Facebook advertising costs jump

The cost of advertising on Facebook has soared over the past year, even though the social network has doubled the number of ads on each page.

The average amount of money companies pay to get a Facebook user to 'like' their page has jumped by 43pc in the past three months alone. Pictured: Facebook founder Mark Zuckerberg Photo: AFP

According to TBG Digital's Global Facebook Advertising Report, the average CPM - a key unit in advertising that measures the cost per thousand clicks - has risen by 41pc in the past 12 months, including 15pc in the past quarter.

Meanwhile, the average amount of money companies pay to get a Facebook user to "like" their page has jumped by 43pc in the past three months alone. The UK saw the steepest increase, at 77pc.

The rise in ad revenues comes at a crucial time for Facebook, which is under pressure to demonstrate that it can monetise its global reach as it gears up to make its initial public offering next month. The social network, which last week paid out $1bn for Instagram, the photo app, is expected to launch an IPO with a valuation north of $100bn.

Simon Mansell, chief executive of TBG Digital, said he was "amazed" that Facebook had increased its revenue per ad at the same time as introducing more ad slots in its new "Timeline" format. "It has grown the number of ads per page, sometimes up to seven, which you would naturally expect to actually deflate prices," he said.

TBG's research also revealed which sectors were prepared to spend the most on advertising on Facebook. The finance industry was the biggest spender in terms of cost per click, shelling out three-and-a-half times the average of companies in the food and drinks sector. Retailers were the most effective at winning click-throughs from the social network, accounting for nearly a quarter of all page impressions via the website.

Facebook also saw a sharp upswing in its reach as a source of news. The number of clicks through to stories on third-party news websites nearly doubled, laying a challenge to Twitter, which has traditionally been the leading social network in this regard.