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Facebook ad revenue increases despite rate hike

Facebook ads may be cumbersome for the average newsfeed browser but, as long as they keep bringing in hefty revenue, don't expect them to disappear.

TBG's second-quarter Global Facebook Advertising Report concluded that despite ad costs having risen for another quarter, the social network doesn't seem to have much trouble selling more than ever before. Facebook ad buyers in the US are leading the charge with a 25 per cent increase in spending, landing them at the top of the pack in front of buyers from Canada, the UK, Germany, and France to round out the top five buyers by country.

All five countries saw a rise in cost-per-thousand (CPM) rates year-over-year, increasing that number by 58 per cent from the second quarter of 2011.

"The increases are definitely great news for Facebook as they signify that their inventory continues to work better for them," the TBG Digital report said. The firm chalked up the higher CPM rates to the recent introduction of the social network's new mobile ads and more clients buying into the Sponsored Stories advertising model.

Facebook can take a moment to celebrate, since TBG reports that the social network has left competitor Twitter in its dust. A recent study by the firm indicated that the micro-blogging site has been surpassed in ad sales about four times over by its Bay Area neighbour.

Meanwhile, Facebook's ad click-through rates (CTR), an indication of how relevant and interesting users find ads, have grown 11 per cent this quarter, compared to last quarter's 6 per cent decrease. CTRs probably saw a jump due to Facebook's June launch of mobile ad targeting, TBG said, as well as what the firm said was a general improvement in marketing techniques and ad creativity.

"So, it would appear that Facebook is doing something right here," the research firm said. "Social context continues to make a difference to ad engagement and mobile targeting is possibility affecting click-through rates."

The report distinguished between various advertising sectors, showing a drop in entertainment CTRs since the first quarter of 2012 but spikes in the health, pets, and non-profit categories. "There aren't many things that people feel more passionately about than charities and pets," TBG said.

Last month, another researcher, comScore, also presented a bullish outlook on Facebook's advertising business.