Cost Per Click Advertising On Facebook Increases By 22% In Second Quarter Of 2011.

We’re still in the middle of a recession, or so we’re told, yet the social media giant, Facebook, doesn’t appear to think so.

In spite of the economic downturn, Facebook is still raking in the profits and showing strong signs of continued growth. Part of this is due to the fact that Facebook has increased the price of its cost per click (CPC) advertising. A study by Global Digital Marketing Performance, for marketing company, Efficient Frontier and its subsidiary, social marketing management company, Context Optional, has shown that Facebook’s cost-per-click advertising increased by 22% in the second quarter of 2011. It is predicted that Facebook CPCs could reach 80% growth in a year by the end of 2011.

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So, what other findings did this survey unearth about the biggest player in the world of social networking? Did it highlight any unusual patterns or transitions in behaviour of the companies marketing on the platform? Well, in spite of the fact that statistics can be notoriously unreliable, this is what Global Marketing Digital Performance discovered.

  • Facebook’s CPCs went up by 22 percent in the second quarter of 2011 over quarter 1: the rate of increase is expected to continue to rise throughout the rest of 2011. If this trend continues during the remaining 2 quarters, it’s forecast that Facebook will see growth of 80% in its CPC advertising in the year.
  • Companies who use Facebook for marketing, spend on average around five percent their total search spend. However, for some advertisers this can peak at 25 percent during specific promotions, or at key buying times.
  • Companies who market on Facebook spend incrementally, and this does not have a negative impact on the rest of their search spend which continues as normal. The increased budget for Facebook is mostly coming from other budgets like offline media such as TV and print. Efficient Frontier believes that Facebook will show the strongest growth in the months ahead.
  • Brands are aggressively acquiring Facebook fans and those brands which are dynamic and active on Facebook will, on average, double their fan base by October 2011.
  • An analysis of 20 million fans managed by the Context Optional platform shows that for every brand’s post, there were on average of 100 comments per post in response. Social interaction appears to be determined both by the number of fans a companies possesses and their level of interaction with these fans. Brands with the greater numbers of fans unsurprisingly, receive greatest number of comments interaction: on average, for every extra 17,000 fans a company adds one additional comment per post will be generated.
  • Overall search spend growth in the second quarter of 2011 slowed globally. None the less, this was still an 8% increase year on year: although it’s fair to put that in context – the year on year increase in 2010 was 17% globally. Search growth in the UK was slightly down at 7% year on year. Efficient Frontier attributes this slower rate of growth in part, to advertisers focusing more on ROI than volume, and the current uncertainty in the Eurozone and the recovery of Japan following March’s earthquake, as search is usually a strong indicator of the prevailing macro-economic conditions.
  • In the UK, Google continues to dominate the world of search with a 92.5% share of the market. However, the effect of the Yahoo!/Bing Alliance has yet to felt fully over here.  Efficient Frontier still reports Bing and Yahoo! as separate entities. Yet interestingly, Yahoo! was the only search engine that had a higher percentage of clicks than spend, principally because of cheaper clicks. Whether the Alliance will now increase its CPC costs to match Facebook and Google remains to be seen.

Efficient Frontier’s global marketing director, Jonathan Beeston, wrapped up the survey by stating:

“The biggest increase in spend this year is on Facebook advertising. Over the year, we expect it to have grown by 80 percent from last year. The budget for Facebook advertising is mostly coming from offline media such as TV and print rather than search. If the Yahoo!/Bing Search Alliance renews integration outside of the US next year, then the UK will see the same effect as the US: advertisers will move money towards Yahoo!/Bing to take advantage of ROI improvements.”

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