News Feed and mobile ads bring Facebook CPCs down to 2010 levels, TBG report finds

Social media ad company TBG Digital released its quarterly Global Facebook Advertising Report today with findings about how mobile and desktop News Feed ads have driven down costs per click to averages not seen since 2010.

CPCs in the U.S. decreased by 40 percent this quarter, likely because of the high clickthrough rates provided by News Feed ad placements. When more users click on ads, Facebook can earn its target CPM while advertisers spend less per click. In the U.S., average CTR increased 99 percent. New ad formats are clearly driving more engagement by being prominently featured in the main stream of content, though it’s unclear how long this will last. Facebook continues to experiment with the size and design of ads in the feed, and typically ads see high CTRs when they are new and novel.

Not every country has adopted mobile and News Feed ads at the same rates as the U.S., and that’s reflected in the data. CPCs decreased by 27 percent in Canada and 2 percent in the United Kingdom. CPCs increased 19 percent in France and 15 percent in Germany. TBG says campaigns driving off-Facebook are more popular in other countries, and since those ads do not appear in the feed, they haven’t seen the same increases in engagement and reductions in cost.

Overall though, average CPCs during Q3 2012 are only 5 percent more than Q2 2010’s CPCs, which is particularly significant since earlier this year CPCs rose to their highest levels ever — averaging over a dollar in the U.S. and Canada. Q3, however, was the first full quarter with mobile placements available, so advertisers were able to spend less for more engagement.

How all this affects Facebook’s own business will be seen on Tuesday when the company releases its Q3 financial results.

Images from TBG Digital

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