Ads on Facebook are decreasing in price, despite recent reports to the contrary, according to TBG Digital.
In fact, in some markets, the suggested bid rate has dropped upwards of 40 percent, the exact rate which Efficient Frontier recently stated ads had increased by. Given that TBG Digital manages a large percentage of Facebook’s daily ad inventory (possibly the largest), we’d have to trust this latest report.
Does this mean that Facebook ad prices have decreased in every market segment? Definitely not. Instead, what we’re seeing is that broadly targeted ad campaigns can be performed for less, while some subsegments of the market may actually be increasing in price.
The net result is that Facebook ads will appear even more attractive to advertisers as costs decrease. The reason for this decrease could potentially be an increase in inventory that is outpacing demand. In other words, the social network’s user base may be growing too fast for advertisers. Patrick Toland, U.S. Managing Director of TBG Digital, says, “Our data suggests the CPCs have decreased on Facebook due to inventory increases in ad units, from 3 to 4 to 5 ads per page, and continued Facebook user growth. But more importantly, the Facebook algorithm has become more stable which has enabled savvy marketers to better optimize campaigns.”
While one would typically expect bid prices to closely track demand for the company’s advertising service, this report throws a kink into such theories. Despite the decreasing bid prices, Facebook’s ad revenue is still projected to grow to a whopping $4 billion this year, according to eMarketer.