Facebook boosted by CPM rise

17 April 2012

LONDON: Facebook ads are becoming increasingly lucrative for the social network despite a decline in clicks, a new report has shown.

The Global Facebook Advertising Report, compiled by ad agency TBG Digital and audited by academics at Cambridge University, shows that the site's CPMs rose by 41% year-on-year in Q1 2012.

More expensive inventory also contributed to an increase in the typical "cost per fan" for brands with a presence on the social network. This metric rose by 43% worldwide from the previous quarter.

But overall clickthrough rates (CTRs) on the ads were down by an average 6% from Q4 2011 across the top five global markets measured by the survey. In the US, still the world's largest Facebook nation, CTRs fell by 8%.

In comments accompanying the data, TBG Digital suggested that a combination of seasonal factors and an increase in the number of ads being served to users on each page – from six to seven – could have resulted in the quarterly decline.

Sector by sector, news providers enjoyed a big year-on-year increase in clicks, with CTRs up 196% from Q4 2011. The continued success of the "social readers" launched by clients such as Yahoo! News, The Washington Post and The Guardian, was a factor behind this success.

Simon Mansell, CEO of TBG Digital, said: "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.

"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."

TBG Digital measured a total of 372bn global impressions over the course of its research.

According to Facebook's 2011 financial figures, advertising accounts for around 85% of the company's overall revenues.

Facebook will also benefit from a 60% increase of ad revenues in 2012, according to forecasts from eMarketer.

Data sourced from TBG Digital; additional content by Warc staff