Facebook advertising is all the rage these days. Advertisers and businesses are lining up in huge number to reach out to the 600 million strong Facebook community. So, how does Facebook make the most of this opportunity? The most obvious way is to increase the price per click to encash the increasing demand for Facebook ads.
According to figures from advertising management company Efficient Frontier, Facebook has increased the per click rate by nearly 40 percent in the last three months. The price hike is for Facebook’s self-service ads. Despite the increased prices, Facebook continues to hold forte and is still the leading choice for most advertisers.
So, should you be worried about the increasing Facebook advertising costs? Or is this a signal to jump onboard the Facebook advertising bandwagon? Or is it just another game of demand-supply and a matter of time before the Facebook advertising bubble eventually bursts?
Competition
Running a business is all about competition and how you beat your competitors. The increased demand for Facebook advertising is an ominous sign that advertisers have now matured with their Facebook campaigns. They are now smartly choosing their budget and adopting a judicious approach in allocating the funds. Since they realize the potential of Facebook ads, they are no longer shying away from shelling out a few extra dollars to get to the consumer ahead of their competitors.
Facebook user base is growing at a scorching pace, the demand for ads is growing leading to competition and it’s only set to get more intense from here on.
Revenue
An advertising campaign is as good as the revenue it generates. If you end up spending a fortune on your Facebook advertising campaign without a noticeable increase in the revenue, you need to reconsider your strategy.
Either way, Facebook stepping up the ad prices is a good indication that businesses are making good profits with their ads. If you aren’t using Facebook ads, you are missing out on a massive opportunity. If you are using Facebook ads but not getting the expected ROI, it’s a good case to learn from others.
Ad Traffic
Facebook top brass have been quiet vocal about the prospects of advertising traffic. Facebook COO Sheryl Sandberg flatly said on record that the site’s ad traffic would post phenomenal growth even as its ad prices rise. And his words are now beginning to come true.
Facebook vs. Search Engine Marketing
The Efficient Frontier report suggests Facebook advertising grew lot faster than search engine marketing which managed a 17% year-over-year primarily because of increases in the retail and finance categories.
Do you use Facebook advertising for your business? Would you continue using Facebook ads in wake of increasing advertising costs? Please share your opinion by leaving a comment below this post.
Wow, a 40% increase in 3 months sure gets noticed. As I mentioned before in other comments to your posts, I am still not sure where to place my mind about Facebook ads, we used them once and we weren’t thrilled about them, but then again it’s true you gotta experiment far more with them to be able to judge their performance properly.
As you say, if they raised their prices it means the revenues companies are making off them are more than positive.
Gabriele, thanks for your always thoughtful comments. What we are saying here again is the Adword treatment of the advertisers with hikes and slap. I hope Facebook is not becoming Google 2.0. Fingers crossed!
A brilliant article. Thank you for the information.
Here there are some of the other features facebook has updated recently.
http://www.onlinemarketingsphere.com/category/social-marketing/
Great article – thanks for posting. We (e-sharper.com) are currently looking into running some Facebook ads, so it will be interesting to see what the responses have been so far with businesses who are advertising on Facebook.
FaceBook advertising doesn’t pay yet for the amount of visitors. Still needs a lot of improvement with allowing business pages to brand and so on
Hey good article – one point of information though – FB COO Sheryl Sandberg is a woman.
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