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BizReport : Social Marketing : February 01, 2011

Social endorsements improve flagging Facebook ad CTRs

Global ad spend on Facebook is forecast to more than double this year, yet recent research has found the performance of the average ad on the social network to be disappointing.

by Helen Leggatt

Webtrends-Logo.gifGlobal ad spend on Facebook is expected to total over $4billion this year as businesses big and small clamor for a piece of social action.

But, what is it that attracts them? It certainly isn't the amazing click-through rates and campaign longevity, according to a white paper published by Webtrends this week.

"Facebook Advertising Performance Benchmarks & Insights", which is based on analysis of 1,500 advertising campaigns on the social network giant (comprising over 11,200 individual ads, 2.2 million clicks and 4.5 billion impressions), found the average click-through rate dropped over the past year. Meanwhile the cost per click increased.

The average click-through rate (CTR) on Facebook in 2009 was 0.063%. That figure slipped to 0.051% in 2010, or about 1 click for every 2,000 ad impressions. The industry standard is 0.1%.

During the same time span, cost-per-click (CPC) on Facebook increased, rising from 27 cents in 2009 to 49 cents last year.

This, explains Webtrends, is a "typical pattern for display ad networks as the audience becomes more savvy and demand causes prices to rise," adding that "brands investing now will save money building their Facebook ad programs now by taking advantage of currently low rates that will continue to increase over time".

In terms of CTR, the ad categories that perform best on Facebook are, not surprisingly, news and entertainment-related. "Tabloids and blogs" had a CTR of 0.165% and CPC of 12 cents, while "media and entertainment" had a CTR of 0.154% and CPC of 25 cents.

Ads in which a user's Friend is listed as having "liked" the ad, called friend-of-fan targeting, were found to attract higher CTRs.

Not only that, Webtrend's research found that advertisers who had used this type of social endorsement were able to extend the life of an ad campaign. While regular "social ad" burnout is around 3-5 days, friend-of-fan targeted ads can last up to three times longer.

Tags: ad spend, advertising, Facebook, social network

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