Facebook advertisers face 40% rate rise

 

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By Stewart Mitchell

Posted on 11 Apr 2011 at 14:52

Advertisers on Facebook will have to dig deeper to stay on the social network after the company's rates soared.

According to figures from advertising management company Efficient Frontier, its clients have seen the price per click on Facebook rise by 40% in the last three months compared to the quarter before.

Efficient Frontier said the sharp increase highlighted the high demand to be on Facebook as the 500-million-strong social network increasingly creates waves in online advertising.

"The way that adverts are bought is via auction, with the highest bidder winning and as competition goes up then so do the prices," said Efficient Frontiers' client service manager for Europe, Jonathan Beeston.

"As Facebook gets more mature it will also know more about where adverts work best, which will affect price, but this is largely down to increased competition, with more advertisers wanting to be on Facebook."

Efficient Frontier said the steep increase was for self-service ads, not the more expensive premium ads shown on user home pages, but still marked a change in bargaining power for Facebook.

According to figures from research company eMarketer, the company is likely to double its advertising revenue to $4 billion this year, while nearest social networking rival Twitter was expected to attract only $150 million.