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October 25, 2012

Facebook Mobile Success Is Increasing Ad Prices

Efforts to monetize the Facebook mobile platform this year have yielded big income numbers for the social media giant. It has also been a boon for brands that made the right campaign choices.

Over the past several quarters, however, rising mobile ad CPM rates and onsite ad rates have made advertising on Facebook more expensive than ever. While this news initially broke in April, thanks to a report by TBG Digital, newer numbers have supported its findings and suggest the trend is continuing.

What does this mean for the small company hoping to leverage social advertising for more cost-effective marketing?

It means everyone will need to be more judicious about their Facebook ad campaign choices and focus on the strategies with proven returns on investment (ROIs). On the one hand, Facebook mobile ads are “outperforming desktop ads in click-through rates by 14 times,” according to the TBG Digital report.

This is powerful, especially considering it’s an aggregation of sponsored stories — the highest CTR yielding ad type — and basic ads. On the other hand, Facebook earns more than 10 times as much for mobile ads as it does for desktop, at $9.86 per thousand views (CPM) as of mid-July.

The introduction of Facebook mobile ads in mid-summer reversed the trend of falling click-through rates that had raised concerns earlier this year because they contrasted with already-climbing Facebook ad prices. This roller-coaster of ad effectiveness remains unpredictable, which adds another complication for interested companies and brands. And recent claims by many advertisers

on Facebook have further complicated the issue, suggesting that “bots” are responsible for a large number of the clicks their ads are receiving.

The other major variable is the type of ad. Companies need to pay close attention to the effectiveness of their advertising investments on Facebook. Sponsored stories, also called “earned media,” offer the best ROI on the site. These types of advertisements aim to get “likes” by featuring the ad in users’ news feeds with a larger layout that makes it more likely for users’ friends to see the ad and also “like” it as well as visit the site. This type of advertising is significantly outperforming conventional Facebook ads, but has a higher initial cost and relies on already-existing branding to be effective.

Companies looking to remain competitive and get new traffic from this type of Facebook ad should be wary of investing too much up front and, instead, focus on testing and monitoring to determine which type of advertising offers them the best ROI.

Visit us at and learn how working with Facebook mobile can derive real, measurable results that maximize ROI.