Here's The Secret To ROI On Facebook Display Ads

Facebook display advertising yields a return on investment when your measurements separate the targeted ads from the untargeted.

Facebook display advertising yields a return on investment when your measurements separate the targeted ads from the un-targeted.

That’s what Dave Williams, founder and chief executive officer of BLiNQ Media, argues in Ad Age.

“Facebook has massive value as an advertising channel, but using it right requires a sound strategy, and a thorough understanding of its unusual metrics,” Williams said.

He points out that recent research by Webtrends didn’t parse targeted from un-targeted ads when measuring click-through rates and that’s why the results show that Facebook’s click-through rate dropped to .051 percent in 2010 (in other words, only one of every 2,000 ads is clicked).

The difference matters, said Williams, adding that Facebook’s value to marketers is in the massive amounts of data it gathers from users. It’s this personal data that allows for targeted adds to be effectively used.

“People willingly share personal information about themselves, opening the door to uniquely targeted advertisements based on age, gender, interests, location, occupation and even friends’ interests,” said Williams.

In contrast to the Webtrends study, Williams mentioned research performed by his own company that tracked three billion-plus impressions over seven months.

Data analysis revealed a click-through rate of .02 percent, on average, for un-targeted ads, compared to .15 percent, on average, for targeted ads (three times higher than Webtrends findings). Better yet, in terms of engagement metrics, targeted ads scored 150 percent, drastically higher than the 22.5 percent scored by un-targeted ads.

Still, Williams cautioned that measuring click-through rates alone is not enough to gauge the success of a Facebook campaign. He likened the campaign goal to attaining a business card rather than a signed deal. Getting the consumer to like your brand is enough as a first step of engagement.

“Your Facebook page should offer value, functioning as a gateway to conversations and transactions, either online or offline,” said Williams.

Readers, do you think that targeted ads should be tracked separately from un-targeted ads when measuring click-through rates?