Study: Paid, Earned Media On Facebook Boost Purchases

by Mark Walsh, Jun 12, 2012, 5:51 PM

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When General Motors took the much-publicized step of pulling its advertising from Facebook last month, the social networking site didn’t respond directly to the move. But it raised broader questions about the effectiveness of advertising on a site that endured a disappointing IPO and investor skepticism.

A new study released Tuesday by comScore, in partnership with Facebook, however, aims to demonstrate that advertising on the site actually works -- by leveraging social context to boost return on investment. In particular, the research showed that Facebook users are more likely to make a purchase after seeing messages about brands their friends like.

comScore found, for example, that within four weeks of seeing unpaid messages about Starbucks, fans and friends of Starbucks fans were 38% more likely to buy Starbucks coffee. Likewise, a test with Target fans and their friends suggested they were 27% more likely to make buy at the retail giant.

The results of the Starbucks and Target studies were intended to highlight the value of earned media on Facebook. Posts are generated when someone “likes” a brand, “checks in” at a venue, is “listening” to a song or is taking some other action through the site that show up organically in friends’ news feeds.

In recent months, Facebook has increasingly emphasized the use of paid advertising options, like sponsored stories and promoted posts, to boost exposure of brand-related messages from friends and posts on company Facebook pages. In that vein, the comScore study touts the benefit of combining paid, earned and owned media (fan pages) on Facebook “to create a virtuous cycle of brand impact.”

To highlight the impact of paid advertising, comScore pointed to a recent test with an “unnamed retailer” showing a 16% increase in purchases in-store and a 56% jump in online purchases four weeks after a paid campaign on Facebook. The report downplayed the value of click-throughs -- known to be lower in social media campaigns than average -- in favor of view-through rates for determining the effectiveness of ads.

The alliance with comScore isn’t Facebook’s first effort to work with a third-party measurement firm to validate its ad model. The company previously entered into a partnership with Nielsen in 2009 to track ad results on the social network. A Nielsen study in March based on an analysis of 79 Facebook campaigns showed social ads delivered 55% higher recall than ads that don’t allow people to share ad content with friends.

As Facebook comes under increasing pressure to meet Wall Street’s expectations for revenue growth, expect the company to continue rolling out studies to prove advertising on the site pays off.

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