By Stephen Yusko on October 2nd, 2012 | 30988Comment on this postLive+at+%23IABMIXX%3A+Facebook%27s+Brad+Smallwood+on+how+brands+can+maximize+ROI2012-10-02+11%3A13%3A23Stephen+Yuskohttp%3A%2F%2Fsmartblogs.com%2F%3Fp%3D30988
The online advertising industry was built around clicks, but it’s time for something new, Facebook’s Brad Smallwood, head of measurement and insights, said at the Interactive Advertising Bureau MIXX Conference & Expo on Monday.
Clicks were the closest the online industry could get to Nielsen’s gross-ratings point for television, but studies have shown that for products that aren’t purchased online, clicks don’t make much sense, Smallwood said.
Facebook’s solution, developed in partnership with Datalogix, “draws that elusive straight line between digital advertising and in-store purchases,” he said.
The tool works by connecting exposure to a Facebook ad with in-store purchasing. It’s a solution that not only demonstrates return on investment but also gives brands an opportunity to markedly improve it, Smallwood said.
Making things better
Nestle marketing chief Tom Buday also spoke as part of Smallwood’s presentation, and he said that anyone who questions whether social media advertising works “misses the point at best, and is … misguided at worst.”
Platforms don’t work or not work, Buday said. ROI is instead related directly with the quality of the message, even more so in an age in which consumers can reject or publicly denounce brand messaging.
Facebook, for its part, studied 50 campaigns using information from Datalogix, and came up with three key takeaways of how to improve campaigns:
Impressions over clicks
Clicks may still matter in some cases, but not for driving in-store sales. Smallwood said that 99% of sales driven by Facebook brand campaigns were from people who saw ads, but never clicked on them.
“Brands should be optimizing to that 99%,” Smallwood said.
Reaching consumers drives ROI
Nestle is working to “maximize impact, social desirability and the potential to share our content, and we’re trying to do it consistently at scale,” Buday said.
Reach, Smallwood said, is as important in online campaigns as it is in television — aiming at a target demographic, and understanding how you fare against that goal, makes for an effective campaign.
“The Facebook ad server … optimizes the delivery of brand campaigns to maximize for reach,” he added.
The “frequency sweet spot”
Campaigns can now determine how many impressions to serve a household to achieve maximum profit, allowing marketers to hit a “frequency sweet spot.” Hitting that sweet spot, and reallocating any extra impressions, led to a 40% increase in ROI, according to Facebook’s study.
“If you’re not doing this, you’re kind of wasting money,” said Smallwood.
Nestle’s Buday described the success of one Facebook campaign, a “Skinny Cow” page that engages fans with brand-centric, interesting conversations. “This does not happen accidentally. … We do it with very, very detailed and specific communications frameworks.”
Nestle’s ability to create successful campaigns depends on data — even at the creative idea phase — and Facebook is now offering data that has previously been unavailable to brands.
“It’s up to us to actually use this data, and to move away from models that don’t … maximize ROI,” Smallwood said.
You can watch the entire presentation on Facebook.
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