Posted April 17, 2012 2:29 pm by with 0 comments

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If you’re on a see-saw, you expect one side to go up while the other goes down. But when you’re paying for advertising. . . not so much. Still, that’s exactly what’s happening on Facebook says a new report from TBG Digital.

In the simplest terms, the average CPM rates on Facebook ads have risen 41% year over year. There was an initial, corresponding rise in click-throughs through Q3 of last year, but since then clicks have dropped off. In the US, the decline was 8%. France got hit the hardest with a 13% decline.

The reason for the drop? TBG blames it on the change in number of ads displayed per page. Facebook now shows up to 7 ads at a time, but statistically we know that only one will get clicked. Even I can do that math. Only 4 ads per page equals 1 in 4 chance of getting a click. 7 ads drops to 1 in 7.

Granted, those decline numbers aren’t huge, but they only represent a change over the last quarter. What’s going to happen in the next quarter? A continuation of the decline? And if clicks are dropping off, shouldn’t Facebook be charging less, not more?

Of the ads that are running, retail is picking up the biggest percentage of impressions with 23%, barely squeaking past the mysterious “Others” category. They aren’t on top when it comes to click-through-rates. That award goes to Entertainment.

News came in fifth on the chart, but they showed huge growth — 196% increase in CTR. They might be the only real winners here.

What all of this means is that the cost of doing business on Facebook has gone up.

It’s to be expected. Facebook isn’t the new kid on the block anymore. In spite of the grumbling from users, it’s become a large part of the US experience and that means it has to be a part of the US marketing experience as well.

Okay, maybe “has to” is too strong a word, but consumers do turn to Facebook for information. They use it to find deals, product specs, and feedback from customers. Any company that doesn’t have a Facebook page is considered “old fashioned” and that’s not something you want to be.

Facebook brand pages are still free. At the lowest level, it won’t cost you anything but time to put one up and keep it updated. Facebook ads, however, are something you need to think about. Some marketers swear by them, others say they’re a bust. You’ll never know how they work for your business unless you try them. But if they don’t deliver the goods, don’t hesitate to pull the plug. Facebook may be the kind of social media, but there are plenty of other marketing options on the web.