While part of the decline may be due to the holiday season boosting ad prices in the latter part of 2012, Spruce also mentioned that in Q1, Facebook pushed more ads into the news feed, increasing inventory and causing the drop in prices for those ads. The increase in demand for the Facebook Exchange from advertisers kept up interest in the ads on the right-hand side of the page.
Spruce showed that CTRs for Facebook in Q1 2013 were inconsistent as advertisers started to optimize their ad buys and shift spending to the more effective News Feed ads, especially on mobile. Mobile-only News Feed ads saw a CTR of 1.86% in Q1, up 7 percentage points from 1.74% in Q4 2012, and all Facebook ads saw an average CTR of 0.1%, up from 0.07% in Q4. Desktop-only News Feed ads saw a lower CTR of 1.08%, down 14 percentage points from 1.25% in Q4, while desktop ads saw CTRs drop from 0.04% to 0.03%.
CPCs for Facebook ads declined mostly, with the Q4 2012 CPC for all Facebook ads at $0.55, dropping 31% to $0.38 in the first quarter 2013. Desktop-only News Feed ads dropped from $0.43 to $0.41, while mobile dropped to $0.19, down from $0.30 in Q4 2012. CPCs for general desktop ads rose to $0.87 from $0.75.
Facebook continues to evolve its advertising offerings, most recently introducing cost-per-action (CPA) bidding, in April 2013.