The Brand Value of Facebook
In 2010, Facebook topped the list of most visited websites in the U.S., and it is estimated that overall worldwide ad spending on Facebook will likely reach more than $4 billion this year and $5.74 billion by 2012.
Because of the tremendous potential it holds for our clients, Efficient Frontier has been in the unique position of working up close and personal with Facebook engineers and account reps for the past several months to optimize performance and enhance our clients’ user experience. Thus, we bring you the first in a series of blogs about how to maximize Facebook advertising campaigns, supported by our data so far, and the insights gleaned from working closely with the social networking giant.
How are Facebook advertising campaigns performing? How do they compare to search? Are they effective? Can we integrate them into other channels? In short, the answers are: the campaigns are performing well thus far; in comparison to search, it depends; yes, Facebook is an effective advertising tool and; yes, campaigns absolutely can and should be integrated.
How are Facebook advertising campaigns performing?
For our clients, Facebook is performing very well. Luckily for Efficient Frontier, our clients tend to be smart, savvy, and open to new strategies, especially the dozen or so forging ahead into the realm of Facebook advertising under Efficient Frontier’s management. Staying open to new strategies is important when advertising with Facebook since you need to be able to move away from the direct marketing results that take place on Google and MSN and into more of a branding mindset. This is not search, it’s Facebook.
Yeah, but how does it compare to search?
It depends. The data varies by industry and client right now and there is no set standard for performance. Facebook is not an advertising platform that has been around for 13 years as search has, so that’s okay. On the cost per click (CPC) side, the performance has varied on either side of the norm. We have seen CPCs on Facebook 3X cheaper than on Google, and with other clients, 1X more expensive. The consistent factor is that the CPCs on Facebook have been relatively competitive with those on Google. On the cost per lead (CPL) side, the performance favors Google because it converts better. But it should convert better because users are looking for you on Google, whereas on Facebook, they are not. Though the CPLs are consistently trending higher on Facebook than on Google, that number varies (between 1 X – 7X) depending on the client, though 3X – 4X tends to be the current average.
So is this effective?
Yes. There is a branding value to Facebook that can’t be overlooked. It’s the Friends of Connections (FOC) effect, or more simply, the friends of users who like your page. The effect is highlighted below:
If you only account for direct leads from Facebook, you are missing half the story. Looking at the above graph (which I made up for demonstration purposes), giving 100% credit to FOC leads brings a CPL of $50 down to $16.67, or giving only 50% credit to FOC leads, brings the CPL down to $25. Though we can target connections of a brand, the FOC metric on Facebook is currently not something you can track (although there are betas around the corner). So then, how do you measure what you can’t see? You don’t. But, you move towards the branding mindset to understand that the effect is there, and how it impacts your bottom line. And you leave a little leeway in your CPL goals for it, and look to a more holistic, cross-channel CPL.
Should we integrate this into other channels?
Of course you should. How? Efficient Frontier can help.
Was that too obvious? In all seriousness, being able to dissect and analyze data from SEM, SEO, display, and Facebook, and measure the value/impact they have on one another and your business is paramount right now. Being able to look at a forecast at various budget points and from there allocate costs across search, display, and Facebook, so that you are getting the best bang for your buck overall, is key. We’re doing it right now at Efficient Frontier, and it’s exciting!
Accurately measuring your brand value is just one of many important issues to consider in regards to Facebook advertising. Stay tuned for several more blogs on Facebook topics in the coming weeks.
Senior Account Manager