Kenshoo Reveals Search, Facebook Advertising Investment Formula For Success

Kenshoo has released a formula for investments in paid search and Facebook advertising that it believes will deliver the best campaign success rates. Paid-search performance and conversions rose by 19% on average when paired with Facebook advertising, driven by improvements in other key performance metrics, per a report released Wednesday that describes tests among several levels of Facebook spending, with detectable gains in performance. It also identifies a minimum and maximum spend requirement to see gains without losing returns when using this cross-channel search-and-social strategy.

When marketers find the perfect investment percentage in each media, paid-search conversions rose by 8% to 12%, as the number of Facebook users were exposed to advertising on the social site. The Kenshoo study, which ran from Jan. 30 through Feb. 12, with help from Facebook and Experian Marketing Services, proves efficiencies in attribution and knowing the best cross-channel media investments.

"You must spend some money on Facebook to see paid-search lift because the sweet spot is between 1.8x and 2.23x higher," said Aaron Goldman, CMO at Kenshoo. "Any less than 1.8 you won't get a steep lift on search, and any more than 2.34 the returns start flattening off and you see diminishing returns."

The study uses real data to examine hypothetical budgets, such as none, low, medium and high spend on Facebook advertising. The highest Facebook spending level, 2.34 times higher than low spend, showed smaller returns in performance improvements, demonstrating the need for advertisers to continually optimize campaigns and keep budgets in check. Smaller gains between mid -- 1.8-times higher than low -- and high levels -- 2.34 times higher than low -- indicate that additional spending may not yield proportionate levels of improvement.

"If I spent $1.80 on Facebook I would see 24% lift in search conversion volumes compared to just spending $1," Goldman explains. "If I had a $2.34 spend on Facebook I would see a 27% increase in search conversions."

During the study, the average conversion rate of the exposed groups rose 11%. Setting the value of the additional conversions generated by the difference against the cost of the Facebook ads allowed individual marketers to assess whether the additional conversion volume is worthwhile. The study provides this example: If every 10,000 clicks yielded an additional 73 conversions, each with a value of $100, an additional $7,300 would be generated by running Facebook ads alongside paid search. With slightly less than a 90% statistical confidence level, the difference becomes directional.

The study uses live campaign performance data from Experian. Online conversion data from the advertiser's Web site was tracked to determine the impact of Facebook advertising on paid-search performance for the study. A conversion is defined as an online application for a credit report. The three test groups and the control group used the same set of paid-search ad creative and directed traffic to the same landing pages on the advertiser's Web site. Each segment consisted of 80 discrete ZIP codes across multiple U.S. regions to prevent geographical bias.

"Sunburst over ocean water" photo from Shutterstock.

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