As with any new advertising medium, there is always a lag between user and marketer adoption. Although there has been much written about how or why Facebook marketing does or doesn’t work, in my view we’ve only touched the tip of the “like-berg” of its effectiveness as a marketing tool. This strong belief is based on my historical perspective of working in digital media for 20 years and the number of solutions that exit the market just as quickly as they entered.
User Numbers Keep Rising
Facebook now has more than 750 million active users and counting. Wherever there are large audiences, advertising dollars follow. This has been the case in all other forums of advertising, and while Facebook is front and center in a market where rapid change and fluctuating consumer sentiment is the norm, the correlation between advertising dollars and business success remains unchanged. Recent reports have shown that the coveted youth demographic has slowed while more mature audiences remain fairly consistent. This is an important trend to watch, but truth be told, we are still in the very early stages of social-media marketing.
Marketers Continue To Actively Engage on Facebook
According to eMarketer, U.S. online ad spending will grow this year more than 20% and remain solid in double digits through 2014. By 2015, total online ad spending will approach $50 billion, with large gains from Facebook marketing. EMarketer also forecasts that Facebook will have $4 billion in ad revenues worldwide in 2011. Twitter is expected to attract $150 million in ad spending. In total, worldwide social-network spending is expected to reach almost $6 billion this year.
To further demonstrate the trend:
- As part of Efficient Frontier’s State of Digital Marketing Report for Q2 2011, we discovered that Facebook advertising continues to get more competitive as brands add social to their advertising mix or focus specifically on the Facebook platform.
- As a result we are seeing CPCs (cost-per-clicks) increasing 22% from Q1. This means that the longer brands wait to engage consumers on Facebook, the more expensive it will become to acquire fans.
There Is Proof That It’s Working
First, just ask your friends. Look no further than your personal and professional networks and their online activity to validate the hype. People aren’t just present on Facebook, they are very active including their interactions with brands. In an analysis of comments from more than 20 million fans, there was an average of 100 comments for each advertiser’s post, meaning users on Facebook are increasing their engagement with brands they like.
As an example of this, Expedia ran a campaign this year called FriendTrips, an interactive sweepstakes in which fans could pilot a virtual plane and fill it with friends in order to win vacation packages. It was supported by a unified multi-channel marketing campaign that integrated print advertising, celebrity endorsements, email marketing campaigns to Expedia customers, placements on Expedia.com and supplier partner sites, as well as a comprehensive Facebook advertising campaign.
An important source of traffic was friends clicking on friends’ invitations in the Newsfeed. Interestingly, Facebook Marketplace and Sponsored Stories advertising drove the majority of users. There was a 750% increase in fans over the course of 6 weeks,15 to 30 times more mentions on Facebook over the course of the six-week campaign, and the cost-per-fan was reduced by more than 400%. As the total quantity of acquired fans rose, the efficiency at which Expedia could acquire new fans improved. More than half of Expedia’s ad clicks in Facebook were social, demonstrating the influence of endorsements from friends.
Social Is A Cornerstone of Marketing Campaigns
It’s now no longer a question of “if” but “how” to integrate social into an overall marketing campaign.The attribution element, while already important when looking at the interaction of different online and offline channels, is vitally important in understanding Facebook activity. Efficient Frontier data show that 50-60% of all transactions involving Facebook will involve another channel. Not capturing this effect will present only a partial picture of user engagement and purchase behavior and can lead to strategically incorrect marketing decisions.
Success for brands and publishers is now about more than amassing “fans” or “likes,” it’s about creating engagement and a long-term connection with your brand. Achieving a critical mass of engaged fans takes expertise, savvy and the right platform. Brands and publishers used to appear as distinctly different groups, but with the advent of social media, both must be curators — storytellers –in order to engage and keep consumers.
There is a lot of talk about the lack of ROI on Facebook. Interestingly, TV seldom has such a discussion despite its maturity and tens of billions being spent on it. The engagement and its effect on branding and purchase behavior are assumed. The reason why Facebook receives so much scrutiny is because it can be evaluated through a variety of lenses. It is this variation of measurability in Facebook fan engagement and behavior that tempts many advertisers to look at Facebook through a direct-response lens. I think this is a myopic and narrow view of the channel. Facebook is not the same as Search in that it is not pure direct response. Facebook is not TV in that it is not pure engagement. Facebook is, well,Facebook. As more data emerge, the value of Facebook as a branding, engagement and a direct-response medium will become evident to even the most ardent of naysayers.
In my view, Facebook marketing isn’t a fad. The how and why of marketing in this medium will continue to evolve but it’s here to stay. Some are already looking for the next Facebook. Other social marketing channels like Twitter and LinkedIn and the recently launched Google+ will continue to emerge as they allow more seamless access to their marketing platforms and attempt to compete with Facebook. We are still in such early stages of understanding social media’s power as a marketing channel that it would be foolish to be looking so far forward that we don’t see the immediate opportunity. The time for brands to test and learn is now.
David Karnstedt is CEO of Efficient Frontier.