Brands are reportedly paying up to seven times more for ad space on Facebook than they were last year as the network seeks to capitalise on improved ROI.
Tests on the average cost per mille of Facebook advertising in November 2014 show that normalised rates are seven times higher than charges on placements in November 2013.
Reasoning for what seems like a hefty increase comes in the form of higher return on investment. But with this rising by only two times compared to 2014, there is evidence of Facebook trying to cement a payment structure that reflects its true value for advertisers.
The findings, released by predictive marketing software provider Kenshoo, also show that click-through rates on Newsfeed ads are five-times higher in November compared to the same period in 2013.
While accounting for improved ROI, Kenshoo has pinned the price rise to Facebook’s growing mobile audience - sparking competition from advertisers to reach mobile users - along with a higher demand for ads in the Newsfeed as a result of declining options in the right-hand column.
Laura Ruszkowski, marketing research analyst at Kenshoo, added that Facebook’s ecosystem is now well equipped to help brands pinpoint and reach out to their most ideal users. There is also something to be said about the evolving strategies of Facebook marketers, as Ruszkowski points out.
"As Facebook advertising has evolved, it has given marketers the opportunity to identify and target their highest valued audiences to drive engagement and conversions.
"By driving efficiencies and optimisations in their paid search programmes, marketers have become more sophisticated and their strategies more vigorous, thus increasing overall competition within Facebook advertising and, in turn, upping the worth of Facebook users.