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Advertising on Facebook during the holidays is just like fishing. There are many kinds of shoppers on Facebook ready to make a purchase during the holidays just like there are many types of fish. Advertisers need to know which customers they want to target, design the right marketing strategy, push their ads to the right place, and use the right metrics to capture ROI–similar to how a fisherman ensures his bait reaches the right fish at the right spot and time.
This process usually involves customer segmentation, strategic decision-making and long-term ROI measurement. Preparation, timing, patience –the same procedures an experienced fisherman follows, are what will enable advertisers to succeed during the holiday season.
The graph below gives a high-level view of ecommerce performance in 2012 Q4 by day. We will look at trends from the Q4 2012 holiday shopping season and what’s happened so far in Q4 2013.
eCommerce – Q4 2012
Fish are hungry, invest now! Our data shows that November is the best time to achieve high ROI and bring in long-term revenue because customers are more likely to make purchases from a variety of brands. A comparison of ads placed in October, November and December 2012, showed that Facebook ads placed one to three weeks before Thanksgiving attracted customers who delivered the highest ROI over time — loyal customers with consistent purchasing throughout Q4 and beyond who yielded the highest ROI contributed by lifetime revenue return.
2012 Spend vs. ROI
Similar to how different fish swim at different speeds, customers in various segments shop with different patterns. It’s crucial to understand and identify your target customers. Customers acquired the week before Thanksgiving and Christmas consistently yielded high return, both short-term and long-term while those who shopped right around holidays tended to be last-minute rush shoppers If you are seeking a bigger fish, set an enticing bait and wait; alternatively, if you see high volumes of smaller fish as your target, set lots of small bait but be prepared to act quickly.
1. Loyal customers – these customers performed consistently well even after six months and responded to ads placed in mid-November.
2. Steady shoppers – these customers brought in higher revenue after one month of viewing the ad and responded to ads placed in late October and early November.
3. Flash shoppers – these customers reacted quickly to an ad and made purchases within one month but barely came back again or were easily distracted by other campaigns within a half-year period. They responded to ads displayed in late November and early December.
The graph below shows the incremental ROI by daily cohorts in 2012 Q4. Incremental units are first day, first week, first two weeks, first month, first two months, first three months, first six months and lifetime. Red indicates lower ROI and green shows higher ROI.
Female shoppers who purchased in November yielded more than 3X ROI as compared to male shoppers, although engagement and cost data showed that men had slightly higher click-through-rates (CTRs), measured in a one-month time frame.
CTR – eCommerce Q4 2012
First Month ROI – eCommerce Q4 2012
Marketing, like fishing, is a game of patience. If your bait is already set, abandoning it too soon could potentially cause you to leave many fish uncaught. High costs from the holiday competition and fiscal pressure at the end of year easily wear out advertisers’ patience. If you are measuring one-week or even one-week ROI, don’t forget to come back and observe what is going on later on. Our data shows that a significant amount of revenue is attributed after one month, or even a half a year later. Loyal customers are sticky and consistently contribute to the revenue over the long run. Instead of a one-week/month attribution window, advertisers should consider use a longer time-frame to measure an ad’s performance. Big fish take longer to catch. Short-term measurement has a higher risk of killing the best campaigns before they have started performing
Incremental ROI by Placement Month – eCommerce Q4 2012
The Facebook advertising market has grown more mature and competitive over the past year. Facebook daily active users grew 16% at the end of Q3 2013 as compared to a year ago. As reported by Facebook, advertising spend in Q3 2013 was 66% higher than Q3 2012. Nanigans has observed that CPMs have almost tripled over the past year.
2012 vs. 2013 – eCommerce Q4
Another important consideration is new ad products. Unpublished Page Posts, Mobile and FBX retargeting are three ad products that have been rapidly adopted by advertisers in the past year. They are effective for bringing in high quality traffic and conversions.
When looking at bid type, CPM-search saw a 41% lower CPA for purchase events at similar volume when compared to CPC bidding (according to Facebook’s most recent data). Advertisers should test different ad types and bidding methods to achieve the best performance.
At last, it is the most exciting time of year again for advertisers. Get your campaigns ready, act on a consistent strategy and focus on long-term lifetime value. Happy Fishing!