Facebook‘s average cost per thousand impressions (CPM) increased 41% since Q1 last year, said Simon Mansell, CEO of social media marketing company TBG Digital. The findings, detailed in a TBG Digital’s “Global Facebook Advertising Report“, was designed to identify trends and measure performance of Facebook campaigns.
“An increase of over 40% in the price of advertising would generally mean that there was a lot less advertising sold,” Mansell said. “I’ve never seen pricing jump that aggressively while the number of ads has also gone up.”
From Q1 2011 to Q1 2012, there were 372 billion Facebook impressions online in 190 countries, the study said. An impression, Mansell said, happens every time a Facebook user sees an ad. The actual CPM increase, according to the study, was about 21 cents in Q1 2011 to nearly 30 cents in Q1 2012.
This means that Facebook is a necessity for brand building and awareness, Mansell said. Sixteen percent of time online is spent on Facebook, which means “that’s where people are spending their time,” Mansell said. “To continue to be in peoples’ heads as a brand, you need to be where they are.”
According to the study, the retail sector has also taken the lead in the total number impressions on Facebook, with a 10 percent increase during the past year.
Most striking about the findings is that supply and demand went up at the same time, Mansell said. This year, increased Facebook ads, which added to available supply, did not cause reduced pricing, counter to the laws of supply and demand. The fact that this is happening indicates that “the demand has gone up faster than the supply has gone up,” Mansell said. “From a lot of our big customers, like Heineken, we’ve seen a lot of interest in increasing Facebook ad presence.”
“Thinking about how your product could be more social is important for businesses today,” Mansell said, adding that now is the time for companies to increase spending on Facebook, should that be a brand priority, as Mansell predicts pricing will rise following the social network’s IPO.