What's The Deal With Facebook's Ad Prices?

Facebook's advertising inventory has mushroomed in 2011, but demand appears to be rising too because costs remain constant.

Facebook’s advertising inventory has mushroomed in 2011, but demand appears to be rising too.

Now that sponsored stories have had almost half a year to germinate, a growing number of pundits are saying that these ad units perform about 50 percent better than other types of promotions on the site.

The better the performance, the more cost effective the ad gets. And explains why Facebook can keep prices constant while growing inventory.

However, sponsored stories haven’t expanded the promotional inventory that greatly simply because the ad units rely on users engagement with brands.

“Sponsored stories is a consumer-initiated ad unit,” explained Blinq’s Chief Executive Officer Dave Williams in an interview. Only when the individual “interacts with the brand, does it have the ability to market that as an ad unit.”

Williams said he’s seen a three-fold increase in ad spending among Blinq’s clients during the first half of this year, and he expects it to continue into 2012, possibly at an even faster rate. The early adopters of sponsored stories have included group buying services, game developers and affiliate programs.

Meanwhile, it’s almost impossible to quantify an average cost per ad unit on Facebook simply because of the wide variety of targeting options — and you could even call that an understatement. Of course, without having any exact numbers to cite, it becomes much easier to accept assertions that costs are remaining constant.

So we’ll just have to ask you, readers, to chime in here. Are you seeing any changes in the prices of ads? Have you noticed an increase in the number of promotions you see on the site?