Pays to Click But It Will Cost You, Too

You may have noticed that Facebook’s advertising rates have been slowly creeping up this year. Whether you’re a for-profit or non-profit organization, these changes may impact where and how you spend your advertising dollars. According to a recent report published by Efficient Frontier (EF), a digital marketing firm that monitors growth in search engine advertising, the total amount marketers were likely to spend on cost-per-click (CPC) advertising on Facebook rose 22% in the last quarter. If you’ve ever advertised on Facebook, you know that Facebook suggests a CPC rate based on your budget and the audience you want to reach. Ad rates seem to be determined on a case-by-case basis. The bottom line? Online advertisers are spending more to reach their audience, whether they know it or not.

Already Advertising Online?

The data suggests that you can expect to pay more for your CPC campaigns throughout the rest of 2011. Brands already advertising on Facebook have the advantage of connecting with consumers and winning their loyalty early on, even as competition grows. "The longer brands wait to engage with consumers on Facebook, the more expensive it will become to acquire fans."

Still Thinking of Advertising Online?

The report predicts that "advertising dollars will shift from offline to search, Facebook and display" channels. We tend to agree. If this is true, then brands still considering online advertising budgets would be wise to test the waters of online advertising now. The longer they wait, the longer they risk competing with brands already established in these channels who, as early-adopters of CPC ads, have had a head start converting users into customers.

CPC and the Future

Efficient Frontier recognizes that Facebook advertising is sill a "young channel" and the data it’s pulling from is "highly volatile." Still, the report wraps up by stating the cost of CPCs will continue to rise. “Even if CPCs increase at 20% per quarter for the remainder of the year, this will still result in an 80% growth in a year.”

Despite the rate increases, Facebook CPC ads continue to be some of the most effective ad dollars we spend for client projects. That's because conversion rates tend to be high and the cost is still so much lower than traditional web and offline advertising.

To read the complete report by Efficient Frontier, click here.