Looks like a report showing that facebook’s CTR is around .04% and they and they might get bought by mircosoft is sparking a lot of speculation again.
From all the posts on facebooks CTR problem it looks like people are coming to the same conclusion I came to 8 months ago. That being that given Facebooks extremely LOW ctr they have no way of making huge amounts of money. Facebook can never monitize like google can because the Unique user to pageview ratio is far to high.
I’ve advertised on facebook a few times as a test, and again last week when their inventory got triggered by adsense ads. It is by far the worst site of all time to advertise. I got over 2000 clicks and 1!!! signup. The biggest problem with facebook is that nearly everyone clicking on ads is doing so accidently or using the service much in the way people use DIGG, ie to waste time/browse.
with a CTR of 0.04% facebook gets 0.4 clicks per 1000 ad impressions, or .4 clicks per CPM.
5 cent/CPM = 12.5 cents a click
50 cent/CPM = $1.25 a click
$1.00/CPM = $2.50 a click
$15.00/CPM = $37.50 a click
Brad Feld suggests that apps on facebook can get 50 cents/CPM to $15.00 a CPM. Looking at the above math that is clearly impossible. Note that the average price on search engines per click is only ~50 cents
Facebook really only has 2 options. Move the ads into better positions which will raise revenues by at least doubling CTR. 2 Find advertisers like myspace did that are willing to pay high CPM’s. But there are a very limited number of advertisers willing to pay insane prices.