Some view the Face­book ads mar­ket­place as bid­d­a­ble, and there­fore label it a lower-funnel oppor­tu­nity like search (i.e., direct mar­ket­ing). Some have argued that Face­book ads are not directly tied to con­sumer intent, use images, and should be char­ac­ter­ized as upper-funnel (i.e., brand mar­ket­ing). I’m here to argue that because of the new form fac­tor of social media, Face­book ads can’t and shouldn’t be char­ac­ter­ized as upper or lower-funnel.

Let’s start by exam­in­ing the upper-funnel poten­tial of FB mar­ket­place ads. The Face­book ad is a small, sta­tic image with lim­ited text. The small stature of the cre­ative unit is rea­son enough to doubt its poten­tial to alter mate­ri­ally brand aware­ness, brand per­cep­tion, or pur­chase intent.

Yet there is evi­dence of sub­stan­tial impact from see­ing ads that ref­er­ence friends who like that ad/product/service, or see­ing an ad that is a direct endorse­ment by a friend via spon­sored sto­ries. Face­book touts a study that the ads drive a 4x lift in pur­chase intent. Clearly, there is some poten­tial for Face­book ads to address upper-funnel metrics.

Now let’s take a look at the lower-funnel poten­tial. The text-heavy, CPC-biddable, keyword-targetable Face­book ads remind us of search. But the sig­nal from Facebook’s key­word tar­get­ing — pri­mar­ily lever­ag­ing the data from users’ pro­file, such as geog­ra­phy and likes — is not nearly as pow­er­ful an indi­ca­tion of inter­est as the clear intent of a search query.

The result of the vari­ance between Facebook’s affin­ity tar­get­ing and search’s intent tar­get­ing is that Face­book ads tend not to per­form like search. (CTRs and con­ver­sion rates tend to be lower.) How­ever, if opti­mized across tar­gets, bids and cre­ative, the ads can per­form like search and deliver strong lower-funnel/direct mar­ket­ing performance.

While there is value in both upper– and lower-funnel met­rics with Face­book, the larger value is in what hap­pens socially as a result of a suc­cess­fully placed ad. Using a recent buzz­word, it is the “social ampli­fi­ca­tion” rather than just the ad itself that cre­ates the most value.

The aver­age Face­book user — of which there are more than 600 mil­lion — has 140 friends. When a brand is “Liked” by a Face­book user, the action of “Lik­ing” that brand is broad­cast to all friends in their news­feed. If that “Like” is “Shared” (a fea­ture that is now merged with the “Like” but­ton), the action is broad­cast to all friends’ news­feed in the form of a story. There­fore, the mere action of “lik­ing” both on and off Face­book is very valu­able. But that is just the tip of Like-iceberg, or as I like to call it the Likeberg.

Face­book allows all fans and con­nec­tions of fans to be tar­geted directly with mar­ket­place ads. When pos­si­ble, Face­book adds details about friends who “Like” the brand to ads deliv­ered to con­nec­tions. Adding the brand “Like” to the ad unit itself adds a pow­er­ful rec­om­men­da­tion ele­ment to the ad.

Facebook’s Spon­sored Story Ads take this a step fur­ther using the copy of the individual’s “Like” as the ad itself. Spon­sored Sto­ries are essen­tially a turnkey way to broad­cast rec­om­men­da­tions with the con­trol resid­ing with the rec­om­mended (brand) vs. the recommeder (user). Clearly, “Likes” are the fuel for Face­book ad campaigns.

We’re just begin­ning to descend into the core of the Like-berg. All “Likes” give brands the abil­ity to pub­lish to the news­feed of fans. Think of news­feed pub­lish­ing as a sort of opt-in email list that has arguably has more buy-in and greater vis­i­bil­ity than email, espe­cially with cer­tain pop­u­la­tions such as the youth cat­e­gory. Brands can offer coupons, pro­mo­tions, or offers as well as lever­age FB ele­ments like polls and apps to drive engage­ment. The key to extract­ing value from news feed pub­lish­ing is get­ting the right value-mix to customers.

Each con­sumer who becomes a fan pro­vides a rich set of data to ana­lyze. This data-set becomes all the more rich as they engage with appli­ca­tions. This data can both inform tar­get­ing and tie directly into Face­book ad optimization.

Obtain­ing “Likes” prob­a­bly sounds pretty good to most mar­keters. Unfor­tu­nately, we can’t put an actual value on social ampli­fi­ca­tion. Yet. There are com­pa­nies like Chom­pOn that have quan­ti­fied the value of a “Share” in terms of daily deals. Also, Con­text Optional has rich data that quan­ti­fies the viral­ity of appli­ca­tion engage­ment dri­ven by Face­book ads (rang­ing from 3-12X). But attempt­ing to value likes on com­par­a­tive met­rics to exist­ing val­u­a­tions seems a lit­tle use­less. The bot­tom line is that the value of a like could be noth­ing if a brand doesn’t extract value, or invalu­able if used to its full extent.

I would be remiss not to men­tion one last “Like” wrin­kle. To have your news feed posts show up to your fans, they have to reg­u­larly engage with some ele­ment of your expe­ri­ence: polls, apps, offers, prod­uct likes, etc. A good way to drive this re-engagement is with Face­book mar­ket­place ads — a bril­liant rev­enue move by Facebook.

To bring this full cir­cle, the full value of Face­book adver­tis­ing is much larger than the imme­di­ate impact of the ad. To not con­sider the social impact of mar­ket­ing on Face­book is to miss the for­est for the trees. And in my expe­ri­ence, mar­keters are much more inter­ested in grow­ing a for­est of rev­enue oppor­tu­ni­ties than cul­ti­vat­ing a sin­gle sprig of sales.

Justin Mer­ickel

V.P.Marketing and New Prod­uct Development