Facebook Ads Less Effective, Cost More

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Bad news for marketers out of Facebook. According to agency TBD Digital, Facebook ad prices have increased over 41% since Q1 2011. TBD Digital knows what they are talking about, because they are responsible for over 10% of Facebook’s revenue through the ads they book for brands. Their study was based 372 billion ad impressions that the bought for 235 clients in 190 countries.

The Higher CPM are good news for Facebook ,which wants to increase revenue. However, this is timed with really bad news from the study that claims that the US Market suffered almost a 10% reduction in click-through rates in that same time period. Additional bad news is that the Cost Per Fan has actually increased 77% in the UK and  37% in the US.

This is interesting, because it shows that the marketplace is more competitive, more people advertising and thus driving the prices up. Of course, the lower CTRs mean that users are getting more and more used to the advertising – which has increased significantly, with more and more ads popping up in different places.

Is this good for Facebook long term? No, because as users get used to ignoring advertisement, they are less likely to engage them, click on them, or care about them. This seems like a real issue, because Facebook ads all look somewhat the same, the same format, unlike banner advertising that allows creative design.

What's your opinion?