Helping To Build A Facebook Ad Model

• by Jack Loechner , Staff Writer @mp_research, June 27, 2012

According to a new report from Resolution Media and Kenshoo, “Exposure Rate,” a new metric to measure targeted engagement on Facebook, takes center stage. The research focuses on interaction with Facebook Marketplace Ads (not to be confused with the Facebook Premium Ads offering) across various ad types and targeting criteria.

Based on a year-long study that analyzed global data spanning 65 billion Facebook ad impressions and 20 million Facebook ad clicks, the findings represent a wide range of brands and categories including entertainment, finance, retail, and insurance, among others.

Since social media and, particularly, social network advertising, are relatively new phenomena, there are no hard-and-fast methods to guarantee success. The research covered in this paper focuses on interaction with Facebook Marketplace Ads, and the complete report includes data supporting:

• Unique impressions in the context of desired target audience actually reached
• The ideal Frequency Rate for ads across Facebook platforms
• The combination of High Exposure/Low Frequency translating to higher rates of conversion
• Performance models for the entire Facebook ad portfolio
• Strategies that support High Exposure/Low Frequency rates to deliver higher ROI

Alan Osetek, president of Resolution Media, says “... social media (promotion)... when done right... can foster meaningful relationships between brands and consumers... never before possible... giving marketers a model for demonstrating effectiveness...”

Sivan Metzger, general manager of Kenshoo Social adds, “... with new channels... ad formats... tracking capabilities... new data points... new insights... come new key performance indicators... “

Sponsored Stories and Post Ads boast roughly double the response rate of Social Ads and Web Ads, as measured by click-through rate (CTR). An ad with social context resonates better based on the personal connection made with the individual on Facebook viewing the ad. Post Ads had the highest CTR of any ad type, likely because they often feature special offers and are larger than the other ad units. Generally speaking, with Facebook Marketplace Ads, higher CTR leads to lower average cost-per-click (CPC) rates.

Definitions of terms in chart(s)

• App Usage – A person on Facebook who used a brand application for more than 10 minutes in the last month
• Like – A person who liked a brand’s Facebook Page
• Post Like – A person who liked a brand’s Facebook Page post
• App Share – A person who shared content from a brand app on Facebook within the last seven days

Among the different ad types, Social Ads and Web Ads had the highest average CPC, whereas Post Ads and Sponsored Stories had the lowest. Post Ads had a significantly lower average CPC than any other unit, representing a relative bargain at $0.24 CPC vs. $0.46 for Sponsored Stories. The best explanation for this, says the report, is the fact that Social Ads and Web Ads are the easiest to show direct ROI as they can drive people to specific Facebook objects or to websites outside of the Facebook network where actions like application downloads and online sales can take place.

With it being easier to associate value to Social Ads and Web Ads, it’s easier to justify increased bid rates. It’s important to note that CPCs on Facebook are also affected by the selected targeting. Some targets have more competitive auctions than others and, as a result, data generated by these ad types may vary depending on their defined targeting.

Facebook gives advertisers the ability to choose between a CPC and cost-per-thousand impressions (CPM) model. When purchasing ads on a CPM basis, Sponsored Stories are the most expensive ad type, says the report. As a rule of thumb, when creating and managing campaigns with Facebook Marketplace Ads, test pricing models to determine which best fits the ad types.

Sponsored Stories, promoting Page or Post Likes, generate higher CTR than stories promoting App activity. Presumably, says the report, because it’s relatively easy to like something and doesn’t come with strings attached as opposed to the process of installing an application. Facebook users are wary of revealing personal information to third parties to get apps, considered a deterrent.

Higher CTR drives down average CPC, and the same correlation is seen with Like stories carrying lower CPC than App stories. However, Apps are great tools for driving deep ongoing brand engagement and, despite CPC breaking the $1 barrier, App stories can be well worth the investment, concludes the report.

The report concludes by noting that the blessing and the curse of social media is that there are plenty of ways to measure engagement with your brand. This research seeks to isolate the signal from the noise, and found that Engagement Rate and Frequency are the KPIs most heavily correlated to campaign success.

More data and suggestions are available in the complete PDF file found through the complete report, entitled Social Media Insights Part 1: Metrics That Matter, which can be downloaded at Kenshoo here, or Resolution Media here.

Research Brief Addendum:

To assist in understanding some of the elements of the study and subsequent report, the authors included a helpful glossary:

• OWNED MEDIA refers to brand assets or objects created within social networks by your organization such as a Facebook page or an application.
• PAID MEDIA refers to advertisements that can be purchased on a social network such as Facebook Marketplace Ads, which represent the scope of this research paper.
• EARNED MEDIA refers to the incremental exposure that your brand “earns” through viral engagement and interactions with your brand. Examples include Facebook likes, shares, or check
• A POST AD is content generated through Owned Media that gets turned into Paid Media. In this case, a post made on a Facebook Page becomes an ad unit and placed within the newsfeed or on the Facebook homepage of targeted users.
• A SPONSORED STORY is content generated by Earned Media that gets turned into Paid Media. The ad itself is generated by Facebook users through their social interactions with a brand on Facebook.
• A WEB AD is an ad that encourages people on Facebook to engage with your Owned Media outside of the Facebook network. As opposed to a Social Ad, which drives engagement to a Facebook Object such as a Page, Event, App or Place, a Web Ad drives people to a corporate website or other “off- Facebook” web property; referred to by Facebook as an “External URL Ad.”
• A SOCIAL AD is an ad that encourages people on Facebook to engage with your Owned Media existing within the Facebook network. Social Ads can drive traffic to fan pages, encourage app installations, promote events created on Facebook, or connect with Facebook linked places; referred to as “Facebook Ads” on Facebook.