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Attribution, Big Data & The Open Graph: 3 Driving Forces of Social Ad Innovation

Written by: Cheryl Morris, VP Marketing

This article was originally published on Social Media Today.

It’s the year of Facebook for digital marketers, with the social network projected to surpass $5B in worldwide ad revenues. Nearly half of Facebook’s 901M active users visit the site at least 6 out of 7 days a week, and with people spending more than 1 out of every 7 of their online minutes on Facebook, it’s no surprise that ad spend will continue to flow from other mediums to the social network. As a believer in Facebook’s lasting impact on the world of marketing, we anticipate downstream attribution, big data and the Open Graph to be three driving forces of social ad innovation post-IPO.

(1) Attribution: Measuring an ad’s downstream impact

Generating a clickthrough on your ad, while an important first step, is not the whole story. Not all clickers convert to business goals like registering, sharing with friends or making purchases. As a result, it is measuring and attributing downstream, post-clickthrough user engagement that truly matters in social advertising. And it will become increasingly important in 2012 as marketers place a greater emphasis on demonstrating social ROI.

We recently shared a Facebook Advertising case study for the e-commerce sector that illustrates this point. By measuring beyond the clickthrough to the advertiser’s goal of generating purchases, you learn that ads with the highest clickthrough rates do not always generate the most purchases. In this instance, those with some of the lowest clickthrough rates generated 4 times higher purchase rates. If we were to have only measured and optimized based on clickthrough rate performance, we would have missed out on the opportunity to drive a considerable amount of incremental revenue to the retailer.

Going beyond the click to attribute downstream user actions such as purchases and word-of-mouth referrals to the initial paid ad will become a must for social advertisers in 2012. With the right technology, marketers can measure the value of earned engagement and leverage social ads to meet specific business goals – goals that live both on Facebook (e.g., subscribing to an email list via a Page or inviting friends to an app) and off Facebook (e.g., add-to-cart actions and purchases).

Harnessing and attributing this downstream user engagement is key to maximizing return on ad spend on Facebook.

(2) Big data: Mining consumer insights

McKinsey has underscored big data as “the next frontier for innovation, competition and productivity.” Online advertising, increasingly requiring the quantitative minds of Wall Street, is certainly not one to be left out of this discussion.

When online advertising made its foray in 1994, the ability to track impression data was earth shattering. The promise of leveraging additional data, namely through IP addresses and cookie tracking, drove innovation for more than a decade. While leaps-and-bounds more effective than prior methods, the data behind these methods was still based on a good amount of guesswork.

Enter Facebook, a place where hundreds of millions of people actively share demographics, interests and increasingly actions that advertisers can target. With 3.2B Likes and Comments generated by Facebook users every day and more than 42M Pages with 10 or more Likes, there is a wealth of data available for advertisers to leverage. Our Ad Engine, for example, taps real-time data like downstream conversion events, historical data such as audience performance, and even predictive data like typical purchase patterns to deliver more effective social ads on Facebook.

The future of social advertising undoubtedly lies in leveraging Facebook’s trove of consumer insights in new ways. Mashing on Facebook data with off Facebook data, pinpointing the data that truly matters, and developing algorithms that utilize data in real-time are just a few examples. New methods to capture, search, analyze, automate decisioning and visualize consumer insights will all play a role in this driving force of innovation. Facebook’s mass of consumer data will enable more effective social ad targeting and optimization, and, most important, an incredibly relevant advertising experience for Facebook users.

(3) The Open Graph: Tip of the action-based advertising iceberg

Facebook announced Open Graph apps at f8 in September, and recently announced that 3,000 of these timeline apps have been developed since. We will see considerable implications on social ad innovation in 2012 as more developers integrate with the Open Graph and create timeline apps, and as more people share from these social channels.

When people engage with and use timeline apps, such as Spotify or Fab.com, their activity is frictionlessly shared to friends on Facebook. This activity includes actions (e.g., “want,” “bought,” “watched”) and objects (e.g., specific products, TV shows). As this activity is shared, it is featured on the person’s timeline, their friends’ tickers, and sometimes in their friends’ News Feeds. Marketers can target these actions, and even feature the activity as an ad unit that is shown to the person’s friends.

Imagine being a film studio able to sponsor an ad that shows a friend just “bought” tickets to watch your movie, or simply being able to reach someone who has “watched” a movie in a similar genre the week before. This type of advertising on Facebook based on actions will help marketers truly find the right people at the right time, and further create a more relevant advertising experience for Facebook users.

The increase in targetable actions resulting from more developers building timeline apps and more people leveraging their sharing capabilities will have considerable implications on social ad innovation. Ultimately, these apps and the actions shared from them introduce intent-based advertising on Facebook – something search has held as its trump card over social for years.

In conclusion, while Facebook’s IPO confirms it is a mainstream media channel, social advertising is still in its infancy. Marketers who focus on measuring an ad’s downstream impact, leveraging consumer data in new ways, and investing in the Open Graph will be at the forefront of the next wave of social ad innovation.

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