Recently, Visual IQ released internal data showing that Facebook advertising is generally undervalued by marketers when it is only given credit by being the last ad viewed or clicked before a conversion. By analyzing all of a consumer's marketing touch-points with a given brand, marketing attribution systems provide a much more precise measurement of how cross-channel marketing (including Facebook advertising) works to drive conversions compared to a last ad measurement methodology.
In fact, in a recent analysis, Visual IQ found that more than 70 percent of its clients' media elements had a 20 percent or greater variance in conversion contribution credit between last ad and attribution measurement. What does this mean? It means that nearly three-quarters of marketers' campaign conversion reporting is significantly flawed! It's no wonder that Facebook advertising, which generally comes into play earlier in the conversion funnel, rarely gets its share of the credit and has marketers continuously debating its value.
However, although attribution modeling can show advertisers where they are overvaluing and undervaluing media channels such as Facebook ads, it can still be somewhat of a mystery as to why a certain channel works better than others. That being said, based on experience with Facebook campaigns run by clients who spend significant dollars on the social network, the following are insights gleaned over time on this topic.
Why Facebook is undervalued when solely measured by last ad
Facebook ads are display media -- Display media tends to reach users at the top and middle of the buying cycle and will almost always be undervalued in a last ad approach. Once a user has been hit over the head with a marketer's message on Facebook and decides to take action, in the vast majority of cases, the user will be herded into the conversion path via other bottom-of-the-funnel channels such as paid/organic search or direct navigation.
Users on social networks are highly engaged -- This is the case not just on social media websites but on gaming sites and other highly interactive domains. Users who reach these destinations are there for a specific type of interaction and generally don't take immediate action on advertising appearing there. By the time they convert, users will probably have been exposed to another media channel, which swoops in to take full credit in the last ad world.
Why Facebook ads get high ROI
Hyper-targeted -- One of the unwritten rules of marketing is that response rates go up as the relevance increases. With the incredible targeting that Facebook provides, marketers can focus ads on their target audience with precision. This eliminates waste and gets their message in front of the most relevant users.
Lost cost -- The ROI calculation is return/cost, so simple math tells us that even if one channel returns the same volume as another, if it costs less to purchase, the ROI value will be higher. Facebook's main advertising offering -- its self-service PPC ads -- is very cost effective. Sold in an auction-based model akin to paid search, Facebook PPC ad prices are kept in check by the marketplace.
Publisher affinity -- With the unprecedented popularity of Facebook, it's obvious that for the most part, users trust and like Facebook. Marketing partners of the social network will get a rub-off affect by appearing in this environment.
Facebook has recently been opening the kimono for ad tracking solutions (such as Atlas and DoubleClick) because it knows that the current last-ad lens that most marketers use to evaluate their media buys puts it at a distinct disadvantage to lower-funnel channel and tactics. This will definitely help its cause. And with the assistance of a true, cross-channel attribution tool in the marketer toolbox, Facebook paid advertising will quickly become recognized for the true ROI that it delivers to advertisers.
Josh Dreller is senior director of client and industry solutions at Visual IQ.
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"Facebook" image via YouTube.