Facebook advertising agency TBG Digital experienced a decrease in clickthrough rate and increase in cost per click in the U.S. between Q3 and Q4 last ear, though overall Facebook ad performance is up since Q1. This is according to data from 266 TBG clients advertising in 205 countries. The agency serves a number of Fortune 500 companies across a range of industries, so thought it is not statistically representative of the whole market, it is a relevant indicator of how advertisers are faring on Facebook’s platform.
TBG CEO Simon Mansell attributes some of the fluctuations over the course of the year to Sponsored Stories, which Facebook announced in January 2011, and started to be adopted by U.S. advertisers between Q2 and Q3. These new ad units that leverage social actions had higher clickthrough rates and helped drive down cost per click. Mansell said that the United Kingdom was slower to adopt the new format but started to see the same rise in CTR and dip in CPC between Q3 and Q4. As more advertisers in the United States started to take advantage of these ads, supply has plateaued driving CPC back up, Mansell said. The same could happen in the U.K. next quarter.
Another factor affecting U.S. ad prices and performance last year was the holiday period. TBG’s study of 5 billion U.S. Facebook ad impressions showed CPCs rose 55 percent from the Monday before Thanksgiving to Dec. 17. The amount of competition between advertisers promoting holiday sales and spending the last of their yearly budget seems to have driven up bid prices significantly.
On the whole, TBG found CTR increased 18 percent over the course of 2011, for the U.S., U.K., Germany, France and Canada. Mansell said this is the result of advertisers implementing better creative and targeting strategies — for instance, adding borders to images to increase performance — and trying more engaging options like Sponsored Stories.
TBG found that food and drink ads perform best on Facebook, followed by those for beauty and fitness. Finance-related ads have the lowest CTR and a CPC 200 percent more than the Q4 average.
The agency’s full report can be viewed here. The company does not reveal the actual prices or CTR it found in 2011, but the trends are worth viewing and comparing. TBG also found evidence of Facebook favoring ads that keep traffic on-site, which we cover in more depth here.