February 02, 2011, 12:25 PM — On Monday I wrote about a study of Facebook advertising metrics by web analytics firm Webtrends (link below), which looked at 11,000 Facebook ad campaigns and crunched a few numbers, as analytics firms like to do.
Webtrends determined that click-through rates for Facebook ads were much lower than CTRs for regular web banner ads.
There was another interesting data point in the Webtrends white paper that the Wall Street Journal's Geoffrey Fowler flagged in an article Tuesday night. (Note to self: Milk more blog posts out of these white papers.)
Fowler noted a statistic called CPF, or Cost Per Fan. As he describe it, that's "the cost of advertising on Facebook that encourages a user to become a 'fan' on the brand’s Facebook page." And that cost (on average) in 2010 was $1.07. There was no data on CPF for 2009, but we can assume the cost rose in 2010 because the costs of ads went up that year, while the click-through rate went down.
Of course, what we're really talking about here from the perspective of advertisers aren't "fans," they're unpaid marketers. If a company gets a "fan" to say they "like" an ad, that person's name goes on the bottom of the ad. Webtrends study shows that ad click-through rates double if someone's "friend" likes it. This is called "friend of fan targeting."
My guess is that the effectiveness of "friend of fan targeting" will begin to diminish over time as the method becomes overused. But for now it's clearly producing better results for advertisers than fanless ads.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.