Facebook Looking to Cash in Ahead of IPO; Ad Costs Skyrocket
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As it's popularity is rapidly expanding, and formidable competitors appearing on the horizon, Facebook is aiming to cash in before it's too late.
According to the Financial Times (FT) this morning, Facebook has raised the prices on it's cost-per-click ads by 74 percent over the last year in four of its largest markets.
FT cites research firm TBG Digital on the data.
Display ad costs rose 45 percent in key markets like the U.S., the U.K., France and Germany through the second-quarter of 2011.
TBG's CEO said the growth is the biggest he's seen since Google (Nasdaq: GOOG), and the difference is that the growth is being fueled by brand spending rather than direct response spending. And TBG knows what they're talking about; data is derived from 200 billion ad impressions from 167 different clients.
Is that money worth it? That's debatable. According to Webtrends, the average click-through rate for Facebook was 0.05 percent at an average cost-per-click of 49 cents. With 750 million users, that amounts to about $18.4 million.
Of course, brand awareness measured outside Facebook wasn't included in the measure.
As Facebook mounts for an IPO next year, following in the steps of LinkedIn (NYSE: LNKD), Renren (Nasdaq: RENN), and, shortly, Zynga, increasing pressure has come from Google.
The search giant is aiming to capitalize on the millions of users of its free email service, Gmail, with the introduction of Google+ (Hereafter: G+). G+ is a basic set-up, which allows status updates, grouping of friends, multiple chat, photo-posting, and more, though you still can't direct-message one of your friends. Google CEO Larry Page also announced that G+ has registered about 10 million users in its first few weeks...and this is still by invite only.
It should be interesting to see how Google and Facebook's rivalry pan out, now that it looks like Google finally produced a decent competitor to Facebook (which they keep denying, for some reason).
According to the Financial Times (FT) this morning, Facebook has raised the prices on it's cost-per-click ads by 74 percent over the last year in four of its largest markets.
FT cites research firm TBG Digital on the data.
Display ad costs rose 45 percent in key markets like the U.S., the U.K., France and Germany through the second-quarter of 2011.
TBG's CEO said the growth is the biggest he's seen since Google (Nasdaq: GOOG), and the difference is that the growth is being fueled by brand spending rather than direct response spending. And TBG knows what they're talking about; data is derived from 200 billion ad impressions from 167 different clients.
Is that money worth it? That's debatable. According to Webtrends, the average click-through rate for Facebook was 0.05 percent at an average cost-per-click of 49 cents. With 750 million users, that amounts to about $18.4 million.
Of course, brand awareness measured outside Facebook wasn't included in the measure.
As Facebook mounts for an IPO next year, following in the steps of LinkedIn (NYSE: LNKD), Renren (Nasdaq: RENN), and, shortly, Zynga, increasing pressure has come from Google.
The search giant is aiming to capitalize on the millions of users of its free email service, Gmail, with the introduction of Google+ (Hereafter: G+). G+ is a basic set-up, which allows status updates, grouping of friends, multiple chat, photo-posting, and more, though you still can't direct-message one of your friends. Google CEO Larry Page also announced that G+ has registered about 10 million users in its first few weeks...and this is still by invite only.
It should be interesting to see how Google and Facebook's rivalry pan out, now that it looks like Google finally produced a decent competitor to Facebook (which they keep denying, for some reason).
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