SocialMore Advertisers Flocking to Facebook Despite Rising Ad Costs [Report]

More Advertisers Flocking to Facebook Despite Rising Ad Costs [Report]

Facebook Ads CPC, CPM and Cost per Fan have all increased over the past year, even as engagement has slumped. Changes in Facebook ad display formats, competition, and how advertisers use Facebook may all contribute to the increased costs.

Over the past year, the cost of Facebook Ads has increased in just about every way possible, with CPM, CPC, and Cost per Fan all up from Q1 2011. Even so, Facebook is earning more from Marketplace ads, says TBG Digital’s Q1 2012 Global Facebook Advertising Report.


Costs per click are up 23 percent across the five territories evaluated by TBG: Canada, France, Germany, UK, and US. Advertisers in France saw the biggest CPC jump, with Q1 2012 rates 35 percent higher YoY. TBG hypothesizes that an imbalance in Facebook ads supply and demand could be driving the increasing CPCs.

Because TBG uses confidential data from 235 clients in 190 countries, actual CPC values have been removed from the chart. These figures, however, reflect data collected from over 268 billion impressions served in the five countries indicated above.


On average, CPMs (cost per thousand impressions) rose 41 percent over the same quarter last year, an increase of 15 percent since Q4 2011.

Engagement actually dropped in the same period; CTRs (click through rates) fell 6 percent, on average, from the previous quarter. Marketers in France were the hardest hit, seeing a 13 percent decline in ad engagement, while in the US, it fell 8 percent.

In their report, TBG notes that though CTR is generally a reflection of targeting and the quality of creative, recent changes in Facebook’s ad display format could be another contributing factor. The drop came after Facebook increased the number of ads on-page to seven, which might affect CTR.

The Cost per Fan has risen a significant 43 percent across all geographic regions studied since the previous quarter. This is not surprising, says the report, given higher ad costs, lower CTRs, and increased competition.


Ads for retailers took the greatest share of all impressions in Q1, at 23 percent. This was actually a 10 percent increase in share for retailers, who TBG suggest may be beginning to use Facebook more as a discovery tool and a way to communicate new products and sales.

The top five sectors advertising on Facebook haven’t changed. Together, Retail, Food & Drink, Finance, Entertainment, and Games make up 78 percent of all ads served on Facebook.


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