Facebook’s annual revenues neared $800 million last year, driven
largely by self-serve ads, according to a recent report. And its
active users likely number around 500 million, although the company
hasn’t released official figures in four months. So how much does
it cost advertisers to reach one of those users?
Naturally, not all Facebook users are created equal in the eyes of
advertisers. They’re willing to pay more to reach older users than
younger ones, for example. The social network doesn’t release any
details on its most financially valuable demographic groups, but it
does have suggested price ranges for advertisers looking to bid on
ads targeting a particular demographic.
These price ranges, called “suggested bids” reflect what
advertisers have most recently paid to reach the same group based
on CPMs (cost to show 1,000 impressions of an ad) or CPCs (cost for
every time a user clicks on an ad), and they shed some light on
which types of users are more expensive to reach.
There are some trends that are pretty intuitive — the older users
being more expensive to reach than younger ones, for example. But
there are some counter-intuitive ones too. Japanese users, for
example, are less expensive to advertise to than Russian users,
even though the Asian country’s GDP per capita is more than three
times as large. (That’s because Facebook’s penetration in Japan is
fairly low with just 1.1 million adult users. Twitter outstrips the
social network’s presence in the country by almost four-to-one
based on unique visitors.)
There are, of course, a number of caveats to Facebook’s suggested
bid data. The figures constantly change depending on real-time
demand. They can easily fluctuate by several cents or more in
either direction, so a measurement today will not be identical to
one tomorrow or even an hour from now. But big discrepancies like
the difference between the CPC it takes to reach an adult aged
35-44 ($1.15) and the CPC it takes to reach a teenager ($.64),
aren’t significantly changed by these fluctuations.
Also, certain categories may have higher bid ranges just because
there are more advertisers in that area that are comfortable
working with Facebook right now. As buying ads on the social
network becomes more mainstream, markets in other categories might
become more competitive.
Here’s a look at some of the suggested bids:
1) Group
of Eight: If you look at the G-8, Facebook users in
the United Kingdom are the most expensive to reach, while Italian
and Japanese users are the cheapest.
2) Emerging
markets: With lower costs of living and smaller
numbers of Facebook users, these countries naturally have lower
suggested bid ranges. Below are the suggested bid ranges for
Facebook users from the “BRICs,” or Brazil, Russia, India and
China, which are considered to be the more promising emerging
markets. China, which has largely blocked Facebook access, has
an estimated user base of just 34,000, so its range is probably not
very reliable. Brazil and India also are the remaining strongholds
for Google’s Orkut social network and Facebook hasn’t made deep
in-roads in either country.
3) Age: Older
users are more expensive to reach than younger users.
4)Employers: Amusingly,
Facebook employees are much more expensive to reach than employees
of other companies like Google or Goldman Sachs Group Inc.
5) Media
brands: Facebook users that are interested in or like
CNBC are more expensive to reach than users who like other media
brands. (Presumably, they work in finance or have lots of
investable or discretionary income.)
