Facebook may or may not have some tough competition in the not-too-distant future, but right now, Facebook is at the top of many brands' lists when it comes to digital marketing initiatives.

Increasingly, that's proving to be a double-edged sword.

The good news: according to Efficient Frontier's latest Global Digital Marketing Performance Report, brands that are active on Facebook can expect to see their fan bases on the social network doubling year-over-year by October.

The bad news: marketing on Facebook, which is used to drive fan acquisition, is getting far more costly.

Last quarter, Efficient Frontier saw CPCs for Facebook ads rising 40% quarter-over-quarter. In Q2 2011, there was another hefty increase of 20%.

While growth in CPCs would seem to be slowing, Efficient Frontier warns "we do not consider this a deceleration," adding "The immaturity of the medium results in high volatility in the data."

As Efficient Frontier sees it, brands have one choice: "brands looking to acquire Facebook fans need to do so now." The justification: "the longer brands wait to engage with consumers on Facebook, the more expensive it will become to acquire fans".

This, of course, is true provided that CPCs continue to grow at double-digit clips, which is what Efficient Frontier expects to see for the foreseeable future. More importantly, brands are expected to up their spend on the social network, often taking from budget previously allocated to offline media.

If the data paints an accurate portrait, we may have a bonafide Facebook gold rush on our hands. This is good for the site no doubt, and possibly for brands too, but brands need to be careful.

Currently, many brands still aren't capable of truly measuring the ROI from their efforts on the site. Yet that's not only not stopping them from investing money, it's driving them to implement campaigns that often dilute traffic to their own websites, or force them to fit campaigns into the rigid structures Facebook provides.

None of this is to say that Facebook isn't delivering ROI to brands. In some cases, it probably is. But when advertisers are advised "to exploit new ad formats on Facebook such as Sponsored Stories" in an effort to help find "further efficiencies" before the efficacies of these new ad formats are known, there's plenty of risk.

At the end of the day, hot or not, brands should treat Facebook like any other platform or medium. That means further investments should not be driven by a rush to buy ads before the price goes up even further.

That's bubble-mentality behavior. Instead, brands should base their decisions to boost their investment in Facebook ads on the absolute and relative performance of those ads.

Patricio Robles

Published 18 July, 2011 by Patricio Robles

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

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Comments (3)


Pete Austin @MarketingXD

Re: "the longer brands wait to engage with consumers on Facebook, the more expensive it will become to acquire fans".

Depends on churn rate. The best figure for Facebook churn that I could find in 10 mins searching is 24%.

This is for charities, so business brands could he higher ... "The annual “churn” rate – fans who click a button to “remove me from fans” or who hide status updates – averaged out at 24% per year."

about 7 years ago


Sam Brown

I've always chosen to use CPM for Facebook ads - the right optimisation etc can make your ads cost 7-8x cheaper than choosing to pay CPC if done correctly.

about 7 years ago



ROI is at the centre of any decision made in this arena and this is part of what has seen this happen with facebook.

about 7 years ago

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