Facebook Won Over Wall Street By Wooing Performance Marketers
Facebook went public promising to change the way brand marketers connect with consumers; it’s now winning over Wall Street as a performance marketing company.
A year ago, Facebook offered advertising products focused almost solely on driving awareness and building brand affinity. Post IPO, Facebook has changed its tune. With all eyes on the company’s long-term revenue strategy, Facebook has found that performance-driven advertising is a better way to make money than simply selling “brand engagement.”
To meet the demands of performance marketers – most importantly, ROI, conversion, and measurability – Facebook has unleashed sweeping changes to its platform. It has revamped campaign creation and management, and offers new creative options, mobile advertising capabilitie, and targeting tools.
Facebook’s ad product overhaul has already begun to pay off.
With a 55% year-on-year increase in revenue in Q2 2013 – 12% higher than analysts’ expectations – Facebook is rapidly growing ad spend. What exactly did Facebook do to so dramatically grow ad revenues this year? Here are three new Facebook ad tactics that wowed Wall Street:
- Increased clicks from mobile devices. Facebook has publicly declared itself a "mobile company." According to CNN, Facebook now has more daily active users on mobile devices than on desktops. Yet, as of Q1 2013, only 30% of the company’s ad revenue stemmed from mobile. Facebook set out to close this gap by simplifying the process for marketers to promote their mobile apps through Facebook ads. With click-to-install rates 10 times higher than mobile Web banner ads, Facebook has helped marketers derive more ROI from their mobile app investments. Today, 30% of mobile display dollars are spent on Facebook.
- Put more ads in the newsfeed. Facebook users pay attention to their newsfeeds – not the right side of the page, where Facebook had customarily placed ads. Newsfeed ads were an inevitable move for Facebook, yet adoption was relatively low until Q2 2013, when Facebook launched Unpublished Page Post ads, the social network’s giant leap into performance marketing.
Unpublished Page Posts ads show up within the newsfeeds of targeted audiences, but don’t necessarily show up on the marketer’s own Page timeline. With click-through rates 20-40 times greater than right-side ads, Unpublished Page Post ads deliver return-on-ad spend 97% greater than right-side ads, according to Facebook.
- Made it easier for marketers to see ROI. With access to billions of consumers, Facebook has always had strong potential as a customer acquisition channel. However, Facebook hasn’t historically offered the sophisticated tools marketers need to measure the direct impact of their campaigns on ROI, customer acquisition, and revenues. Facebook realized that if it could provide advertisers with more efficient ways to measure ROI among target audiences, more advertisers would shift budgets towards the platform. Facebook thus launched the Custom Audiences targeting option, which according to Sheryl Sandberg, allows advertisers to “enhance their ad targeting by marrying their data with ours.”
Said another way, marketers can now target their existing leads and customers on Facebook using email addresses and phone numbers stored in their CRM databases. Custom Audiences lets marketers measure performance throughout the purchase funnel – from lead, to sale, to lifetime value. A hit among performance marketers, use of Custom Audiences doubled in Q2 2013 compared to Q1.
Facebook may still be a good place for brands to build affinity, but it’s increasingly a top choice among performance marketers to drive sales, acquire customers and generate revenues. Google has made hundreds of billions of dollars from performance marketing. Why not Facebook, too?