Facebook's new friends in advertising drive revenue

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The Independent Online

Facebook's advertising rates have shot up 41 per cent on a year ago, an authoritative new survey suggests, boosting hopes for the social networking website's planned $100bn (£63bn) stock-market flotation.

The figures, compiled by the ad agency TBG Digital, one of the biggest spenders on Facebook, show that the cost of advertising was rising even as the website increased the number of ads it carries on each page.

"It's good news for Facebook," said Simon Mansell, the chief executive of TBG Digital. "Facebook has seen an increase in pricing at the same time it has grown the number of ads per page to seven, which you would naturally expect to actually deflate prices."

TBG Digital, whose survey was audited by Cambridge University, is believed to be responsible for just under 10 per cent of all advertising spend on the world's biggest social media site, which was founded by Mark Zuckerberg in 2004 and has more than 850 million users.

Another key finding to emerge from TBG Digital's quarterly survey is that the number of Facebook users clicking on news stories has almost trebled compared with just three months earlier, thanks to so-called "social readers". This means that when a Facebook user is logged into the social networking site and also visits an external "partner" news website, the software will automatically post an update to that user's Facebook news feed, telling their friends they've read that story.

The Independent, The Guardian, The Washington Post and Yahoo are among the news websites that have signed up as partners with Facebook's social reader technology.

Click-through-rates – the number of Facebook users who subsequently click on a news story – have surged 196 per cent, says TBG Digital.

At the moment the Facebook social reader service is free to news websites, but Mr Mansell said the jump in click-through rates suggested Facebook might be able to make money from it in future, in the same way that it has done from games.