Facebook ad rates rise for brands, study finds. So is Facebook marketing worth the effort?

By Chris Lee

The cost of advertising on Facebook has accelerated in the last year, according to a recent study. The latest Global Facebook Advertising Report compiled by TBG Digital (TBG) and verified by the University of Cambridge found that Facebook average cost-per-thousand-impressions (CPM) ad rates increased by 41 per cent between Q1 2011-Q1 2012, including a 15 per cent increase on the last quarter.

TBG’s survey of its own client base took into account 372 billion impressions in more than 190 countries for 235 clients between Q1 2011 to Q1 2012 and also found that the average cost per click (CPC) increased by 23 per cent in its top five territories. The finance sector leads with the most expensive advertising costs, with 3.5 times higher CPCs than the food and drink sector which has the lowest ad costs

Recruiting fans has also hyper-inflated, with each fan costing 43 per cent more to encourage to ‘like’ a Facebook brand page in Q1 2012 than in Q4 2011, with the UK seeing the highest rise at 77 per cent.

Good news

On the plus side, the click through rate (CTR) for news shot up in the same period by 196 per cent, meaning Twitter is no longer the sole dominant social network for news consumption. The retail sector also saw a 10 per cent rise in impressions. TBG attributes this rise in news consumption with the success of Facebook social readers from the likes of Yahoo! News, The Washington Post and The Guardian.

Simon Mansell, CEO of TBG Digital, said that his company’s study had unearthed some compelling trends as it relates to how brands are using the site to engage customers.

“One amazing finding is that Facebook has seen an increase in pricing at the same time when it has also grown the number of ads per page, sometimes up to seven, which you would naturally expect to actually deflate prices,” he said. “Additionally, the rapid increase in CTR for news clients is promising for Facebook as it demonstrates that the platform works well for sharing news as well as gaming and photos, an offering which other social networks, such as Twitter have dominated to date.”

Is Facebook worth the effort?

Given the incredible interest and investment from brands that Facebook marketing is receiving, is it paying back?

For Roger Warner, founder and managing director of UK-based online PR firm Content and Motion, brands are now at a crossroads on social media. He argues that they absolutely need to participate, engage and connect in authentic ways – and lots of great things are happening as a result.

“Facebook and Twitter are dragging customer service levels up and most socially active brands are becoming more transparent and accountable for their wider business actions,” he told NMK. “But when a brand shows up on Facebook and asks (in an ‘open’, ‘authentic’ way), ‘Hi, how was your weekend?’ that brand is betraying itself by devaluing its investment in the things that have – to this point in time – made it a brand.”

Added to this, Warner says that the role of ‘Social Media Expert’ is creating a near term hybrid set of skills and responsibilities that mix corporate functions like customer service, product development, support, communications and branding into a single entity that succeeds in some things but excels at nothing.

“For those brands that are currently kludging the requirement, the common denominators are the ‘weekend gambit’ on Facebook (boring) and a thin, smiley veneer of customer service on Twitter (not very helpful),” he concluded. “We’re becoming very focused on specific types of [social media] people, elaborate new social media processes and all of the technology underneath – at the expense of creative ideas and wider organisational change. And this type of approach is often held up – by us Social Media wonks – as ‘best practice.’”

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