Our checks on the quarter highlighted that advertisers are not pushing back on pricing given the continued high ROI they?re seeing from Facebook. Carousel ads were highlighted this quarter as being in high demand as they?ve proven to be very effective from the advertisers' perspective.
Checks said that on a like for like basis, CPMs increased in a range of 10-30% qoq driven by the ongoing shift to mobile, an uptick in international pricing and helped by new Instagram spend. The early take on Instagram was very positive with marketing partners calling out rapid adoption and frictionless integration, while noting that Instagram spend to date has been incremental to Facebook budgets (and not yet showing signs of cannibalizing). In early September, Facebook announced that was rolling out Instagram advertising to all businesses (versus the prior limited beta mode) and that it would be available in 30 countries by September 30th. Marketers cited Instagram CPMs of about $15 in North America which is ~2x our estimates for Facebook mobile newsfeed pricing.
For 3Q15, our model assumes a +3% qoq increase in mobile newsfeed CPMs which we believe may prove conservative given our checks. In terms of 2016 ad budgets, checks say that Facebook can continue its share gains and see a second wave of companies driving spend on top of the early adopters.
