Facebook’s Fan CPA Is On The Rise – $1.07 Per Conversion

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With the online advertising landscape changing, social networks are becoming increasingly important for connecting with potential and existing customers. Facebook is at the head of the pack when it comes to social network advertising, and more businesses are choosing to purchase ads on Facebook to drive more attention to their Facebook Pages.

Facebook’s importance in the Internet marketing world is certainly hard to deny, however many marketers have struggled to quantify costs and ROI associated with their Facebook marketing campaigns.

Webtrends, a web analytics provide, has dug into the data and gives us an overview of costs. More than 11,000 Facebook advertising campaigns studied, all of which were designed with the intention to drive a user to ‘like’ the advertiser’s Facebook Page, finding that the cost associated with the activity is $1.07 per conversion. Of course as Facebook awareness builds, costs increase. Back in 2009, these same ads had a CPM averaging 17 cents. In 2010, the cost rose to 25 cents, click-throughs decreasing, lowering to .051% in 2010 compared to 2009’s .063%.

If you consider operating costs of other display based advertising services, such as Google’s display network, these numbers look fantastic, even with increasing costs. Of course as marketers it’s important to look inside the data to find out what’s really working. What are your campaign goals? How much traffic are these ads generating? What is the actual onsite conversion rate potential?

Justin Kistner from Webtrends spoke to the Wall Street Journal regarding the actual value that Facebook fans add, saying it “depends on the kinds of campaigns you are driving at that fan base.” If you step back and think about the core of a social media marketing campaign, of course you have to design it around user activity and the likelihood of users sharing information with their friends. Posting products and expecting sales simply won’t work.

This is easier said than done, of course. Many marketers have faced an uphill battle when attempting to get Facebook fans to take meaningful action. Social media related campaigns require involvement and personalization in order to be most effective, and this may not be practical across all markets.

In fact, one study shows that social media drives only 3% of traffic to e-commerce sites. At first glance, this clearly isn’t encouraging to those involved in markets such as online retail. Facebook-based retail could be a potential option, using FBML to include your e-commerce products within a tab on your Facebook Page. This requires investment, not only with the intention of making your products more ‘socially available’, but for measurability.

This doesn’t mean that you shouldn’t focus on investing in a Facebook campaign – there are 650 million users, this isn’t a market you can ignore. Custom Facebook pages may be relatively inexpensive, however remember that this is only one step in a larger process.

Facebook is the world’s largest social network – it’s going take a real campaign to make it work.

For those who want to learn more about how advertising works on Facebook, here’s a video:

Have you done any Facebook advertising or campaigning to date? Let us know in the comment section below!