Facebook Ads 122% More Expensive Following News Feed Revamp

The cost of a thousand ad impressions on Facebook was up 122-percent year-on-year in January, data collected by AdStage shows, suggesting the company's bottom line may not take a hit following the polarizing revamp of its News Feed that some industry watchers were previously predicting. The change prioritized content posted by one's friends at a direct expense of everything else, even promoted posts competing for being featured on the social media network's landing page as part of its advertising auction system. The development prompted marketers to bid for the remaining advertising spots more aggressively as users were seeing fewer of them anyway, possibly because they started spending less time on Facebook, AdStage's data suggests.

The ad cost spike wasn't as large in February but remained notable, being up 77-percent year-on-year, according to the same source. With fewer ad units now being shown by Facebook on a daily basis and the demand from the digital marketing industry presumably remaining identical, the average ad unit price is now correcting itself in accordance with the basic economic principles. The current state of affairs suggests Facebook may report its first decline in displayed ad units for Q1 2018, with the growth of that metric already slowing down in recent times, being up only four-percent annually over the three-month period ending December 31. Facebook Chief Executive Officer Mark Zuckerberg previously said the company will be focusing on ensuring the time users spend on its social network is "well spent" starting this year, directly telling investors they should expect a decline in the number of the platform's usage hours going forward.

Many industry watchers are speculating Facebook opted for the unconventional move in an attempt to contain its "fake news" problem that it still isn't able to control; by radically slashing the amount of content from pages people see on their News Feed, the firm should also significantly reduce the extent of factually inaccurate stories promoted on its platform. It's presently unclear whether that nuclear option is meant to stay in the long term or is just a band-aid move that Facebook is hoping to replace once it's able to identify and remove misinformation in a more timelier manner.

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