As Facebook Evolves Ad Offerings, CPCs And CPMs Drop

As Facebook continues to expand and adapt its advertising offerings, metrics including CPMs, CTRs and CPCs showed inconsistencies in Q1 2013 which are expected to level out as advertising normalizes on the social networking site.

Facebook strategic PMD Spruce Media highlighted these changes in its “State of Facebook Advertising Q1 2013,” released this week, leading up to Facebook’s Q1 earnings call set for May 1.

CPMs for all Facebook advertisements rose slightly by 3%, from $0.38 in Q4 2012 to $0.39 in Q1 2013. CPMs for desktop ads, or those ads on the right-hand side of the Facebook page, decreased by 24%; CPMs of desktop-only News Feed ads dropped by 18%, and those for mobile-only News Feed ads dropped by 31%.

While part of the decline may be due to the holiday season boosting ad prices in the latter part of 2012, Spruce also mentioned that in Q1, Facebook pushed more ads into the news feed, increasing inventory and causing the drop in prices for those ads. The increase in demand for the Facebook Exchange from advertisers kept up interest in the ads on the right-hand side of the page.

Spruce showed that CTRs for Facebook in Q1 2013 were inconsistent as advertisers started to optimize their ad buys and shift spending to the more effective News Feed ads, especially on mobile. Mobile-only News Feed ads saw a CTR of 1.86% in Q1, up 7 percentage points from 1.74% in Q4 2012, and all Facebook ads saw an average CTR of 0.1%, up from 0.07% in Q4. Desktop-only News Feed ads saw a lower CTR of 1.08%, down 14 percentage points from 1.25% in Q4, while desktop ads saw CTRs drop from 0.04% to 0.03%.

CPCs for Facebook ads declined mostly, with the Q4 2012 CPC for all Facebook ads at $0.55, dropping 31% to $0.38 in the first quarter 2013. Desktop-only News Feed ads dropped from $0.43 to $0.41, while mobile dropped to $0.19, down from $0.30 in Q4 2012. CPCs for general desktop ads rose to $0.87 from $0.75.