Facebook Advertising Costs on the Rise

February 1, 2012

According to a study conducted by Tbgdigital, Facebook advertising costs have increased significantly over the past year. Average Cost per Thousand Impressions (CPM) rates increased eight percent and cost-per-click (CPC) rates increased slightly by one percent in the final quarter of 2011, compared to the prior quarter.  Tbgdigital based their research on 326 billion Facebook ad impressions in the year’s fourth quarter across five major markets including the U.S., U.K., France, Germany and Canada.

The research shows over the course of the past year, CPM rates have increased 23 percent across all markets. CPC in the U.S. during the fourth quarter multiplied at a rate ten times greater than the average of the five markets at ten percent. Tbg stated, “This could point to demand increasing as more brands are advertising on Facebook and supply plateauing as U.S. user growth slows.” Rates have increased at various increments across markets, the United States seeing the largest leap in 2011.

Over the course of the year, click-through rates have seen the same steady increase. Click-through rates have increased 18 percent, showing advertisers may be creating more intriguing ads. This number could also indicate advertisers are acquiring more out of the available targeting options.

The Tbgdigital study concluded that Facebook’s dominance has expanded beyond the social landscape into the advertising industry, as it will be responsible for over 20 percent of U.S. display ad dollars. According to eMarketer, “Facebook's U.S. display ad revenue will grow 81 percent to $2.2 billion this year, accounting for more than a fifth of all U.S. display ad dollars.”

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