Impressive news for Facebook and display advertising overall. Not only does Facebook have almost a third of the market for display ad impressions, data shows a major run-up in pricing for Facebook advertising on a year over year basis. In the past year, the “cost per click” for a Facebook ad rose 74% in the US, UK, France, and Germany, while display advertising more generally rose 45%. One factor in this run-up is that traditional advertisers are diverting more advertising spend from traditional to digital media. This part of the Facebook equation (High market share of Ads + Strong Pricing for Each Individual Ad), putting aside other questions, is *winning* for upcoming Facebook Valuation.
Remember when display ads were worthless? Facebook, like Google before it, is proving to be an Internet business model alchemist, turning Internet advertising from scrap to gold.
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