Are Facebook Ads Worth the Money?

The Wall Street Journal, in its article “The Big Doubt Over Facebook”, states Facebook has built a $3 billion a year advertising business. So, what are advertisers getting for their money? With about 900 million users, you could make an assumption that an ad on Facebook could boost sales. However, here at Marketsmith, we don’t like to make assumptions; we like the hard facts. How many consumers clicked on our ad? How many consumers bought something after clicking on our ad? What’s the ROI?

Michael Sprague, VP of Marketing at Kia Motors Corp.’s North America said, “What are we getting for our dollars?” Unlike Google and Yahoo, who sell traditional display and search ads on their sites from which advertisers can directly track the return on ads, Facebook does not permit third-party surveys on its site or allow ads to be tagged with “cookies”.

To address marketers’ concerns, last year Facebook started working with research firms comScore Inc. and Nielsen Co. to offer tools for brands to track Facebook campaigns. Nielsen attempts to match ad exposure to product sales. But it is not necessarily possible to measure the direct effect of Facebook advertising on purchases, particularly for high end products for which the decision-process may be long and include intangibles such as emotional reactions, word of mouth, seeing what your family and friends like, etc.

WSJ quotes a Ford spokesman, Charles Zinkowski, who noted that “more than 20% of the company’s digital media spend is on Facebook”, but declined to be specific. He also shared “by using Facebook ads instead of Super Bowl ads in marketing its 2011 Explorer, shopping activity for the Explorer jumped 104% versus the average shopping lift of 14% following a Super Bowl ad.” So even though we cannot see the same granular data provided elsewhere, there are methods of drilling down to measure the effect of Facebook advertising which we at Marketsmith work to identify for our clients in order to evaluate Facebook as a worthwhile investment of marketing dollars. We do notice advertising value is not the only metric it is difficult to assess on Facebook. Both the WSJ and DealBook comment on determining value with respect to the IPO. Maybe there will be more transparency after Facebook becomes publicly traded and must be accountable to shareholders. We will certainly be watching to see what happens, and ready to respond in order to drive increased marketing ROI for our clients.

Source: Wall Street Journal

Jen Allain
Client Services Associate
Marketsmith, Inc.