When Facebook filed to go public back in February, it simultaneously unveiled its advertising revenue for the first time and lost the ability to publicly discuss those numbers or refute critics because of a quiet period mandated by the Securities and Exchange Commission. And oh the critics they've had, including GM's vote of no confidence days before the IPO. Well as the Financial Times pointed out this morning, that quiet period is over, and now Facebook is shouting back at its critics, "No, you're wrong! Check the stats!"
What stats? A study by Facebook and comScore, released today, examines a few brand case studies that show that Facebook marketing drives sales. For the study, comScore examined an unspecified share of the 2 million global Internet users who are panelists involved with its Social Essentials measurement service (comScore did not respond to a request for the specific number of consumers that participated in the study). That opted-in group of panelists permitted comScore to see their online behavior—such as site visits, search queries, ad exposure and online purchases—and link those observations with their exposure to social media marketing.
Among the study’s examples is an unspecified “large retailer” that wanted to check out how Facebook Premium Ads—those that run on the Facebook home page, in the news feed or on profile pages—translate into in-store and online sales. Of the retailers’ fans or friends of those fans exposed to its paid ad, 1.47 percent made in in-store purchase and 0.61 percent made an online purchase within four weeks of seeing the ads. However, those numbers are not too different from consumers in a control group not exposed to the Facebook marketing. Of the control group, 1.27 percent purchased in stores and 0.39 percent purchased online in that four-week span.
But comScore didn’t just look at how paid ads influenced purchase behavior. The research firm eyed how earned media—content posted to a brand’s Facebook page and then possibly shared to a user’s Facebook friends—performed for Starbucks over a four-week period. Of Starbucks’ fans and friends of fans who came across that earned media, 2.12 percent made a purchase at a physical Starbucks location in that span versus 1.54 percent of those not exposed. Prior to the four-week window, comScore determined the test and control groups had nearly identical purchasing behavior, so the earned media exposure can be credited for driving an additional 0.58 percentage points in in-store purchases.
Given similar parameters as the Starbucks example, comScore looked at how earned media performed for Target. It found that 3.9 percent of Target’s fans and friends of fans exposed to its earned media, four weeks later, were more likely to buy from Target as a result, as opposed to the 3.3 percent of consumers in the control group.
It makes sense that Facebook would want to show brands that marketing on the social network can, in fact, drive sales. For the first quarter, advertising revenue accounted for 82 percent of the company’s total revenue. And it's not suprising that comScore would look at paid and earned media since Facebook has been blurring the two through products like Sponsored Stories and its Reach Generator and Promoted Post tools, both of which work to ensure more users see a brand’s posts—albeit for a price. But for all that to work Facebook needs to answer those in the industry who question the bottom-line value of marketing on Facebook. After all, more of those advertisers are bringing their budgets online or increasing those budgets, as demonstrated by the 15 percent year-over-year jump in Q1 Internet advertising revenue to a record $8.4 billion, according to the Interactive Advertising Bureau and PricewaterhouseCoopers.