The cost of Facebook ads has increased further since the platform tweaked its News Feed algorithm to de-prioritize publisher content, according to data from ad tech company AdStage per Recode.
Facebook announced the News Feed tweak in January, and AdStage found that CPMs (cost per thousand ad impressions) increased 122% year-over-year (YoY) in that month. In comparison, CPMs increased 45% YoY in January 2017.
The growing cost of Facebook ads has likely been propelled as a result of the decreased prominence of ads within the News Feed and users spending less time on the platform. Facebook's algorithm change means fewer news articles and ads are being surfaced to users, leading to fewer ad impressions. Moreover, Facebook announced that globally, users on average spent two minutes less per day on the platform in Q4 2017. Assuming advertisers have kept their Facebook ad budgets constant, this would lead to higher CPMs for Facebook ads.
Below are two key points to keep in mind as the cost of Facebook ads increases:
- CPMs for Facebook ads may continue to increase as the platform approaches maximum ad load in the News Feed.Places in the News Feed where Facebook can insert new ads are running out, according to the company. When Facebook does reach max ad load, ad impressions could level out and cause CPMs to increase further if ad demand stays constant.
- However, Facebook's active user base will help the platform attract ad spend amid ad price increases.Fifty-one percent of US adult Facebook users visit the platform several times a day, higher than any other major social platform, according to Pew Research Center. A highly engaged user base makes it more likely that somebody on the platform will see a brand's campaign, and this will help advertisers justify spending more for Facebook ads.