In the piece, Ad Age mentions that the two largest social networking sites, MySpace and Facebook, represent more than a fifth of all advertising traffic, but are only drawing an average $.56 CPM compared to the $2.43 CPM average for the internet at large. In fact, the averages for the largest player, Facebook may even be lower than that.

I don’t believe that thinking about the “average” CPM is that helpful – because as we know, impressions are not commodities (if they were,  our lives would be a WHOLE lot easier!). Instead of considering how a handful of large social media sites are pushing down the average CPM, we think social media represents a very exciting opportunity for advertisers for the following reasons:

• There is a low initial starting point in terms of budget to get started with these systems
• Connection-based targeting opportunities offer an intriguing targeting prospect
• Social media ad systems like Facebook’s allow for easy demographic-based buying
• Conversion tracking is now directly possible on some of these social media sites (earlier one had to use redirects)
• Text plus image ads are easier to iterate than graphical banners, meaning many more tests can be run in parallel, more quickly
• Perceptually, low CPMs on social media sites appear to be a good opportunity to start testing ad concepts, and lower some of the barriers for advertising

Tools like XA.net’s Text Ad Creator (with our Facebook advertising API integration) can help automate the creation and optimization of tens or hundreds of different creative/landing page combinations, to allow for more efficient and effective advertising. Contact us to learn more. In terms of connection-based targeting, XA.net can target (with your permission) the fans of your pages or applications using our system — so definitely let us know if you would like us to do that for you!