Big brands take over Facebook ad market

As Facebook woos investors for its forthcoming IPO, set to value the company at a mind-boggling $96bn, there are mixed messages about its advertising prospects, its only real source of revenue.

New research from ad platform Marin Software shows that the cost per clicks (CCC) for its premium social ads – like Sponsored Stories which highlight brand friends’ likes and comments – have risen 26 per cent in the past year. These are the ad formats favoured by the big brands which are flooding onto Facebook.

The CCCs for ‘Standard’ ads, favoured by smaller advertisers and the likes of betting and dating sites, fell by about the same amount however.

This appears to show a migration of advertisers to premium Facebook products (good for the company) but also a growing dependence on same, which may cause problems for Facebook down the line unless it can show more convincingly that its premium ads actually deliver results.

At the moment it’s become almost of matter of corporate machismo to boast about how much you’re spending on Facebook with media agencies falling over themselves to talk up their Facebook-buying skills. At some stage though clients are going to want some hard evidence that their premium Facebook spend is worth it, especially if the price keeps rising at its current rate.

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