Facebook Ads Get Half the Clicks of Network Banners

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Facebook apparently has some distance to cover before it achieves the utopian vision of social advertising. A new Webtrends report suggests the site's paid promotions performed only half as well as network-driven banner ads in 2010. And it found Facebook.com ads delivered a lower average click-through rate last year compared to 2009, even though prices went up.

Webtrends' research examined 11,000-plus Facebook ads to create a set of marketing benchmarks. According to the Portland, OR-based company, Facebook's average click-through rate was 0.051 percent in 2010, down from 0.063 percent the year before. So for two straight years, the platform has come in below the industry standard of 0.1 percent for banner click-throughs. Cost per click was $0.27 (2009) and $0.49 (2010) for those years, according to Webtrends.

The researcher also studied demographics of viewers clicking ads vs. those who did not. It found that older consumers are more likely to click, as are people who didn't attend college. Regardless of education level, people clicked more if an ad had a friend's name appear at the bottom of the ad. Geography wasn't much of a deciding factor with clicks unless the Facebook users resided in Hawaii, Wyoming, or North Dakota. Hawaiians clicked less often than any other state's residents, while North Dakotans and Wyomingites brought in click-through rates that were double and triple the average.

In addition, Webtrends found that click-throughs for an ad decline by around 50 percent after it has run for two days. Once click-throughs drop below a certain threshold, Facebook stops serving the ad. But when marketers use the "friend-of-fan" targeting option, the report says, the ads "last two to three times as long" on the platform.

While click-throughs have long been an important online metric, marketers are naturally more interested in creating sales and brand engagement. And the promise for social advertising on Facebook's platform revolves around friends affecting other friends' purchase and interest behaviors.

Facebook last week launched "Sponsored Stories" ads, which let marketers utilize messages from their "likes" community for paid promotions on the site. The ads contain word-for-word Facebook user posts and his or her profile picture, while appearing in the right-hand column with other paid promotions on the website.