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.