Facebook CPMs Climb Despite Falling Clicks

Click-through rates on Facebook are going down even as the cost of advertising on the dominant social network continues to rise. Average CPM rates for non-premium display ads on Facebook in the first quarter are up 41% from a year ago, and up 15% from the fourth quarter of 2011. At the same time, click-through rates dropped 8% from the prior quarter.

The new findings from social media marketing firm TBG Digital are based on an analysis of 268 billion Marketplace ad impressions served on Facebook across five major markets: the U.S., U.K., France, Germany and Canada. (The firm did not disclose the actual value of ad rates.) Cost-per-click rates on Facebook rose even faster than CPMs, increasing 25% over the last quarter.

Underscoring that point, WPP CEO Martin Sorrell  that client spending on Facebook advertising would double to about $400 million this year.

A separate forecast by Brian Wieser of Pivotal Research Group released last week takes a more measured view, estimating that Facebook’s ad revenue will increase about 30% overall in 2012 from $3.1 billion last year.

Still, how does TBG explain ad rates continuing to climb on Facebook while click rates slip?

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