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The Truth About Facebook Advertising: Is it Working?

Written by: Laurie Cutts, Director of Marketing

While marketers have spent billions of dollars on Facebook advertising and reported countless success stories, a recent Forrester Research report caused an uproar when it assailed the social giant for failing marketers. The reaction to the report is telling. The general consensus as reported by VentureBeat, Motley Fool and Digiday appears to be that Facebook advertising has come a long way and that Facebook is a significant channel for marketers.

So why does Facebook matter? Facebook offers a massive audience (1.19 billion people) that can be reached accurately and at scale. People come to Facebook to connect on what matters to them the most —friends, family, organizations, events, causes and more. They’re spending more time on Facebook than anywhere else online. And brands have the opportunity to join in on the conversation. Brands on Facebook play powerful roles because they are a part of people’s lives. Users care about brands on Facebook just as they do in their every day life.

As the number of people and time spent on Facebook has grown, so has the company’s ad capabilities and performance. This is reflected in the evolution of Facebook’s ad products and creative.

evolution_of_facebook_ads

Facebook advertisers have access to a wide range of new products with many of their latest product announcements (Partner Categories, Custom Audiences, FBX) are designed to allow marketers to reach their massive audience accurately and at scale. They understand that marketers want to target not just women, but a woman. Not just a 40 year old female, but a cook, a fashion fanatic, a mom. Marketers know precisely who their audience is and Facebook allows them to tailor creative and messaging directly to them.

Successful advertisers on Facebook are focused on building the right creative to identify the best customer for their brand. Part of the effectiveness of ads in the desktop or mobile News Feed lies in the fact that it blurs the line between advertising and content on Facebook, combining the feeling of traditional engagement marketing with the rich targeting and expansive reach of paid advertising. Aesthetics and visuals are the first things that grab attention, and then it’s about the language and copy presented. A compelling headline, an exclusive offer or a daily sale drive urgency and incent people to act.

Many marketers thinking about advertising at scale on Facebook are thinking bigger than CPA and ROI and are instead focusing on predictive lifetime value. They are developing marketing strategies and optimizing their campaigns to acquire customers based on their contribution rather than treating customers all the same. By understanding the lifetime value of various customers, they are improving their ROI in the long run.

The results are telling. Our data shows that Facebook ads are seeing 375% higher clickthroughs in 2013 and ROI is up 152%. And since the introduction of the News Feed, costs have decreased by 27%. Plus, Facebook is a force to be reckoned with in mobile. In combination with Google, Facebook accounts for 70 percent of all mobile ad revenues worldwide.

Today, Facebook is a promising opportunity for performance marketers. They are leveraging Facebook to find and acquire customers, promote unique timely and personalized offers and drive incremental traffic to their online and offline stores. As marketers we should continue to push Facebook to new levels, and not solely focus on how many impressions or fans we can get but instead focus the conversation on:

  • Scale
  • Multichannel
  • Precision targeting
  • Multivariate ad testing
  • Affinity modeling
  • Predictive lifetime value-based bidding and measurement
  • Reporting and analytics

Facebook is a cultural economic and social phenomenon. As more and more brands compete to stand out among its millions of users, the need to stand out is even more pressing. At the end of the day, success on Facebook always comes back to great, targeting, creative and optimization. Marketers that follow this approach have the best opportunity to unlock the full potential of Facebook advertising.

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