Can Facebook Solve Its Relevance Problem?

tuleya-usethis“Data Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Chris Tuleya, VP of Direct Response at Underscore Marketing.

For months, the industry has been abuzz about Facebook’s Real-Time Bidding exchange, with pundits touting the millions of impressions it makes available to advertisers. But whether all the Facebook Exchange (FBX) hype is justified remains to be seen.

I, for one, remain skeptical. The FBX launch doesn't change my opinion that Facebook has plenty of work to do if it wants to stand out from other ad-supported publishers in terms of relevance. So far, the impact of advertising within its platform simply hasn’t proven greater than that of its competitors.
Opening up vast pools of inventory to RTB could bring even less relevant ads, which could result in poor consumer engagement and, ultimately, a quick divestment of agency and client funds. So while FBX opens up a significant amount of display impressions, it still faces a few challenges.

Chief among these is that the metrics it highlights in its success stories – especially the number of “likes” – are relevant mainly to Facebook, rather than to advertisers. As marketers, we like to think FBX’s targeted inventory will provide a greater ability to reach consumers and drive engagement with our brands. However, none of the Facebook case studies discusses the value of the advertising beyond a “like” and I’ve heard very few stories of brands successfully using Facebook to lure potential customers to their own pages.

Can the number of people that “like” a page truly define success? In general, not if you are an ROI-focused advertiser. When calculating the viability of Facebook as a media channel, marketers need to determine the value of a “like” from inside Facebook’s walls and its application to their business goals.

Another challenge is how much of the Facebook ad inventory is being purchased through trading desks or other buy-side platforms for remarketing efforts. As a result, three of the seven sponsored ads on my personal page are for sites and products that I’ve already recently visited as part of my DIY bathroom project. These serve as great reminder ads, but they give me no sense of urgency to take action beyond clicking over. In a few cases, knowing that the ads will continue to chase me, I’ve even opted against bookmarking the advertised site.
This lack of urgency to act isn’t Facebook’s fault, but Facebook may ultimately pay the price as advertisers optimize toward top ROI-driven channels. ROI-focused RTB advertisers, who constantly test their inventory in search of an immediate response to their ads, may abandon this model if they find Facebook ads less efficient at driving people to take action outside Facebook.

But it may not be fair to put the blame on Facebook’s shoulders alone. As marketers, it’s our responsibility to drive client success with our campaigns. This doesn’t end at buying a channel or placing an ad. Facebook may be used by millions of Americans every day, but it’s still our responsibility to drive them to action.

Facebook has created a great forum for reaching and speaking to any target audience you could imagine. My advice? Don’t get distracted by proprietary metrics that have little bearing on advertiser business goals. Crafting an effective campaign on Facebook should be no different from how you would approach the same challenge with any media partner.

Follow Chris Tuleya (@tuleya) and AdExchanger (@adexchanger) on Twitter.

 

3 Comments

  1. This is quite interesting, and you make some pretty bold statements, like "So far, the impact of advertising within its platform simply hasn’t proven greater than that of its competitors".

    Do you have any figures or further information that you can share which could give more insight into your analysis?

    Regarding remarketing, you make some very valid points. I think it is worth highlighting that if you are an advertisers focused on performance, it makes no sense to continue addressing a user who shows no interest in a message. The beauty of the FBX is that through RTB, it is possible to determine how likely it is that a user (like yourself in the example you gave!) would be driven to action when served creative. The ability to now look at each individual user and impression, bid an individual price and display a unique creative means that these ads should be even more relevant than before and performance will improve incrementally.

    Ultimately, yes, there are many challenges as with any new platform and I am sure that there will be fluctuation in the coming months as more and more advertisers and platforms begin to use FBX - but it is a step in the right direction and in my opinion it is already living up to the hype.

    Reply
  2. A great response to the marketing du jour attitude that permeates the industry. A warning shot to those who chase the shiny new bauble to be first for the recognition without proper consideration for how this aligns with their overall marketing strategy.

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  3. If you're looking for case studies on ROI from Facebook ads that has nothing to do with "likes", there are plenty. At Optimal we're seeing great results on direct response ads on Facebook via retargeting but *even more* so via News Feed advertising that leverages Custom Audiences and lookalike Custom Audiences. The understanding in the marketplace of these opportunities is still not there yet, as your piece indicates. Two quick examples:

    - Video game company, saw a sub-$10 Cost Per Sale on a $16 Cost per Sale target using FBX via Optimal RTB/FBX retargeting
    - companies in insurance, education and auto who are combining lookalike audiences to find new targets based on consumer segments that are working for them - where they're measuring cost-per-lead. some of these companies have been increasing ROI and their spend every month for over 9 months.

    Facebook is the first platform I'm aware of that is delivering high-ROI results for DR advertisers as well as great engagement for brands. With FBX soon coming to the News Feed, results will continue to increase but ultimately, cookie-based retargeting is a niche business. First-party data onboarding, and combining this with third-party Partner Category targeting, advertising to existing customers on mobile devices, by themselves are going to drive a ton of revenue for Facebook and great results for marketers. The burden is on FB Preferred Marketing Developers like us to help educate the market better about these opportunities. I don't think we're doing a good enough job yet at that.

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