Facebook, it appears, is beginning to upset the CPM apple cart. Why? Because Costs Per Impression (CPM) with Facebook are a fraction of the cost of the traditional Internet networks. In a recent Advertising Age article Keith Lozio, head of U.S. sales for Microsoft stated, “Social networks are going to be a challenge for everybody, as the sheer dominance of the impressions they're making flood the marketplace with inventory.”
This is a simple matter of supply and demand. It is inevitable that the deluge of growing available ad space will dilute overall CPM costs. A recent ComScore analysis reveals that social networks have over the last year drawn an average CPM of only $0.56 cents, compared to the $2.43 average for the Internet at large. So are these Social Media networks devaluing the coin of the realm? Not really. Remember, that the available ad units offered by Facebook are typically text only, and smaller units––no banner ads, for instance––and therefore more affordable than a traditional ad unit on something like FOXNews.com or the New York Times site. Also, Facebook has recently launched a self-serve build-your-own-ad site that may further drive down CPMs. But here is the big news: Social Media networks are starting to carve out an increasingly larger share of the digital landscape. Take, for instance, the digital giant AOL. They are forecasted to rake in $890 million in net advertising revenue. Facebook, amazingly, will just about equal if not surpass it. And that is at roughly $0.56 a CPM. Not too shabby.
So here is the caution: Social Media networks are not getting the level of click through that you can get with a traditional banner ad. So are you getting a deal or simply paying for a less effective ROI? These are the kind of questions that it is still too early to answer. Stay tuned.
