Social Network Crunches Data to Woo Big Brand Advertisers From Television
Facebook Chief Executive Mark Zuckerberg doesn’t talk much about his company’s advertising business, even when it invents new kinds of ads that could disrupt a chunk of the $500 billion influence industry. So it was up to David Fischer, who left a star career at Google early last year to run Facebook’s advertising business, to make a pilgrimage to Advertising Week, a weeklong annual confab of marketers in New York in October. His goal: to draw big brand marketers whose mainstay ad venue is television onto the world’s largest social network.
What he showed during his speech was something blandly dubbed “Expanded Premium Ad.” It’s simply a short post—“Rolling Stone calls Ides of March ‘A big bruising thriller’”—transformed into a right-hand-side ad that goes to a targeted audience. Fischer conceded during his address.
“Honestly, it doesn’t look that interesting,”
David Fischer (left) oversees ads and Brad Smallwood heads analytics teams at Facebook's Palo Alto headquarters
Then he described one small wrinkle: If your friend Jim has clicked the “Like” button back on Columbia Pictures’ fan page, a line of text will pop into the ad saying
“Jim Squires likes Ides of March”
alongside his photo. People are twice as likely to remember an ad if their friend is in it, according to the Nielsen Co., and they tend to click on it or share it with friends more often than they do plain-vanilla display ads. What’s more, their intent to purchase rises fourfold when they see “social” ads like this. Twice the recall. More clicks. Quadruple the purchase intent. More products flying off the retail shelves. These are not uninteresting concepts to marketers.
On the surface it’s puzzling that Facebook feels the need to prove itself to Madison Avenue. With an audience of 800 million worldwide, the social network will double its ad sales this year, to $3.8 billion, according to eMarketer. But the way Fischer is pitching to advertisers, with a focus on the results and not the flash, is very telling. If Facebook is going to justify its $80 billion private valuation—let alone the initial public offering widely expected next year—it will have to show brands how these purposely plain ads will deliver the goods. Fischer says.
“The best ads on Facebook are the ones that are most consistent with what’s already being done on Facebook.”
Indeed, but for the tiny “sponsored” label above them, you can hardly tell they’re ads.
A lot of brands, however, aren’t yet convinced. Facebook ads are clicked on only once every 2,000 times they’re viewed. Typical banner ads are clicked on twice as often. Google search ads are clicked on 40 times as often. By most accounts brand spending on Facebook has been focused on getting people to become fans of their Facebook pages because, well, everyone else was and they didn’t want to appear clueless. Fan campaigns aside, just 12% of marketers and agencies in a recent survey by the ad tech firm Collective thought social media such as Facebook works in an ad campaign.
There’s so much activity on Facebook that marketers aren’t sure what correlates with common advertising gauges such as brand awareness and propensity to buy. Facebook fan count? Ad clicks? How many times people shared a post on a brand’s Facebook page? says Sarah Hofstetter,
“It’s the biggest question our clients ask: ‘Is that a good number?’”
who as senior vice president of emerging media and brand strategy at the digital ad agency 360i helps companies such as Coca-Cola and Kraft manage marketing on Facebook.
To make its numbers Facebook is crunching them. Dozens of data geeks are hunkered down in a nondescript building nicknamed “1050” for its address on Page Mill Road in Palo Alto, Calif. They’re mining the 250 million photos shared and the 100 million likes per day. They’re looking for clues as to which kinds of ads and other marketing work best on this new canvas—and how it all compares with other media. The overriding goal, says Brad Smallwood, Facebook’s head of measurement and insights:
“We want marketers to know that when they invest in Facebook and in online in general, they’re going to see measurable impact in the same way they know TV works.”
Social media offers tantalizing new possibilities for getting consumers’ attention in ways that are strikingly different from search and display ads, the two dominant forms of online advertising. Those older forms are, to varying degrees, aimed at prompting immediate or near-term transactions, but the biggest ad spenders want to create a long-term affinity for their soap, cars or beer. Most products are still bought in physical stores well after the ad was served. That’s why marketers still love TV, where they can tell their stories in a setting where people are relaxed and receptive.
Television didn’t take off as an ad medium until it moved from ads showing people reading a radio script to forms of advertising that fit the medium. Facebook needs to find the social media equivalent of the 30-second spot. It’s starting to do so by converting the primary gesture of social media—sharing—into something potentially even better for branding than TV ads: a supercharged version of word of mouth. It’s the most valuable form of marketing but tough to build quickly and even tougher to control.
Social Climber - Facebook trails far behind both television and Google in ad revenues, but it's growing far faster than either.
Facebook demolishes those limitations. People have an average of 130 Facebook friends, so when they “Like” a brand that endorsement spreads instantly to the news feeds of many of those friends—who then may spread it further to their friends, potentially building to millions of people in a flash. Mars Chocolate North America, for instance, seeded demand before last year’s launch of M&M’s Pretzel by offering samples through a virtual vending machine to 40,000 fans, who each could spread the offer to two of their friends. In less than 48 hours 120,000 samples flew out the door.
Last month, based on the work of its data teams, Facebook introduced a series of new metrics that gives a marketer a dashboard for word of mouth. A new measure called “People Talking About This” counts the number who have liked a page, shared a post or taken other actions involving the brand in the past week. Marketers can also see potential reach (how many friends of friends could potentially see a brand’s post) and actual reach (the number of people who did see the post). Most of these impressions are people seeing free brand messages in their news feeds, either from the companies they’ve liked or from their friends who did the same. If this unpaid media works so well, why should brands pay for ads at all?
Randall Brown, Gatorade’s global director of digital engagement says.
“I don’t think the big opportunity [on Facebook] is a lot of advertising.”
He uses Facebook mostly to bolster the brand’s connection with sports nutrition by monitoring conversations. In one case a Gatorade television ad was prompting people on Facebook to fixate on the word “swagger” in the ad’s voice-over, diverting attention from the core brand message. So rather than running ads on Facebook, Gatorade simply used it to help edit the TV ad.
In anticipation of such shrug-offs, Facebook’s researchers came up with data showing that ads are crucial for goosing the viral spread of messages from and about brands. In early September British luxury fashion brand Burberry ran a type of Facebook ad called a “Sponsored Story,” which converts a friend’s like or similar actions unaltered into a paid ad on the right side of the Facebook page. The reach of Burberry’s page posts immediately rose from well under 1 million unique users to 3 million, then sank back down after the ads stopped. And Facebook says when Sponsored Stories are followed by a “social ad,” which are paid marketing messages such as “Jill and three of your other friends like Burberry,” the brand gets twice as many clicks, likes and comments.
What advertisers really want from Web publishers are ratings for display-ad campaigns that are similar to those used in television ad campaigns. Until recently Web publishers have declined, insisting that they offer more measurable stats such as clicks. Smallwood, a former Yahoo ad exec, realized after he joined Facebook three years ago that the company was in a unique position to bridge that gap. Unlike TV or radio, Facebook has highly accurate demographic data about its users. And because so few people click on Facebook ads compared with publishers’ websites, Facebook was keenly motivated to find alternative metrics to measure the real impact of social activity.
Smallwood started talking with Nielsen early last year about creating a system to rate online ad reach in gross rating points, or GRPs, which multiply the size of the audience by the number of times the audience sees the brand. Although the idea was not limited to ads in social media, Facebook’s data were instrumental in providing accurate demographic data similar to Nielsen’s TV panels.The system, called Online Campaign Ratings, launched in August, so the results are still uncertain, but 18 of the top 25 advertisers have run more than 120 campaigns using it. Steve Hasker, Nielsen’s president of media products and advertiser solutions says.
“It gives the client the ability to compare the reach of online and the reach of TV.”
Not least, Facebook is working with Nielsen to scale up a service called BrandEffect. Similar to what Nielsen does with TV viewers, BrandEffect polls people on Facebook who saw a particular ad and measures changes in brand recognition and purchase consideration.
Facebook can succeed wildly in online advertising if it can convince Madison Avenue to look beyond its ads’ lack of creative sizzle. Facebook ads work best, the company’s research indicates, if they’re used in conjunction with more creative brand efforts on fan pages and branded apps. But that’s a tough sell to an industry whose creative infrastructure is still set up around the ad. says Cory Treffiletti, cofounder of digital marketing firm Amplify Social.
“Facebook needs to come up with something more beautiful.”
Even Facebook concedes as much. Closing Facebook’s Ad Week presentation with Fischer, Mark D’Arcy, a former Time Warner ad exec who’s now Facebook’s director of global creative solutions, said of Facebook ads,
“We’re sort of like 1951 television.”
To put it another way, Facebook still needs to marry its social ad science with the ad industry’s creative dark arts.
COMMENTARY: If Facebook ever plans on becoming a serious advertising platform it must function like an online television screen. It must become more active, and less passive. Facebook must find a way to make brand ads more "interruptive". YouTube, Hulu and NetFlix run a pre-roll ad of short duration, generally about 15 or 30 seconds, just before the video runs. The user has the option to end the ad after the ad has run a certain number of seconds, so they can go right to the video. Facebook could do something similar. A brand's display ad or video ad would automatically appear at random, if a certain action is initiated by the user:
- Clicking the Like button.
- Clicking the Wall Post button.
- Clicking the Find Friends button.
- Clicking the Friends Requestions icon.
- Clicking the Search icon.
- Clicking any of the Folders icons or tabs.
- Clicking on an App icon.
Brands could decide how many times their ads will be served up based on the number of fans they have or other criteria, or Facebook could create an algorithm that would serve up the ad for them automatically when certain conditions are met.
A brands display ads need to be attention grabbing, just like a television commercial. Depending on the industry, some display ads generate higher clickthrough rates and clickrough costs, than others. In any event, the display ad will need to be attention grabbing, with a powrful catch phrase, tag line or offer.
Looking forward to feedback from my readers, especially social media pros and major brand managers.
Courtesy of an article dated November 16, 2011 appearing in Forbes
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