January 17, 2012, 11:32 AM

Facebook ads are getting pricier for U.S. marketers…

…except for those who get a discount for keeping consumers on the social network.

Zak Stambor

Managing Editor

Lead Photo

The cost-per-click of Facebook ads in the United States increased 10% in the fourth quarter of 2011 compared with the third quarter, according to a new report from Facebook advertising firm TBG Digital.

That growth was particularly evident from Thanksgiving until Dec. 17, which was one of the last days retailers could guarantee shipment by Christmas Day, as cost-per-click increased 55.7% between Nov. 21 and Dec. 17.

But for marketers whose ads click-through to another place on Facebook, say a retailer’s Facebook page, the costs are actually decreasing. The advertising firm’s second quarter report found Facebook charged a 29% lower cost-per-click for ads that keep traffic within Facebook, rather than sending shoppers to an off-site location, such as the retailer’s web site. The new report suggests that the social network is incentivizing advertisers to keep consumers on the social network by offering a discount that averaged 45% in the fourth quarter. Facebook could not be reached for immediate comment on the practice.

“More and more brands in a huge range of business sectors are building a presence within Facebook to harness these lower costs,” the report says. For instance, retailers are attempting to generate sales directly on the social network via Facebook storefronts.

The report found that Facebook ads’ strength wasn’t evident in all of the five markets TBG Digital serves—Canada, France, Germany, the United Kingdom and the United States. Across all five markets the average cost-per-click increased only 1% in the fourth quarter.

The report, which is based on data from TBG Digital’s 266 clients who operate in retail, entertainment, finance, food and drink and games, also found that the average cost per thousand impressions, or CPM, rose 8% across the five markets. And, since the first quarter, when TBG Digital began producing a quarterly report, Facebook’s CPM rate has increased 23%.

The reason Facebook’s rates are rising is because the social network’s various ad formats are working, the report says. “Facebook’s ads are connecting with their user base as they are becoming more engaging,” the report says. The click-through rates across the five markets increased 18% in Q4, compared with Q1.


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