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Facebook ad rates surge 58 percent, says study

Results represent great news for Facebook ahead of its second-quarter earnings call on July 26.

TBG Digital

Note: The headline of this story, and the story itself, have been altered to reflect a retraction by the study's author, TBG Digital. See the note at the bottom of this post for more information.

Facebook's average cost per thousand impressions has increased by 58 percent in the second quarter of 2012 compared with the year-ago period, meaning Facebook is earning more and more from its ads.

Breaking down by country, the U.S. saw an increase of 25 percent, while Canada saw 21 percent and the U.K. saw 7 percent. The data comes from a study based on 406 billion impressions in more than 190 countries for 276 clients, according to the 12-slide Global Facebook Advertising Report Q2 2012 by TBG Digital, which was also verified by the University of Cambridge.

Click through rates (CTR), which indicate how relevant and interesting ads are to users, have increased by 11 percent this quarter. This is great news when compared with the 6 percent decrease in the last quarter. The U.S. and the U.K. saw increases of 11 percent, while Canada saw an increase of 8 percent.

Cost per click (CPC), the cost paid by advertisers to Facebook, has hit the dollar mark for the first time in North America. CPC rates increased 9 percent this quarter, compared with 23 percent in the last quarter. Only the U.S. and Canada saw increases: both countries have CPCs of more than $1 for the first time. The U.S. saw an increase of 13 percent, to $1.04, and Canada increased by 12 percent, to $1.02. The U.K. saw a reduction of 2 percent.

Last but certainly not least, Facebook's recently released news feed targeting options are delivering significantly better CTR. Mobile ads received CTRs 14 times that of desktop ads, on average. The desktop category, which includes news feed ads and the ads on the right-hand side, saw the lowest CTR at 0.08 percent. The mobile news feed, by contract, saw an average CTR of 1.14 percent.

How does this compare with Twitter? The smaller social network saw an average CTR of 0.27 percent. This would indicate that Facebook's mobile ad CTR is four times that of Twitter's. That's impressive. [Editor's note: No it's not. See correction at the bottom of this article.]

Other highlights from the report include:

  • Sponsored Stories continue to perform better than standard Facebook Ads: Analysis of 13.8 billion impressions in the first and second quarters of 2012 shows Sponsored Story ads receiving 53 percent higher CTR than standard ads. Cost per fan also saw major improvements with 39 percent savings.
  • CTR by Sector Sees shakeup in rankings: Entertainment has dropped three places since the first quarter of 2012 to make room for Health, Pets & Animals, and Not for Profit. Health is a regular in the top five but Not for Profit has jumped four places and Pets & Animals is a new entry.
  • Jobs & Education sector now generates highest CPC: Jobs & Education has jumped four places to hit the top spot with an average CPC of $1.42, pushing Finance and Retail both down one place. Games and Computers & Electronics have switched places taking position four and five, respectively.

"All eyes are on Facebook at the moment and a key part of its progress is the performance of its sponsored stories and mobile ads, which in particular are showing great potential for all parties," TBG Digital CEO Simon Mansell said in a statement.

Correction, July 20 at 11:01 a.m. PT: TBG has retracted its comparison between Facebook and Twitter mobile engagement data. The firm released the following statement:

We took a deeper look at the data and, unfortunately, the engagement rates were not comparing like for like. Twitter engagement rate measured Click Through Rate on Promoted Accounts whereas the Facebook CTR was for news-feed ads. A more comparable product for Twitter would have been Promoted Tweets, which typically see 1 percent to 3 percent engagement rates on desktop and even higher on mobile.

As mentioned earlier in the report, our focus is on driving quality traffic, fans, and followers for our clients, and CTR is only one metric which we measure.

We pride ourselves on delivering insightful and reliable data, so we would like to apologize for any confusion this may have caused.