By advertising to Facebook fans instead of non-fans, advertisers can reduce the acquisition cost of registrations by 44%, event signups by 33%, and purchases by 15%. These results of a 4.1 billion ad-impression, thirteen-client test have been exclusively shared with Inside Facebook by TBG Digital, developers of one of the most popular technology solutions for buying huge volumes of Facebook ads.
The data helps establish the value of a Facebook fan by demonstrating some of the savings in conversion acquisition costs business can make by investing in growing their fan bases. This is because in addition to sending Page updates to fans, businesses can specifically target their own fan base with Facebook ads.
For instance, if a health care company planned on acquiring 1 million registrations over a year via Facebook ads at $10 per registration, it could save $4.4 million by advertising to its Facebook fans instead of the general Facebook population. This means if the cost of attaining enough fans from which to secure 1 million health care registrations is less than $4.4 million, the company has produced a direct return on investment on its Facebook fan acquisition strategy without even counting the value of being able to communicate directly with the fans through Page updates.
TBG Digital is in a relatively unique position to provide this data, as the company serves upwards of 2.1 billion ad impressions a day, making it one of the largest ad buying services or tools on top of the Facebook Ads API. Last month, it shared data indicating that Facebook’s Sponsored Stories ad unit delivers a 46% higher click through rate, and an 18% lower cost per fan than traditional Facebook ads.
The test results should spur a wide variety of companies to consider increasing their efforts to drive fans to their Facebook Page in order to be able to specifically target these users with Facebook ads. A Facebook fan base could be wise investment for web services including off-platform game developers and group buying networks such as Groupon who frequently spend huge amounts on registration acquisition. The one-time cost of fan acquisition could assist them to market new games and deals for years to come.
Event promoters should look to serve ads to the fan bases of any venue, entertainer, or sponsor involved in the production of their event to take advantage of the reduced cost of signups culled from fan targeting. They should also work to build their own fan bases through promotions and physical on-site kiosks that can collect Likes from event goers.
Ecommerce sites and brands that conduct direct response advertising should also look at how developing a Facebook fan base now could be smart strategic move that could lower costs later.
While TBG Digital benefits from increased interest in advertising on Facebook that these results might generate, its testing methods are sound and it uses a large enough sample size to be reliable. Facebook is obviously not the only online advertising medium, and email marketing is still very important. However, similar to how accruing large email lists was eventually recognized as a sound marketing investment, Facebook Likes are emerging as valuable for targeting ads as well as for communicating directly with customers through Page updates.
Some companies might worry that a currently small fan base means there’s no point in focusing on building a Facebook Page audience. Really though, this means there’s plenty of low hanging fruit — people who truly care about their brand but haven’t thought to Like them — that is yet to be picked through ads and viral campaigns. Facebook’s Sponsored Stories allow brands to turn a small buzz into highly efficient fan acquisition campaigns.
Finally, as more brands realize the importance of Facebook, competition for fans will increase and the cost per fan will probably increase. Armed with these new numbers demonstrating the value of a Facebook fan, marketers should push their companies to redouble their fan acquisition initiatives as a component of a clearly measurable strategy for generating ROI from social.
For strategies on how to most effectively use Facebook ads to drive Likes to your Page and other types of conversions, visit the Facebook Marketing Bible, Inside Network’s comprehensive guide to advertising and marketing on Facebook.