Monday, February 22, 2010

Do Facebook Ads Work?

I’ve always understood the conventional wisdom to be that ads on social networking sites like Facebook don’t work well. The reason given is that people go to social networks to network—communicate—and don’t pay attention to ads. Harry Gold of Overdrive Interactive mentioned in my class recently that they had purchased an ad on Facebook’s home page for Harley-Davidson, which has had great success on Facebook. That started me thinking. This chart makes the point that Facebook is now the third-largest site for display ads, so something is going on!

Facebook ads (except for major placements like the home page) work like Google’s AdWords. The advertiser creates ad content; selects targeting options; and sets budget, scheduling and payment parameters. The mechanics are the same; the targeting is completely different. The AdWords targeting that most of us are familiar with is by keyword (content). The basic targeting options on Facebook are demographic; everything from gender to birthday. There is a keyword filter that is based on items from the profiles of Facebook users. That’s different from the search-based keywords of Google but it’s an interesting possibility if you’re looking for, say, fans of a particular rock band. It’s self-service, so there’s a strong help page associated with the main advertising page.

Ok, it’s easy to set up a Facebook ad. Question is, do they work? The answer, of course, is partly dependent on your objectives.

It’s not arguable that a lot of people would have an opportunity to see an ad on Facebook. According to Inside Facebook’s analysis of site data for January 2010, “More than 108 million people are now using the site every month, up from nearly 103 million people before.” The absolute numbers can be disputed, but the trend has been relentlessly upward for a long time. The post has more information about the composition of the Facebook audience and growth segments. The stats are fascinating, but don’t make the mistake of thinking that Facebook is a broadcast network. The real possibility is microtargeting of ads.

Data from comScore, accessed on the Inspire Media blog, give some insights into the effectiveness question. All users were asked where they would be likely to notice advertising and User Generated Content sites ranked below both news and content sites and corporate sites. Another question, presented for the 18-34 age group, is very revealing. The type of sites that score highest by a large margin is music/ movies/ entertainment. Makes sense, doesn’t it? These Millennials want the opinions of their peers when it comes to use of their leisure time, something they find on the social networking sites, including Facebook. That should make them more receptive to advertising there for leisure activities. Note that consumer electronics, travel, and apparel also score relatively high on the “likely to notice” metric; I hypothesize that the reason is the same.

Noticing is nice—do they take action? Click Through Rates (CTR) are not high anywhere. One well-known marketer gives the average for Facebook as 0.01 – 0.05%. Search ‘Facebook CTR’ for a lot of anecdotal evidence that CTRs are low but can be impacted by strategy.

You also see the occasional story about finding motivated buyers on Facebook. Those are super-anecdotal, but you might find this case history on the Facebook advertising page instructive. Think about the product category and the ability to target, both by age and relationship. Again, it makes sense, but it’s also clear the Facebook ad was supported by an active lead management program.

So I’m back to my point about microtargeting. In a lead generation campaign (and that’s one of the obvious marketing objectives), the quality of the leads is more important than the quantity.

Reaching the right people with the right message is always important. Does Facebook advertising make sense for your product/service? Here are some links that may help you think about that question for businesses (1, 2), for small businesses, or for non-profits.

More recent posts on Facebook ad effectiveness:
Targeting Your Facebook Ads
Stronger Evidence that Facebook Ads Work

7 comments:

Brian Bagnall said...

Great Article!

Brian Bagnall
Facebook Social Ads Expert

seb-kam said...

Nice blog

Google page one said...

Excellent information. Thank you.

Griss Adams said...

Facebook Advertising not only gives you and your business wonderful results, but with it, you can only advertise to people who are interested and willing to buy your products. Additionally, you can also target the gender, age, and location of your clients or customers.

Mildred Lynn McDonald said...

Very happy that I came across your article via Google search - thanks a million for posting this information. Useful, thoughtful, and timely :)

shebuyshouses said...

I just tried posting and I think it messed up, unless it already got sent to moderation.

My thing with facebook ads is I don't think the people liking my "page" are real. They either have weird profiles, or their profiles are full of "this person likes this company." and I think they're just going around clicking like. I don't know if they get paid to do that or what, but I don't think they are actually interested in my company.

Any ideas?

Mary Lou Roberts said...

Yes, ads can certainly attract "tire kickers" and people who have no intention of buying. One way to find out is to create a landing page specifically for the Facebook ad and try to get people to register or to provide some information about their interests. Another is to use tracking that can set a cookie on visitors who arrive via Facebook and see where they go on your site, if at all. You can also use some effective low tech methods like asking new contacts where they first heard of your firm. It does take some work, post ad click, to find out whether the ad really worked to bring in customers/leads.