Cities such as London and Paris regularly top the charts when it comes to property prices and the cost of living. However does this translate to the social world – and in particular to Facebook advertising?
Brands now have the ability to target Facebook users based on a wide range of demographic factors. One of these is specific geographical location, with advertising costs varying from city to city dependent on demand. Essentially Facebook provides a ‘suggested bid’ based on the targeting criteria set, and we used these figures to rank Europe’s 46 capital cities to see how they fared when it comes to advertising costs.
The analysis is based on suggested maximum bids for “Newsfeed” placements on desktop and mobile (Newsfeed ads typically get higher click through and conversion rates – usually at a higher cost, vs. right hand column placements). Geographic targeting was set at the city level + no radius (the default setting includes a 25 mile radius). Suggested bids are subject to change, as competition causes them to fluctuate and were analysed on 17 June 2015.
The analysis led to three key findings:
1. Nordic capitals top the rankings
Norwegian capital Oslo was the most expensive city in Europe, at $0.73 per user click. Another three Nordic capitals (Helsinki, Stockholm and Copenhagen) also featured in the top ten for advertising cost. Why? Probably because all of them are medium-sized cities that contain affluent populations, the vast majority of whom are on Facebook. This means there is strong competition between brands looking to reach them.
Separate research from eMarketer backs up our findings about the Nordic region. It found that Facebook was the most widely used social media site for advertising in this region, with 79% of respondents choosing it as their number one channel for ads. The reason it is number one? 63% of those surveyed said it was the most effective social media advertising channel, 12% ahead of nearest rival YouTube.
2. Diversity brings down costs
London and Paris may be expensive places to live, but are outside the top 5 when it comes to Facebook advertising costs. This may well be due to the size and diversity of their Facebook populations, which might mean that it is easier for brands to hone in on specific audiences using additional targeting options. This translates into lower costs per user when targeting the entire city. London ranks 9th in the analysis at $0.48 per click, while Paris is 11th. Other large capitals outside the top 10 are Madrid (16th), Rome (22nd) and Athens (33rd).
In contrast, the tiny Vatican City has less than 1,000 residents, but there is a high demand to reach them. This pushes up the suggested bid to $0.70 per user click, not far behind Oslo. Advertisers do need to bear in mind that no matter how much they spend, they won’t be able to reach the Vatican City’s most famous resident, as Pope Francis isn’t on Facebook!
3. Lower demand equals lower costs
At the other end of the table the cheapest European capitals to target with Facebook ads are both in the Balkans – Skopje in the Republic of Macedonia and Sarajevo in Bosnia & Herzegovina. At $0.03 per user click they are 24 times cheaper than Oslo. Cities towards the bottom of the table combine small actual and Facebook populations with lower average incomes, and consequently generate less competition when it comes to advertising.
When it comes to Facebook advertising, location-specific targeting is just one of the options available. By understanding your audience and their specific attributes, you can use these options to focus your budgets on the segments that deliver the most value to your business, whether this is measured through engagement, app downloads or sales. This ensures you maximise return on investment, and demonstrates the power and flexibility of Facebook advertising – whatever city you are targeting.