GM pulled of its ads from Facebook, this led many marketers to wonder if advertising on facebook or any social media site is a good thing. It is, and it isn’t. With 900 million (900,000,000) active users can you ignore facebook and all of social media? Is it worth paying for? Another good question.
In a study by Resolution Media and Kenshoo seperatly, they7 looked at the effectiveness of Facebook ads, these 2 companies analyzed global data of 65 billion (65,000,000,000) Facebook ad impressions and 20 million (20,000,000) Facebook ad clicks over a wide range of brands and categories. Now remember these are ad clicks and not what social media or even (in my humble opinion) how social media marketing should be used to get maximum exposure for you.
What is the long term viability of facebook and social media advertising?
“Social media has quickly become one of the preferred channels for brands, and when done right, can foster meaningful relationships between brands and consumers in ways that were never before possible,” says Alan Osetek, president of Resolution Media. “The purpose of this study was to define what ‘doing it right’ means in terms of measureable actions and outcomes, and giving marketers a model for demonstrating effectiveness.”
The study showed that Sponsored Stories and Post Ads receive about double the click-through rate (CTR) of Social and Web Ads, which means that ads with social context resonate better with audience members likely due to a personal connection. Additionally, Post Ads draw more attention because they usually feature special offers and are larger than normal ads. I guess this is true because they did a study on it but, well I usually ignore those kinds of adds myself unless I see it and it really matters to me at that specific time.
The data also shows that higher CTR leads to lower average cost-per-click (CPC) rates, with Post Ads averaging a CPC of $0.24, Sponsored Stories averaging $0.46, Web Ads averaging $0.59 and Social Ads averaging the highest CPC at $0.78. But for advertisers that choose the cost-per-thousand (CPM) model, Sponsored Stories are the most expensive ad type – averaging a CPM of $0.31 compared to Web Ads that averaged the lowest CPM of $0.18. That could become a lot of money, couldn’t it? Hope you have deep pockets for the start up. This might be more pricy than direct mail.
The study also showed a new metric called “Exposure Rate,” which measures targeted engagement on Facebook. This metric determines the percentage of the target audience that you are reaching out to and exposing your message to. High exposure rates correlate to a high CTR and conversion rates, with the ads that reached 76-100 percent of their intended audience also receiving an average CTR of .038 percent and conversion rate of 31.92%. In comparison, ads that only reached 0-25 percent of the intended audience resulted in an average CTR of 0.028% and a conversion rate of 11.81 percent. High exposure rates don’t guarantee success, you need to balance this metric with frequency and I might add time of day, to find the number of times the average Facebook user has been exposed to your ad. The study shows that there is a conversion rate drop-off of 32 percent when ads are shown to consumers more than six times. This means that the ad is being shown too frequently, your target will start to ignore it. Additionally, the CTR averaged 39 percent lower after the sixth impression.
One way that marketers can optimize exposure rate and frequency is by maintaining a CPC above the maximum recommended bid. This is because the study’s data showed that the exposure rate was higher for ads with CPCs that were greater than the maximum recommended bid, driving the average exposure rate up by 11.5 percent. Additionally, the data showed that frequency dropped when the CPC was above the maximum recommended bid, by an average of 1.7 exposures.
Larson Notes & Satire: We all are not made of money and for most of us PFC makes no sense. Social Media still comes down to the 3 F’s, family friends and fans. Nothing else really matters. Keep your F’s safe, close, protected, happy and interacted.
When “they” say “doing it right” what are they really saying? Do I hear spend money? In almost anything I read from street smart marketers and sales people it is interaction. Seems funny that my postings are getting an exposure rate of 12-18%. It does not seem to matter what time of the day it is, the % is almost always the same. Would PFC be a good thing?
Then I need to really question paying a higher rate for CPC. Come on who is fooling who here? I’m not a big advocate of paying for clicks in the first place. Now it may have its place but does have its place but not as the center part of your marketing plan. Think long term, think organically.
Then start thinking trichannel. social, telemarketing, direct mail and watch your numbers really take off.
“We don’t sell lists, we find customers.”
Larson & Associates
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