The UK’s online advertising spend increased 10% to nearly £2bn in the first half of 2010 according to the IAB. For the first time the survey estimated spend on social networks, at 3% of total online spend.
Though that’s a rough-and-ready figure, it probably represents around £40-50m in the first 6 months of 2010. There’s no doubt in my mind that a lot of that social spend is going on Facebook and we’ll see that increase considerably through 2011.
The reason? Facebook is building a powerful performance marketing channel that takes advantage of the enormous amount of user data they have. Precisely targeted ads, priced by advertisers through an auction system can be shown to any of Facebook’s 500m active users.
If that ad platform sounds familiar, don’t be surprised – a company called Google has being operating a similar system for the last few years and is doing pretty well from it.
Performance marketing, in its proper sense, is on the up. And it’s changed. Gone are the old ‘throw enough (cheap) mud’ techniques of the very first ad networks. In their place are online ad campaigns that cross the paid media platforms of search, display and social; proper customer attribution analysis, online and offline; measurement based on financial metrics not eyeballs; and predictive and analysis technologies that help marketers plan their budgets based on the best, or combination of the best, performance platforms.
Of course, this kind of marketing has been borne out of the technologies originally associated with search, and so search specialists are leading the way, integrating display and social advertising into their search campaigns.
Automated bidding platforms, predictive modelling techniques and sophisticated analytics have all made it possible to understand the customer path across online platforms from first search to purchase and target based on specific customer data, rather than buying generic space on a single site.
For the right price, Facebook ads can offer great value at the moment. Of course, getting the targeting right, and bidding the right amount based on that targeting, is critical, as it is with search or other display ads. But the biggest change coming is in the way advertisers can work across these platforms. It’s possible now to manage a display, Facebook and search campaign in one place, which means you can adjust the campaign, shift budget from one to the other, and improve performance across all three.
In the new world of performance marketing, the whole really is greater than the sum of its parts.
Jonathan Beeston is Global Marketing Director at Efficient Frontier and Context Optional a guest blogger on Econsultancy. He can be found on Twitter and LinkedIn.
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Head of Search and DEM at Essence
1:54PM on 15th October 2010
The challenge for facebook will be to show the value of their inventory, beyond pure DR metrics.
CEO and Executive Chairman at PAY ON RESULTS SEO, PPC & CRO from Strategy Internet Marketing
8:24AM on 18th October 2010
Well, it should perform. So far tests for ourselves and our clients show it performs substantially less well that Google Adwords.
Digital Marketing Expert, Speaker and Trainer at New Terrain Limited
9:43AM on 18th October 2010
Are we sure that some of the user data Facebook has it that accurate?
Ever since our species lived in caves...people have always managed their reputation and public perception. Indeed, most of us lie in everyday conversation, let alone online spaces:
http://www.eurekalert.org/pub_releases/2002-06/uoma-urf061002.php
On Facebook, I suspect, people list not only their genuine activities and interests (on which much of the advertising data is based) but also what they'd like OTHER people to think they're into.
For example, I might tell Facebook that I'm into lion taming and bungee jumping when, in fact, I spend my time watching Eastenders and knitting ;)
Additionally, I suspect that many people 'manage' their status updates too.
Sure, we all have Facebook friends who tell us they're 'drying their hair' or 'eating a biscuit'. Yawn.
We also have friends who only post, it seems, when they're out doing something interesting, meeting fascinating people or generally having fun, fun, fun!
I think this phenomena is common across all status-update services from Facebook through to Twitter, Foursquare etc.
Which is why, I suspect, ads offered to a Facebook visitor may not, after all, be as appealing as the user data suggests it should be.
11:07AM on 18th October 2010
I found their platform to be lacking - and their cost per click to be prohibitively high. I'll keep using Facebook because I believe in the medium, but until their advertising rates come down, my customers will be directed more towards GoogleAds.
Director, New Product Innovation at Advertising Solutions, Adobe
11:36AM on 18th October 2010
@John - from what we've seen conversions are comparable with non-brand keywords on Google, though of course there's a lot of variance depending on the product/service that is advertised.
@Andrew - don't doubt that people's profiles are not always accurate or comprehensive, but the beauty of an auction model is that you can factor that into the price.
@David - good point on the platform. It feels very much like the early days of PPC. I think we'd all be horrified to have to go back to the Adwords platform of 2003! Hopefully in the next 6-12 months we'll see the platform mature considerably.
SEO Manager/Consultant at Mediacom
1:08PM on 18th October 2010
I was given a voucher from facebook to test their platform.I have installed Google Analytics and a in-house analytic software to track the traffic. According to Facebook,I have had 452 clicks sent from facebook to my site but Google Analytic,In house Analytic and my server log are giving me very different number.I have 172 clicks. I have contacted with facebook and raised my concerns but they would accept third party figures. Clearly they have charged me 3 times more than what I have recived.Untill their platform is stable and numbers match with other analytics (more less) I will not use the facebook and will not recommend it to my clients.
1:30PM on 18th October 2010
Facebook as (DR) advertising vehicle? - I wonder for who...
I have tried facebook advertising 3 times with various products and brands, but with always the same result: Flushing the hard earned cash down the toilet could have been a better waste of time and money.
A lot people nowadays stalk their friends and update their status via mobile. So the need to sit in front of a computer to network socially is diminishing, despite the fact that the frequency and duration we engage with such rubbish is actually increasing.
For companies with a profit margin of between £5 - £35 it hardly makes sense to venture on to facebook's advertising space. At £0.60 you hardly get any impressions and therefore no clicks. The CTR is even lower than on display advertising and the CR is generally performing worse than CPC Ads on search engines. So, at a high profit margin you might break even, but you will be waiting a long time to be proven right or wrong...
The only way that I see facebook advertising perform is on the social level: get people to join your page, become a fan, fill in surveys and otherwise tie them to your brand. This way you might see some return in the long run, unless, of course, people get bored with it...
In closing, I think facebook advertising is a scam, same as this article here. Efficient Frontier is making money by peddling it's clients the facebook product. A questionable View-To-Conversion metric might be applied to justify the spend. Facebook is trying to bring in some revenue for the many shareholders which have seen nothing happening with their investment, except an ever climbing share price. I doubt that investors have ever seen dividends being paid to them?
Photobox UK
11:28AM on 15th November 2010
Has anyone tried fb Connect (single sign on) and if so what was the effect? The plethora of API options, from a client perspective, look much more interesting than good ol vanilla banner advertising frankly, whatever the targeting options; we tried banner advertising and it didn’t work, largely. The only thing that did ‘work’ was fan recruitment i.e. getting people to 'like' us. The ROI of a fan is a bit fuzzy but determining the value of social media followers like fb fans, twitter followers and YT subscribers) is something we’re keen to figure out. Given the mood state and the motivation of users on fb I guess its not difficult to understand why ads encouraging them to click off appear not to work though of course everything has a value if the price is right but 0.70p cpcs aint it.