According to a recent post on the Wall Street Journal’s Digits blog, the cost of advertising on Facebook that encourages a user to become a “fan” is $1.07 per fan. The article is based on a white paper recently released by social marketing and analytics firm WebTrends, which studied 11,000 Facebook ad campaigns in the U.S.
So far, our clients have seen promising results using Facebook ads. Although most are not selling tangible items, they’re using ads to generate a larger fan base. We’ve seen ads generate up to 48.4 percent of a page’s fans. Why is this significant? Becoming a fan of the page gives the brand permission to market directly to a user through messages sent to the user’s news feed and creates a direct line of communication with the target audience.
But according to Webtrends, the rates at which U.S. users are clicking on Facebook ads designed to increase a fan base are beginning to decline. In 2009, the click-through rate on this type of ad was .063 percent. In 2010, the rate declined to .051 percent. At the same time, ads are getting more expensive, rising from 17 cents per thousand in 2009 to 25 cents in 2010.
With time, advertising costs will continue to rise and users will click on fewer ads. For this reason, it’s important to start building a significant fan base now. According to Justin Kistner, Webtrends’ senior manager of product marketing for social, companies that are establishing large fan bases now are going to end up spending less money than others.
“There is a competitive advantage to starting now,” he said.
Check out this video interview with Michael Lazerow, the CEO of Buddy Media, a firm that sells software for brands that want to market on Facebook. He provides some very interesting information on the benefit of marketing on Facebook.