As Facebook gets bigger, so do the costs

As the popularity of Facebook grows, so do the advertising costs.

You are reading: As Facebook gets bigger, so do the costs

Facebook recently announced a massive milestone –  750 million users (and growing).

The social networking powerhouse has been a part of the marketers toolbox for a few years now, but as it approaches 1 billion users it’s fast becoming a ‘must have’ rather than a ‘nice addition’.

Facebook’s advertising appeal has always been obvious – it’s massive, highly targeted and cheap… at least it was cheap.

According to the Global Digital Marketing Performance Report (Q2 2011)released by US based marketing company, Efficient Frontier – Facebook is much more costly than it once was.

Last quarter, Facebook CPC rose 40% quarter-on-quarter and in the second quarter of 2011, CPC rose another 22%.

The data sends a pretty clear message to businesses yet to jump on the Facebook bandwagon – do so now, or pay for it later. As Efficient Frontier put it,  “the longer brands wait to engage with consumers on Facebook, the more expensive it will become to acquire fans“.

Providing CPCs continue to rise, which they’re expected to do in line with increased social ad spend, Facebook could look a lot less appealing than it once did – especially to small businesses and lesser-known brands.

Facebook’s ‘self serve’ ad platform has never really impressed when it comes to conversion rates. For whatever reason advertisers have found it hard to convert clicks in to revenue but this has been largely overlooked due to the low-cost of the service. If you’re paying peanuts and getting a truck load of clicks, who cares right? Not for much longer.

These increased costs are sure to make a lot of people take a much closer look at their ROI where Facebook is concerned.

If you advertise on Facebook we would love to hear your thoughts below.

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