Report: Addition Of Ads To News Feed, Mobile Drove Facebook Click-Through Rates Up In 3Q, Cost Per Click Down

By David Cohen 

Click-through rates for Facebook ads during the third quarter rose dramatically, causing a large drop in cost per click, according to the latest report from social media advertising specialist TBG Digital, which analyzed some 520 billion impressions in more than 190 countries for 282 clients from the first quarter of 2011 through the third quarter of 2012.

CEO Simon Mansell said the major changes for Facebook advertising in the third quarter were the addition of ads to the news feed and the launch of mobile ads.

CTRs for the five major territories covered by TBG’s research — the U.S., the U.K., Canada, France, and Germany — rose 81 percent during the third quarter, with the U.S. leading the way, posting a 99 percent gain.

Meanwhile, CPCs fell to what TBG called 2010 levels during the third quarter, with the U.S. seeing a 40 percent CPC drop. The company added that CPCs for the third quarter were only 5 percent higher than the rate for the second quarter of 2010.

Mansell attributed those figures to the addition of ads to the mobile news feed, which drove down CPC, and he spoke with AllFacebook about Facebook’s strategy for that sector:

Sponsored stories are things you are seeing anyway in your news feed, from a user’s point of view, and not quite different from what you were seeing before. Facebook has been very careful about the volume and about not spamming users with thousands of mobile ads, leading to less supply on the mobile news feed, and more on the desktop news feed.

Page post ads showed much higher CTRs than the Facebook average, reaching 2.49 percent on mobile news feeds and 2.176 percent when targeting desktop news feeds, but surprisingly, TBG found that targeting both desktop and mobile news feeds together yielded the lowest CPC.

Mansell summed up the report’s findings in a press release:

The key takeaways from this quarter’s results are the success of both news feed and mobile. Combined, the two are really driving engagement from consumers and, therefore, bringing down CPCs for advertisers. Of course, the measurables we monitor in this report are only part of the picture, as our team’s main focus is to move the metrics that matter to our client’s businesses. We generally optimize to sales, advocacy, or awareness.

Mansell also spoke with AllFacebook about TBG’s efforts to regain its Preferred Marketing Developer status, and about the climate of the industry, in general:

We have been working closely with Facebook since losing Preferred Marketing Developer status. There are too many companies in the ecosystem — there are 300 companies using Facebook’s ads application-programming interface. There used to be 20.

We are using the opportunity of the suspension to consider what we should do next. It is a challenging environment. So many of us are fighting over Facebook revenue, which is growing, but which isn’t growing at 50 percent per quarter. Eventually, there will have to be some sort of consolidation.