Facebook is an increasingly important tool for marketers, many of whom are purchasing ads on Facebook to drive consumers to their Facebook Pages.
Qualitatively, Facebook's importance is hard to deny, but plenty marketers have largely struggled to quantify the costs and ROI associated with their Facebook marketing efforts.
Web analytics provider Webtrends is, however, shedding some light on costs. It looked at more than 11,000 Facebook advertising campaigns which sought to drive users to 'like' the advertiser's Facebook Page and found that achieving the desired is costing marketers $1.07 per conversion. It also discovered that costs are rising. In 2009, these ads had an average CPM of 17 cents. Last year, that rose to 25 cents. At the same time, click-throughs decreased, going from .063% in 2009 to .051% in 2010.
For marketers purchasing display inventory and search ads off of Facebook, such numbers probably look downright cheap, despite the rising costs. But does that mean that Facebook advertising is a great bargain? No.
Webtrends Justin Kistner told the Wall Street Journal that the value of the Facebook fans these ads is designed to acquire "depends on the kinds of campaigns you are driving at that fan base." A Facebook spokesman echoed a similar sentiment, telling the Journal, "On Facebook, the magic of marketing happens when brands activate their fans in ways that inspire people to share those messages with their friends."
In theory this all sounds good. But marketers have an uphill battle in getting their Facebook fans to take meaningful action. At the very least, it requires time and a strategic, dedicated effort. Neither is free. In some markets, such as online retail, social media offers great promise but currently seems to be playing a minor role in driving traffic (and therefore logically sales), as evidenced by the fact that one new study shows social media only drives 3% of traffic to e-commerce sites. In this market, Facebook-based retail, or F-commerce, may be the answer, but that too requires investment.
None of this, of course, means that marketers shouldn't make investments in Facebook. But they should remember that getting consumers to do business with you through world's largest social network involves extra steps and there are few shortcuts. The marketers who succeed on Facebook will be those who recognize that just because completing one step is relatively inexpensive, it's the entire process that counts.
Photo credit: jaycameron via Flickr.