A few years ago, I made the observation that just because a lot of people go there, doesn't mean it's a good place to advertise. For example, almost everyone visits funeral homes, but that doesn't mean they're a good place to provide advertisements.
So now Webtrends is out with a new report that shows that maybe, just maybe, advertising on Facebook isn't really driving that much, at least as it relates to click-throughs. As they say in the article, many brands use Facebook for more then just their click-through rates, so maybe this isn't a deal breaker.
Still, putting your ads in front of people because they're there, doesn't seem to be driving business. Content without context is just noise.
UPDATE: You can go here to see more details about the report.
Facebook’s advertising business is soaring. Yet the performance of the average Facebook ad is abysmal.
At least that’s according to a new report issued by the analytics firm Webtrends that recently examined 11,000 different Facebook ad campaigns which totaled 4.5 billion impressions. Webtrends found that in 2009 the average click-through rate on Facebook was 0.063 percent. That figure slipped to 0.051 percent in 2010.
Because of that decline, CPMs on Facebook have crept upward, going from 17 cents in 2009 to 25 cents last year.
The only ad categories that were able to crack 0.1 percent click-through rates were "tabloids and blogs" (0.165 percent) and "media and entertainment" (0.154 percent). The worst performing ad category on Facebook, per Webtrends, was healthcare, which generated 0.011 percent click-through rates and an average cost-per-click of $1.27.
However, Facebook’s CPMs are still relatively low in the grand scheme of things (consider that video ads on Hulu can sometimes fetch $50 CPMs). And while many advertisers turn to Facebook to drive traffic or sell products, many traditional brands use the site for its social value, not its propensity to drive clicks.
Yet even "social ads"—at least as defined by Webtrends—are only effective for so long. “Out of the ads we measured, we found that interest-targeted ads began to burn out after three to five days,” reads the report. “Eventually the rotting CTR leads to Facebook deactivating the ad, and it’s back to the drawing board.”
Regardless, advertisers continue to flock to Facebook. According to eMarketer, ad spending on Facebook will reach $2.19 billion in the U.S. in 2011 and close to $4 billion worldwide.
Image by: pshab