Study: Facebook favors advertisers that stay on-site

Advertisers running campaigns that keep traffic within Facebook are likely to pay less than those driving to an external site, according to a study by TBG Digital.

The agency, which specializes in Facebook advertising, found 45 percent lower costs per click for campaigns promoting fan pages and apps than those for third-party sites, even when clickthrough rates were the same. This could lead some advertisers to consider developing tab applications that replicate aspects of their website to move users down the conversion funnel while keeping them on Facebook. TBG Digital analyzed data from 266 clients advertising in 205 countries in Q4. The agency runs campaigns on behalf of a number of Fortune 500 companies from the entertainment, retail, consumer goods, games and finance sectors, among others.

According to CEO Simon Mansell, the company normalized the data to account for differences in clickthrough rate. Ads that stay within Facebook have stronger calls to action — the Like button, RSVP button, Play button — and social context that make users more likely to click them versus ads that lead off-site. When ads have a higher clickthrough rate, costs per click go down. TBG Digital found that even when CTR was the same, Facebook charged an average 45 percent less per click for ads that kept users within its ecosystem than those that didn’t. This supports a previous report from TBG in Q2 2011, which found 29 percent lower CPCs for fan page and app ads.

Advertisers might consider how they could use Facebook pages instead of external landing pages. Gaining Likes might not be an advertiser’s goal, but a tab app could prompt users to watch a video, browse a catalog, enter their information or take some other action toward conversion. If CPC savings are more than the cost of development, this could greatly benefit advertisers who formerly used Facebook ads to lead people to an external site. For TBG, these were mainly clients in the financial sector.

Facebook naturally wants to keep users on its own platform so that it can continue to serve ads to them, but it is not going to turn down paying customers who want to advertise third-party sites. Offering lower CPCs, though, is a way to incentivize advertisers to change their approach to something more favorable to Facebook.