost-per-click) and CPM (cost-per-impression) ad rates. As the below chart shows, the CPM rates for Twitter is about seven times that of Facebook as of Q4 2013.

Less ad inventory helps Twitter with higher CPM and CPC rates

According to a report from Resolution Media,  an agency that handles clients such as HP (HPQ), Pepsi (PEP), and FedEx (FDX) for social media advertising, ”Impressions and, to a lesser extent, clicks cost significantly more on Twitter; this reflects simple supply and demand with Facebook offering far more ad inventory. Facebook enables marketers to tap into significantly more ad inventory in large part thanks to the network’s right rail desktop ad placements, whereas Twitter ad placements appear predominantly in the feed. Facebook’s right rail ad placements sell for much lower costs than the better performing newsfeed-based inventory, which tends to be predominantly mobile inventory.”

Twitter has become a powerful channel for reaching consumers around real-time news and events

Also according to Resolution Media, “Advertisers who take the time to customize their approach to Twitter advertising will reap rewards for doing so thanks to the unique and inherent advantages the social network can offer advertisers. While Facebook continues to have broader appeal as a mass reach platform where advertisers can connect at a 1:1 level with consumers, Twitter, because of its public nature, has become a powerful channel for reaching and engaging consumers around real-time news and events, such as the Grammy Awards and the Super Bowl.”

Continue to Part 6

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