Small businesses have been urged to build their presence within Facebook, following a new global report revealing advertisers who keep traffic within Facebook can reduce cost-per-clicks by 45%.
The latest Global Facebook Advertising Report, compiled by TBG Digital and verified by the University of Cambridge, is based on 326 billion impressions in 205 countries, including Australia.
According to the report, Facebook’s economic model is delivering improved value for advertisers, both in effectiveness and in terms of cost.
TPG has uncovered huge reductions in cost-per-click rates for advertisers running Facebook campaigns that recruit fans or require users to install applications.
“A previous study in Q2 2011 by TPG Digital, albeit with a smaller sample size of 2.8 billion impressions, found that Facebook charged a 29% lower cost-per-click for ads that keep traffic within the Facebook environment, rather than sending users to an offsite location,” the report said.
“We discovered that the fanning/Facebook application CPCs were even cheaper in comparison to offsite CPCs in Q4 2011.”
“We now see that keeping traffic within Facebook via fanning and Facebook application campaigns can reduce CPCs by 45%… [This is] a strong incentive for companies to build their presence within Facebook.”
“For example, financial services firms often direct users back to their own websites to complete a quotation or sign-up process, but building tailored applications that perform the same function within Facebook sees a reduction in advertising costs.”
The report goes on to assess industry sectors in terms of volume and effectiveness.
The top five sectors ranked by volume – finance, retail, food and drink, games and entertainment – account for almost 70% of the total impressions served on Facebook, according to the report.
Meanwhile, the food and drink sector recorded the highest click-through rate levels, largely due to successful fanning campaigns.
“Food and drink has taken over beauty and fitness to hit the top position in our sector click-through rates league,” the report said.
“These sectors are engaging with the Facebook user base and are therefore enjoying lower CPCs as a result. There has [also] been more movement with not-for-profit, with home and garden entering the top five for the first time.”
TPG Digital chief executive Simon Mansell says users are becoming increasingly discerning about what they view on social media networks, so advertisers need to up the ante.
“It is in all advertisers’ interests to ensure that their content resonates with their target audiences and fits with their usage habits,” Mansell said in a statement.
“The potential cost-savings available, by maintaining traffic within the Facebook environment, is particularly compelling and demonstrates its effectiveness as an advertising channel and also as a destination.”
Mansell said Facebook is cementing is position as an increasingly essential part of brands’ advertising strategies, so smaller companies must continue to invest in their Facebook presence.
“With the reported introduction of mobile adverts early this year, the opportunities for advertisers will continue to grow,” he said.