Facebook is working hard to convince marketers that it is best place to spend their advertising budgets, rolling out a range of new methods for brands to tout their wares to consumers.
There are now newsfeed ads, mobile ads, offers and even ads when you logout. But, truth be told, measuring the ROI of social ads is still not an exact science.
The Econsultancy Marketing Budget Report 2012 shows that while 70% of marketers plan to increase their budgets for off-site social media this year, almost 40% of companies believe they are poor at measuring ROI from this channel.
Techlightenment recently launched Alchemy 2, an upgrade to its platform for creating, managing and optimising Facebook advertising campaigns based on demographic. One of the key benefits of Facebook advertising is the ability to target very specific groups of people based on a multitude of behavioural insights – but for many, it’s not immediately clear how best to do that.
Group buying site Cobone, which operates in several Middle Eastern countries, uses Alchemy to help coordinate and measure its Facebook advertising.
CMO Warrick Godfrey said that since it began using the tool, CTR on Cobone’s Facebook ads has doubled from 0.035% to 0.07% and is now at a level that’s double the industry average (reported to be just under 0.03%).
However, he adds that the company was previously investing $4 or $5 per registration, but has now managed to drop that to $1.60 – growing to over 1.3m members since launching in July 2010.
A knock-on effect of this is that Cobone has increased its Facebook ad spend from £5,000 to £10,000 per month to almost ten times that.
Initially our primary objective was database growth, but we’ve since changed our strategy to revenue driving and remarketing.”
Cobone creates its ads based on which deals will make the best margin, and the likelihood that the ad will ‘go viral’.
Godfrey said that the weekly deals can achieve up to a 20% increase on sales by targeting the ads to specific demographics.
Techlightenment says that campaigns managed using the Alchemy 2 platform can receive up to 80% higher CTRs and 50% lower CPC levels than the average Facebook campaign.
While Facebook itself claims that CTR isn’t an exact measurement of the success of its ads – the argument is that you can’t click on a TV ad, but that doesn’t mean it didn’t persuade someone to buy the product.
Though Facebook ads can be hugely successful in driving up registrations or users, as you can from the example above, there’s greater potential there.