Average Facebook costs per click drop as advertisers adopt News Feed ads, TBG finds

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By Brittany Darwell Comment

Average costs per click for Facebook ads reached record lows in the U.S. and decreased across other regions in the fourth quarter of 2012, according to data from third-party ad company TBG Digital.

TBG attributes this to the rise of News Feed ads on desktop and mobile, that have lower CPCs than sidebar ads. In the U.S., where advertisers are adopting this format more quickly, CPCs decreased by 37 percent in Q4, and that’s on top of a 40 percent decrease in Q3. CPCs in the U.S. are now lower than those in Canada, France, Germany and the U.K.

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 The downward trend of CPCs is directly related to the upward trends of clickthrough rates. The prominent placement of ads in the desktop and mobile feed makes them more effective in generating clicks, so Facebook can earn more per impression while charging advertisers less per click. CTR increased by 25 percent in the U.S. between Q3 and Q4 last year, and 157 percent since Q4 2011.

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These stats are based on 397 billion ad impressions served in the U.S., U.K., Canada, France and Germany from January 2011 to December 2012 for TBG Digital clients.

In its quarterly report issued today, TBG also shared its perspective on the Facebook Exchange. The company says FBX retargeting ads for a personal finance brand delivered 48 percent post-click conversion rates and 32 percent better application accept rates than other Facebook advertising that ran during the same period. A computer and electronics brand saw 130 percent lower costs per sale, and a telecommunications company found 33 percent better cost-to-connect rates with FBX versus other Facebook advertising. TBG noted that the combination of standard Facebook and FBX ads can deliver up to 2.6 times better ROI than a traditional Facebook campaign alone.

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