Social Net Ads: Fewer Clicks, More Engagement

Conventional wisdom holds that social media advertising does not perform nearly as well as ads running on non-social sites, at least by standard measurements like clicks.
That’s true, according to a new study by social ad network Lotame, but it misses an important distinction: the same ad placements on social sites can draw far higher levels of engagement. And that’s an increasingly important point for brands.
Lotame examined over 100 rich-media campaigns it ran during 2008 and the first eight months of this year on sites like Bebo, Flixster and The Huffington Post. It compared the performance of those campaigns in aggregate to the industry standard measurements published by Google ad serving unit DoubleClick.
It found that click-through rates for ads on social sites were lower than the DoubleClick average across all ad sizes, formats and types of advertiser.

The good news for social sites: While users are unlikely to leave the site and visit advertisers’ venues, they are more likely to interact with some aspect of ads. Such interaction can include playing videos or expanding the ad messages on-screen. For example, the completion rate for in-page videos was 68 percent on Lotame compared to 62 percent in the DoubleClick sample. Expandable video units showed similar results.
The differences were more apparent in interaction rates. Lotame’s figures showed double response rates in expandable units, both with video and without, and for in-page video.
“It’s a difference in the way users in that space interact with ads,” said Lotame CEO Andy Monfried. “It’s weird to assume they’re not interested in ads because they’re on social media sites. Advertisers need to treat social media in a different fashion from other forms of online media.”
Lotame sells ads based on time exposed rather than impressions or clicks, the standard industry measurements.
“We think there’s a different metric needed both to monetize social media and target the user,” he said.
Monfried is not alone in his contention that current modes of measuring online ads fall short, particularly in social media, where users are spending lots of time. Companies like Videoegg are pushing a cost-per-engagement model and Betawave touts time as a measure of attention. Even former Internet Advertising Bureau chairman and CNET founder Shelby Bonnie lamented the state of metrics in a recent blog post that called for the industry to “kill the CPM.”
Lotame’s sample doesn’t include the Web’s largest social sites, notably Facebook. Mike Murphy, Facebook’s vp, global media sales, declined to detail the engagement rates that site has seen for advertising, but said they were “significantly higher” than industry averages. (Facebook sells “engagement ads” that appear within its stream of content and off to the side. Microsoft handles sales of its standard banner units.) Facebook has now run campaigns for 83 of the top 100 advertisers, he said.

Nielsen Business Media