Recent reports have sug­gested that Face­book adver­tis­ing is not very effec­tive and in com­par­i­son to Google pro­vides sig­nif­i­cantly less value. There has been some inter­est­ing debate about this com­par­i­son, which peaked when GM announced it was not find­ing Face­book adver­tis­ing effec­tive and cut its Face­book ad bud­get. How­ever, other reports have sug­gested that brands such as Ford and P&G have indeed found Face­book ads to be effec­tive. With such dif­fer­ent brand expe­ri­ences, I thought I might share some infor­ma­tion and ideas on why we believe that Face­book ads and social ROI are real and can be highly effective.

There are many nuances to con­sider. First, what is the def­i­n­i­tion of Social ROI? We define Social ROI as the mea­sure of effi­cacy of mar­ket­ing on social media via paid, organic and earned media. The effi­cacy of the mar­ket­ing cam­paign is mea­sured by soft met­rics per­tain­ing to reach and engage­ment as well as hard met­rics mea­sur­ing the even­tual impact on rev­enue, profit, mar­gin, and offline store sales across all mar­ket­ing and sales chan­nels of a business.

While this def­i­n­i­tion of Social ROI typ­i­cally sits well with a brand mar­keter, direct response mar­keters tend to be skep­ti­cal and find this def­i­n­i­tion hard to accept. Many mar­keters have tra­di­tion­ally been able to mea­sure var­i­ous met­rics result­ing from their dig­i­tal mar­ket­ing activ­i­ties. Thus, they feel that social chan­nels should be mea­sured using the same mea­sure­ment mod­els and should be held to the same account­abil­ity as search mar­ket­ing efforts.

Mar­keters who sup­port this per­spec­tive and tra­di­tional mea­sure­ment mod­els for Social ROI, often find it’s often hard to prove (with notable excep­tions such as shoes for women). Why? There are many pos­si­ble rea­sons includ­ing the actual intent behind a consumer’s visit to a brand site. Peo­ple in gen­eral are not spend­ing time on social chan­nels to imme­di­ately buy goods and ser­vices like they often are when engag­ing in online searches. Instead, peo­ple tend to use social plat­forms to con­nect with their friends, social­ize, share con­tent, and par­tic­i­pate in dia­logue around things that they are expe­ri­enc­ing and think­ing. Thus com­par­ing Face­book adver­tis­ing results to search results is inher­ently flawed. More impor­tantly, adver­tis­ing on Face­book is in many ways more like adver­tis­ing on TV – it increases the pro­cliv­ity of a per­son to buy a prod­uct, but it often takes time.

Keep­ing this in mind, here are some com­mon themes we have learned from some of our clients’ suc­cess­ful Face­book campaigns.

1.       Sig­nif­i­cant and sus­tained ad budgets

Suc­cess­ful Face­book cam­paigns must have mean­ing­ful ad bud­gets with sig­nif­i­cant reach. Like TV adver­tis­ing, small bud­gets will rarely cause a major impact because small bud­gets mean a lesser reach and also a lower fre­quency of the ad per user. Typ­i­cally, tip-toeing into the Face­book world will not be effec­tive. Only when the ads reach a sig­nif­i­cant per­cent­age of users with a good fre­quency does one see the desired effects. Search mar­ket­ing which is really a “demand col­lec­tor” works dif­fer­ently and even small bud­gets can show a sig­nif­i­cant and more imme­di­ate ROI, as the schematic response curves below illustrate.

2.       A strate­gic long term view

The best run social cam­paigns are well thought out with strate­gies designed to build audi­ences and engage with them in a mean­ing­ful way, so they: 1) grow a fan base, and 2) increase loy­alty to the brand. For the mar­keter this means a strat­egy to cre­ate mean­ing­ful con­tent that is rel­e­vant to the fan base at a given point of time, and con­stantly updat­ing con­tent so that the mes­sage remains fresh.

This is true for apps as well as adver­tis­ing on Face­book. Some adver­tis­ers believe that they can build an app and expect high engage­ment num­bers for long peri­ods. We have not found this to be true. In fact, audi­ences get bored and engage­ment num­bers fall rapidly over the first 1–2 months. The ques­tion remains, when done right do apps work? The evi­dence so far shows that they do have a pos­i­tive influ­ence on pur­chase behav­ior. We have data from our adver­tiser set as well as anec­do­tal evi­dence from oth­ers that users who engage with apps have a 25–35% higher aver­age order size than non-app users in the same period. Thus a long term view is necessary.

The most effi­cient ad cam­paigns lever­age spon­sored sto­ries. Spon­sored sto­ries are more effec­tive because they can be tar­geted to audi­ences in a con­text that builds a trust with the brand and the con­sumer. e.g. (if your friend inter­acted with a brand and liked it, chances are you will be more likely to trust that brand too). How­ever, for spon­sored sto­ries to work you need a cer­tain thresh­old of fans for the inher­ent viral­ity to have impact.

In above exam­ples of “Like” acqui­si­tion cam­paigns, clients were able to spend 50% of the bud­get for a cam­paign where the aver­age fan base dur­ing the dura­tion of the cam­paign was close to 1 mil­lion. The CPL was also sig­nif­i­cantly lower than the mar­ket­place ads (40% lower). When the fan base was 500,000 clients could only spend about 17% of the Face­book ad bud­get eco­nom­i­cally. For the third cam­paign where the fan base was over 3 mil­lion clients could spend 80% of the total Face­book ad bud­get on spon­sored sto­ries with great efficiency.

A note: It might appear that the CPLs for the 3 MN fan case went up but in real­ity it was because we spent a very high frac­tion of bud­get on spon­sored stories.

Face­book ad cam­paigns can be very effec­tive with spon­sored sto­ries. But, the catch is that for spon­sored sto­ries to work you need fans and to build a sig­nif­i­cant fan base you need a mar­ket­ing bud­get and patience.

3.       Data is used as an asset

The remark­able thing about Face­book adver­tis­ing is both the tar­get­ing and data that the adver­tiser can obtain with appro­pri­ate per­mis­sions from the user. A good exam­ple of how this can be done is to build apps where the user vol­un­tar­ily agrees to pro­vide infor­ma­tion and then launch and mar­ket to them with the sup­port of Face­book ad buys. The ad buys drive audi­ences to the app and the data from the app can be lever­aged to make the app expe­ri­ence more inter­est­ing and the whole process more effi­cient. For instance, if the app data shows that the major­ity of app users are women, then the app can be tweaked to appeal more to a female demo­graphic. Fur­ther, ad buy­ing can be done with the insights gleaned from app usage. For one adver­tiser, such an approach resulted in a 41% increase of fans at a 43% lower cost per fan.

 4.       Viral­ity is not assumed

Many adver­tis­ers expect their Face­book cam­paigns to become viral. How­ever, there is no guar­an­tee that every cam­paign will go viral. While very high viral­ity is a mat­ter of serendip­ity, there are sev­eral best prac­tices that can enable a cam­paign to go viral. Viral­ity has to be achieved, it can­not be assumed. There are many best prac­tices that encour­age viral­ity but they all cen­ter the idea that the cam­paign has to be inher­ently social and encour­age col­lab­o­ra­tion and shar­ing. Many mar­keters miss this sim­ple yet pow­er­ful truth.

5.       The Face­book ad buys are synchronous

Face­book adver­tis­ing works best when the media buys and app launches are syn­chro­nized with TV ad buys. We have seen sev­eral instances of this. TV dri­ves aware­ness and Face­book dri­ves mean­ing­ful engage­ment. If the engage­ment is mean­ing­ful enough, it will drive virality.

6.       Good con­tent is key

Adver­tis­ing will have min­i­mal impact if you don’t have mean­ing­ful con­tent. You need a good com­mu­nity man­ager and mod­er­a­tor to under­stand when to place con­tent, what con­tent to place and how to mea­sure the effi­cacy of con­tent. The golden rule here is that peo­ple have become fans of your brand to engage with you in a mean­ing­ful way. If you fail to develop good con­tent, your fans and the Face­book plat­form will ignore your mes­sage. Your fans will not engage and Face­book will give you a lower Edger­ank, hence lesser reach.

In clos­ing, Face­book is con­stantly exper­i­ment­ing with new ad for­mats that enable adver­tis­ers to reach fans more effi­ciently and effec­tively. Face­book is really at the begin­ning of their plan to inno­vate in this area. We believe that they will strike a bal­ance between adver­tis­ers who want to show tar­geted and rel­e­vant ads in every pos­si­ble con­text and users who want to see very few ads. Per­son­ally, we think it’s going to be fun to watch.