Ads API Profile: Alchemy’s Cascading Ad Creation, Analytics, and Auto-Optimization

Facebook’s performance advertising system provides buyers with a wealth of targeting options, but not the depth of control or analytics to effectively take advantage of the opportunity. To allow companies to build more powerful tools for managing Facebook ads, the company began allowing a select few developers access to an ads API last fall. Here we’ll explain the functionality and strengths of the different products built on top of the ads API, beginning with Techlightenment’s Alchemy.

The browser-based service allows users to manage and analyze large, complex Facebook advertising campaigns. Techlightenment — a bootstrapped 30-employee social media agency based in London with $7 million in annual revenue — created Alchemy to help scale its social media advertising management business. Today, there are roughly 60 clients using the system from industries including direct response marketing, e-commerce, lead generation, segments such as health care, consumer products, social gaming and online entertainment and companies like Skype, Nissan, and GlaxoSmithKline. Alchemy typically works with companies spending over $500,000 a year on Facebook ads, providing its service in exchange for a percentage of total spend, with no-set up cost.

Users begin by entering location and targeting parameters as well as headlines, copy, and images to create a cascading set of ads from selected permutations of the variables. This permits users to create hundreds of ads simultaneously instead of one by one.

Alchemy also suggests additional keywords based on those you enter to enlarge the size of an ad’s audience. Once the ads are created, users can tag their campaign to allow analytics of groups of similar campaigns, place different bids depending on location, choose whether Alchemy will optimize for CPM or CPC, and define how revenue and margins are calculated.

Once ads are running, Alchemy provides an analytics program for tracking results. Graphs can be viewed by metrics such as Costs Per Action, by creative element, or by targeting parameter, showing buyers exactly what city or photo performed best. Alchemy also creates tracking URLs for the different ads and integrates with popular analytics systems to both push and pull data, allowing users to see the direct influence of the ads on conversion rates and ROI, all within the service. These analytics can be exported into a variety of formats, ensuring clients can use it for their own purposes.

Users can utilize the data to edit existing ads and campaigns without having to start over, or clone ads for use in new campaigns. Performance breakdowns by CTR permit A/B testing, helping to find and expand the use of the best performers while halting underperforming permutations. Alchemy lets users create rules such as “If when this ad hits 100,000 impressions the CPC is higher than .31 cents then lower bid to .25 cents” to automatically optimize ads as they fatigue. A notable feature is optimization recommendations, such as telling you which ads it thinks you should pause.

Techlightenment’s Ankur Shah believes clients are seeing the advantage of the product, with “60% [making a] generally consistent month on month spend increase through the system”. He also reports significant drops in CPC cost for clients despite their fees, and large conversion increases for ads which directly link to entertainment media and games.

Shah predicts a massive ramp up in Facebook ad buys, but doesn’t think Facebook will be quick to make the ads API public. He says the most useful thing Facebook could do to improve the API would be to allow counting of impressions served which would aid in tracking branding and the warming up of consumers instead of only tracking actions. Other changes on Alchemy’s wish list include day parting, the ability to place ads for fractions of a day, and an increase in transparency around Facebook’s ad quality score algorithm, which causes ads that perform well at first to be showed much more frequently than initially slow ads within a large campaign.

Overall, Alchemy is a step up from Facebook native ad buying tool or the bulk uploader, trading on it’s cascading ad creation tool, powerful analytics, and increasingly sophisticated auto-optimization features. While it was one of the first companies to start using the API, it now faces many more competitors, including established advertising optimization companies — stay tuned for more profiles in this emerging area.