Very interesting read. So are Facebook trying to say that PPC is a waste of money? It’s hard because some clients can see that sign ups are coming through PPC’s, yet fail to reach an audience with above-the-line media.
Does it depend on whether the consumer is looking for a product/service and go out researching of ‘googling’ for it, or should you push a message on to a large reach (that may or may not be your target audience) in the hope that somebody picks up on it and engages?
Is Facebook the option to use, I mean they now have 1 billion users after all…
Full article after the jump:
Facebook on Monday continued its mission to convince the world’s top marketers that the standard means of measuring an online ad’s performance — the click-through rate — doesn’t matter.
The social network advanced its latest argument to a packed room of marketing execs at the IAB MIXX conference in New York featuring Director of Pricing and Measurement Brad Smallwood (pictured) and Tom Buday, head of marketing and communication at star pupil Nestle.
In his presentation, Smallwood compared social media to the early days of television, which lacked a standard metric until Arthur Nielsen introduced a ratings system in 1950. Smallwood proposed that the industry rely on the two measurements that have served TV well since that time: reach and frequency.
To bolster his argument, Smallwood cited research from Nielsen (the company, not the founder) that showed a 0.07% correlation between high click-through rates and actual sales. Smallwood also rolled out some new datafrom a study conducted with Datalogix that found 99% of sales generated from online branding ad campaign came from consumers who saw ads, but didn’t interact with them. The report also produced fuzzier statistics, like campaigns that “maximized reach” generated an average 70% higher ROI than those that didn’t and that campaigns that maximized frequency had a 40% higher ROI. Since Smallwood didn’t outline what constitutes either maximized reach or frequency, the stat seemed short on specifics. However, he emphasized that each campaign is likely to have a different threshold for each.
Facebook’s pitch to marketers was that the company would calculate such thresholds for them and ensure that each campaign reached its potential. To underscore its point, it showcased Buday’s experience with Nestle. Buday criticized the idea of a media platform like Facebook having a set ROI. Instead, he reiterated that the quality of the marketing communication plays a big role. “The single greatest source of leverage is the quality of messaging, whether its a TV commercial or a post on a Facebook Page,” he said. “It’s not platforms that work or don’t work, it’s brand communications and messages that do.”
To illustrate his point, Buday showed slides of Nestle brand Skinny Cow’s highly engaged Facebook Page. “If you look at the typical Facebook Page, it’s rarely this good,” Buday said immodestly. To achieve its high level of success, Nestle not only followed Facebook’s recommendations for reach and frequency (both of which are enhanced by ad buys), but adhered to a strict rulebook on communications on the platform. (Example: Go easy on the cow puns.) In Buday’s view, the onus is on the brand marketer to compete for attention in the News Feed with “husbands, wives, kids and nephews.”
Facebook, which has underwhelmed Wall Street with its ability to monetize its format, particularly the mobile iteration, via advertising, has been making the “clicks don’t matter” argument for some time. Even the parallel with Nielsen Ratings isn’t particularly new since the company has been pushing Nielsen’s Gross Ratings Points as a metric since last August.
Whether Facebook will succeed in convincing Corporate America that CTRs are a relic of the past remains to be seen. Though there are plenty of doubters, including General Motors, there are proponents as well, including Scott Monty, Ford’s global digital/multimedia communications manager who, like Buday, ridiculed the idea of measuring Facebook via clicks. “What’s the ROI of a TV commercial?” he asked. “What’s the ROI of a press release? What’s the ROI of putting your pants on every day? It’s hard to measure but there’s negative consequences for not doing it.”