Clicks aren’t the right metric for brand advertisers, Facebook Head of Measurement and Insights Brad Smallwood told the audience at the IAB MIXX Conference in New York today.
Smallwood shared results from recent campaign studies that indicated impressions, reach and frequency were more valuable than clicks. Specifically, 99 percent of sales came from users who saw an ad but did not interact with it. Campaigns that optimized for reach were 70 percent more effective at driving ROI, and campaigns that optimized for frequency had a 40 percent increase in ROI.
Smallwood began by outlining the history of advertising and measurement, noting that for the past few years Facebook hasn’t had the right tools and metrics for advertisers to understand their performance on the platform. Now with the company’s partnership with Datalogix, which connects digital media and offline purchasing data, Facebook says it has found a better model that not only proves ROI but also helps advertisers improve their campaigns.
Clicks are important to direct response campaigns, but they’re only one part of brand advertising, Smallwood said, citing a past Nielsen study, which found no correlation between sales lift and clickthrough rate. Moving forward, Facebook will help its advertisers understand the value of the impressions they’re getting on the social network, as well as determine the optimal reach and frequency for their ads.
Smallwood said there is a “sweet spot” for the number of impressions that maximize ROI, but it might differ for different advertisers depending on the product, the campaign and other factors. For example, some advertisers will find that four impressions per user will increase profit. After that, retail sales might still go up, but not enough to cover the cost of advertising and production. When impressions are more evenly allocated — so one user isn’t seeing an ad twice and another seeing an ad 20 times — advertisers have seen a 40 percent increase in ROI. Facebook is applying these findings, and others related to reach, to its ad products to optimize how it serves ads to users.
Tom Buday, head of marketing and consumer communication at Nestle S.A. who went on stage after Smallwood, addressed some of the articles and conversations that try to declare whether Facebook or other social media platforms “work” or “don’t work” for advertisers. He says success or failure isn’t dependent on the advertising channel. It comes down to brand messages. Once advertisers have a quality message and they understand their overall brand health and performance, they can apply it to platforms like Facebook. Message quality is more important than ever, he said, because of the technology that is available. Not only do consumers have more control over the messages they see, they have the means to share whether they love or hate an ad with millions of people. He said Nestle has found Facebook to be a valuable platform for its different brands, including Gerber USA, which is seeing $3.91 ROI for $1 spent.