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Advertiser interest in Facebook has grown rapidly over the past several years. With more than half a billion users, it is the biggest social networking hub in the world, making it one of the top digital platforms on which to reach consumers.

Its self-serve advertising platform, however, has received mixed reviews. Unlike, say Google AdWords, advertisers don't necessarily have 'intent' present with every click, and converting Facebook traffic has, for many of them, been challenging.

The platform's saving grace: it's generally pretty cheap. But that may be changing.

According to ad management platform provider Efficient Frontier, clicks on Facebook's self-serve ads cost 40% more last quarter than they did in the previous quarter.

The reason for the rise? "As advertisers are understanding this medium, they are allocating budgets, and it’s becoming increasingly competitive. They are willing to pay a lot more to get to the consumer," according to Efficient Frontier's Siddharth Shah.

Needless to say, this is good news for Facebook, but is it good news for advertisers?

Naturally, costs were bound to rise as its profile became more prominent in the advertising space. More money being spent on Facebook advertising means greater competition for eyeballs, and this competition will usually lead to higher costs.

The big question: are advertisers spending more money because they're seeing a return, or are they simply feeling more comfortable with Facebook? If recent reports are to be believed, it may have more to do with comfort than ROI.

That said, while Facebook's self-serve ad platform may not be AdWords, there are plenty of advertisers struggling with AdWords ROI too. Lack of active campaign management and subpar tracking capabilities, for instance, cost less sophisticated advertisers lots of money.

The lessons that can be learned from them are applicable to Facebook, which means advertisers that have invested in implementing PPC best practices will probably be better positioned to reap the rewards on the social network as the costs, and stakes, get higher.

Patricio Robles

Published 12 April, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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William King

Definitely advertisers would be getting something in term of consumers from Facebook. That is why they are not hesitating to pay as much as Facebook demands. Or if it is because that they are feeling comfortable with Facebook than Google, and not getting consumers according to their expectation, then their will be fall in price. And also if Google is loosing its customers for Adsense than Larry would also be thinking of few changes in it.

over 5 years ago

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onit

We are currently running a Google PPC and a facebook ads just to compare results. Face book is a little more expensive but we are getting lots of clicks.

over 5 years ago

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Steve Matthews

Facebook certainly seems more expensive for recent campaigns. Facebook are having to throw out masses more page impressions to achieve the same clicks as Google (they clearly have a lot to spare).

Not sure if this is a good thing for brand recognition or if Facebook are simply combatting weak targeting with over-exoposure. Either way it's been pricey enough to make us switch more budget over to Google.

over 5 years ago

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Nichola Finan

We are encouraging our clients to trial Facebook ads alongside other targeted CPC placements, particularly where there is a good fit with a younger demographic or we think there will be merit in creating a little noise about the proposition. So far, CPC's may be on a par with Adwords, but conversions are not....this is not relevant for all proposition types and we need to review where Facebook ads should be tested, and what success looks like.

over 5 years ago

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Facebook App

Mostly Companies use the "Google Adowrd" and "Facebook marketing".If facebook increase the cost of facebook ads so,I think their is a big chance for google to grab the business once again.Mostly Companies used both marketing tools.

over 5 years ago

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ERS CRM

Difficult to understand if Facebook will be as useful for advertising as Google AdWords, particularly for B2B companies. Would those in positions of authority for their companies be bothered clicking on Facebook ad's for software etc? I can't see it..

over 5 years ago

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