Peter Kafka

Recent Posts by Peter Kafka

Facebook Says the Facebook Ads It Didn’t Sell Work Great

Here’s Facebook’s retort to people who say Facebook ads don’t work: A study that says people who see brand messages on the site spend more money on those brands, right away.

The catch: The study focuses on “earned media” — the messages that Facebook users share with each other, not the ones brands pay Facebook to promote.

That’s not entirely good news for Facebook, because it may lead to more moves like the one that General Motors announced before the social network’s IPO. The auto giant said it would continue to spend money on its Facebook presence, but would stop paying Facebook for ad space.

The takeaway here is a bit fuzzy, because Facebook’s newest ad strategy is to combine “earned media” with “paid media,” by offering advertisers the chance to super-charge their free stuff by paying money to get it in front of more eyeballs. But first, the numbers, via a comScore study:

  • Facebook users who saw Starbucks messaging in their newsfeed saw a 38 percent “lift” in the purchase frequency  – that is, visiting a store and buying something — over users who didn’t see the ads. The results showed up in the four weeks after users saw their first ads, and increased over time.
  • Facebook users who saw Target messaging saw a 21 percent lift.

It’s not surprising that these “earned media” messages moved the needle for Facebook users who were already “fans” of the brands. The more encouraging news for Facebook is that those fans’ friends, who also saw the messages, were also prompted to open their wallets.

Facebook says it also has evidence that “premium” ads — the ones advertisers actually paid Facebook to promote — are also working. It says an unnamed retailer saw a 16 percent lift for offline purchases, and a 56 percent bump for online purchases. That study was also conducted by comScore, but in this case, Facebook paid the analytics company to do the work, so it is being less boastful about it.

Again, Facebook is a comScore client, so that relationship will color the results for some folks. And if you want more eyebrow-raising ammo, you could simply note that Starbucks and Target are just two advertisers, and Facebook generated $3 billion in ad sales last year.

Facebook’s retort: It says it has measured more than 60 ad campaigns in the last couple of years, using a variety of measurement services, and has seen 70 percent of its advertisers score a 3x return on their investment.

The fact that the main comScore study focuses on ads that don’t make any money for Facebook isn’t great news for Facebook. But it’s not terrible news, either. If advertisers decide that it’s worthwhile for them to invest in Facebook, then Sheryl Sandberg and company will figure out how to get in on that action, one way or another.

The real challenge for Facebook is that it’s trying to have it both ways: The company says that Facebook ads are a work in progress, and that advertisers are still trying to figure out how to use a giant platform that didn’t exist a few years ago.

But it’s also a public company that needs to convince both investors and advertisers that they should trust it with their money. And both of those groups may be less interested in experimenting these days.

(Image courtesy of Shutterstock/cg-art)


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik