By: Duff Anderson
A recent article in the Economist raised questions about the growth potential of Facebook and its ability to generate traditional advertising revenue. It turns out Facebook may be lacking the lustre it promised for marketers. The question is whether this a true reflection of the social media giant or just a misunderstanding of the value of advertising on Facebook?
Late last year, the value of advertising on Facebook was brought to the forefront with a Forrester report that didn’t mince words. “Facebook creates less business value than any other digital marketing opportunity … [so] … Don’t dedicate a paid ad budget for Facebook.” Forrester surveyed 395 marketing and eBusiness executives’ at large companies across US, Canada and the UK and found they are least satisfied with Facebook advertising in terms of business value.
Should I Advertise on Facebook or Not?
Facebook is a conundrum. On one hand you have one of the most reputable analyst firms in the world saying Facebook is not worth advertising with. On the other hand you have Facebook with a million active advertisers including all of the Ad Age 100.
It is better to look at the root of the problem that, “Marketers still have no idea what they are doing in digital.” This problem was observed in the Adobe report – Digital Distress, which reported that only 9% of respondents strongly agree with the statement “I know our digital marketing is working.” The report also found that 61% of all marketers think that digital marketing approaches are a constant cycle of trial and error.
John Wanamaker, the father of modern advertising, once said “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”
It seems even today amongst the vast amount of data we as marketers have at our finger tips, we still don’t know which half of our advertising budget we are wasting.
Which Half of my Advertising Budget am I Wasting?
This is a surprisingly easy question to answer. Forrester Research reported in “Win the Social Marketing Measurement Game,” that website surveys are a strategy that can bridge this gap between tracking the reach of social campaigns and understanding which social media programs drive exploration. Collecting data on visitor intent and motivation allows marketers to understand the quality of traffic being driven by marketing campaigns and whether it is on target to drive future sales.
Photo: Copyright iPerceptions
Data from the automotive industry to plot the drivers that motivate a visit by purchase horizon and brand purchase intent.
The above graph sheds light on the Forrester findings and the possible reasons why social media got such poor marks. Social media generates a smaller proportion of site traffic, and we know that in the automotive industry, the website experience is an important part of the shopping process. We also note that visitors who were encouraged to visit through social media are significantly further from purchasing than those coming through online search. However, their likelihood of purchasing, albeit in the future, is higher than other traffic sources because social media is typically comprised of fans – i.e. owners or aspiring owners. Therefore, the key is to understand the traffic source and engage in brand building and brand positioning, instead of a focus on immediate conversion and short term sales.
Based on the observations made from looking at the graph above, it is an unfair assessment to say Facebook advertising is “failing marketers.” While the data above considers all social media platforms, it also reinforces that advertising on platforms like Facebook is still a good idea and can reinforce brand awareness in long term prospects.
I think the biggest takeaway is not whether Facebook advertising is worth investing in but whether your business objectives align with the particularities of Facebook advertising. Are you trying to build your brand or are you trying to make short term sales? Facebook is a great brand building tool, but based on this data, probably won’t lead to significant gains in the short-term. With this in mind, marketers should develop marketing campaigns on Facebook that are focused on building their brand and align with a long-term strategy.
So is Facebook really failing marketers? The devil is in the data!
About the Author: Duff Anderson, SVP & Founding Member, iPerceptions
A visionary in digital voice of customer research, Duff has been providing expert advice on how to gain a competitive advantage across the digital customer for over 15 years. Duff is a founding member of iPerceptions and is a featured speaker and contributor on the subjects of digital analytics, marketing technologies and customer experience management. iPerceptions is a leading digital customer research company that enriches marketing technologies with the Voice of the Customer. Connect with Duff Anderson on LinkedIn.
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