• by Karl Greenberg , October 11, 2011

Now the good news-- for Facebook, anyway. Advertisers on Facebook saw an 18.5% improvement in click-through rates in the third quarter in the United States, the United Kingdom, France, Germany and Canada. 

The news, from TBG Digital’s Global Facebook Advertising Report, for the third quarter of 2011, suggests that Facebook is earning more per impression, while advertisers using Facebook as a social strategy platform are getting a bigger return on investment from their ad spend.

The study, audited by Cambridge University's Psychometrics Centre, and based on an analysis of 255 billion impressions from 216 advertisers in 192 countries, showed that Facebook advertising increased in effectiveness by 18.5% a measure of increased click-through rates across the five major markets during the third quarter.

The study said Facebook earned more per impression because the cost-per-click rates fell by 10.8%, but CPM increased by 7.1% across the five major markets. In the U.S., CPM grew by 8.8% (to Facebook's benefit). In the U.K., the increase was 10.9%.

Impressions of social game applications on Facebook increased by 150% in the third quarter, according to the study. Seven out of 17 market sectors drove the use of applications last quarter versus 2 out of 18 in the first quarter. "As brands reach a critical mass of fans on Facebook they are choosing to activate through applications that encourage interactions that are then shared among fans and their friends," note the study's authors. 

Also, according to the study, brand advertising grew 6.7% to 53.7% of total Facebook advertising output. Brands and keywords drive performance, per TGB, which said keyword targeting can cut cost-per-like by as much as 45 cents. The bottom line is that brands and keywords are what prove most influential in campaigns to build Facebook fan numbers.

The top five sectors -- entertainment, food and drink, beauty and fitness, automotive and games -- grew combined volumes of impressions by 117% during the quarter.  Retail still has the highest market share in terms of impressions, with 27%. The authors said that would grow in the fourth quarter as marketers pushed holiday shopping deals.