Doing Facebook Advertising the Right Way

Despite a recent comScore study crowning Facebook the king of all display advertising; marketers still have reservations about putting their ad dollars into the Web’s largest social network.

The negative sentiment was recently amplified after General Motors very publicly pulled their ads from the social network right before Facebook’s IPO. Despite the uncertainties, many marketers believe social networks remain a viable marketing channel — especially those with a well thought-out social advertising strategy in place. Their secret? They know which formats work (check out WM’s Guide to Facebook Ad Formats at http://wsm.co/MfCwNt) and which metrics to measure.

Social Survey Says….?
Most Facebook marketers know that they need to keep an eye on interactions such as likes and comments, yet many remain unsure of how these interaction types affect their bottom line. A new study from Resolution Media and Kenshoo fortunately offers some interesting insights into the social advertising metrics, forcing many to rethink how they define effectiveness in relation to Facebook ads specifically.

“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 essentially introduced new metrics - Exposure Rate and Frequency. Exposure Rate measures the percentage of a target audience that a brand is reaching and exposing its message. Frequency measures the amount of times the average Facebook user has been exposed to a specific advertisement.

According to the joint research, high Exposure Rates correlate to high click-through rates (CTR) and conversion rates, with ads that reached 76-100 percent of their intended audience also receiving an average CTR of .038 percent and conversion rate of 31.92 percent. Conversely, ads that only reached just 0-25 percent of the intended audience resulted in an average CTR of 0.028 percent and a conversion rate of 11.81 percent.

The study also revealed that high Exposure Rates don’t guarantee success as successful campaigns should balance Exposure with Frequency. The data showed there is a conversion rate drop-off of 32 percent (as well as a 39 percent lower CTR) when ads were shown to consumers more than six times. The reason? Consumers start ignoring ads when they have been exposed to them too frequently.

Tips and Tricks
One way that marketers can optimize Exposure Rate and Frequency is by maintaining a cost-per-click (CPC) above the maximum recommended bid. The study showed that the Exposure Rate is higher by an average of 11.5 percent for ads with a CPC that is greater than the maximum recommended bid. Additionally, the Frequency drops when the CPC is above the maximum recommended bid, by an average of 1.7 Exposures.

The data also reveals that Sponsored Stories tend to deliver high Exposure Rates while maintaining a low Frequency. This is because this specific type of advertisement can only be shown to friends of fans. However, it is important to note that marketers shouldn’t rely on Sponsored Stories as their only active advertisement format on Facebook, especially because this option alone most likely won’t garner a large amount of visibility with new users, since only friends of fans are able to see these ads.

Another factor that can impact both Exposure Rate and Frequency is targeting. The study shows that the Exposure Rate is lower when there are no interest targets set, which is because the available audience size is larger. However, by adding a Broad Category Target (BCT), marketers are not only better targeting their audience, but the Exposure Rate of their advertisement also increases. The same is true for marketers who use precise targeting, which is a type of interest targeting that even further narrows down an audience based on specific interests. However, it is also important to note that Frequency is higher for ads that use precise targeting.