Facebook boosted by surge in ad rates

The cost of advertising on Facebook has risen despite a decrease in click-through rates on ads hosted on the social network, a new study reveals.

Facebook

The study, which was compiled by media specialist TBG Digital, found that advertisers have been asked to pay 15% more per thousand views in the first three months of 2012 over the same period a year earlier.

Cost per click (CPC) prices on the social network have jumped 23% in its top five territories of US, UK, France, Germany and Canada year-on-year in Q1 2012.

The average cost to acquire a fan also grew year-on-year in the period, by 43% globally, according to TBG. The highest rise was in the UK where it increased by 77%.

However, the number of Facebook users who subsequently click on a ad in its top markets fell by an average click-through rate of 6% year-on-year in the first quarter.

TBG said that that the UK has overtaken Canada to become the second most lucrative market for the social network in terms of advertising, behind the US.

The number of users clicking on news stories increased by 196% quarter-on-quarter. TBG attributed the rise to the emergence of its “Social Reader” service and its partnerships with publishers such as The Guardian, The Washington Post and Yahoo.

Financial services firms are paying the highest rates, according to the study, at 3.5 times higher than what food and drink advertisers are paying.

Facebook, which is expected to raise $5bn (£3.16bn) when it floats next month, is to introduce a suite of premium marketing tools over the next few months to boost fan engagement as it looks to make its pages the “centre of marketing activity.”

TBG’s study was based on 235 brands across 190 countries and was verified by Cambridge University.

According to Facebook’s 2011 financial figures, advertising accounts for around 85% of the company’s overall revenues.

Facebook declined to comment when asked for a response to the report’s findings.

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