Why Facebook Advertising Is Effective, and How to Do It Right

This past May, General Motors decided to pull its paid advertising campaigns from Facebook, withdrawing an estimated ten million dollars of ad spend from the social media platform. Naturally, the decision sparked frenzied controversy over the efficiency of advertising through Facebook and its associated ROI. General Motors concluded that the service had failed to deliver on its promise of consumer engagement, claiming that its paid advertisements had little effect on consumers. In the wake of the controversy, Facebook responded by releasing a study this month that may have GM rethinking their decision.

Not surprisingly, the study, conducted by comScore and Facebook, reveals that advertising on Facebook actually does work. In fact, it works really well. Titled “The Power of Like 2: How Social Media Marketing Works,” the study claims that Facebook ads—including paid ones—do indeed drive lifts in purchase behavior.

Outlined in the study is a basic framework for delivering a brand’s message at scale in order to maximize ROI; Facebook provides brands the unique marketing opportunity of simultaneously leveraging a combination of paid, earned, and owned media. Here’s how it works in a nutshell:

  • Brands use paid media (e.g., ads, promoted brand stories) in order to drive traffic to their Brand Page
  • The Brand Page, owned media, serves as a platform through which marketing communications are executed to reach Fans and Friends of Fans
  • Consequent fan reach, earned media, occurs in the News Feed and other sections of the website
  • Further paid media, such as Sponsored Stories, can then be used to supplement these communications and encourage brand resonance

Done correctly, the study claims that the result is “a virtuous cycle of brand impact.” The key here is that successful marketing on Facebook is about more than simply accruing massive amounts of Fans. The study argues that brands can leverage the framework described above by focusing on three key dimensions in order to deliver against their broader goals: fan reach, engagement, and amplification.

Fan reach involves the delivery of a relevant brand message to Facebook users. This usually occurs in the News Feed. Facebook uses an algorithm to optimize what its users see in their News Feeds, which takes into account brand relevance based on engagement with the message.

Engagement involves interaction with a brand through liking, sharing, posting, or checking-in. Engagement is critical, as it boosts amplification of the message.

Amplification is the idea that once a Fan is reached by a brand, he or she becomes a channel for further exposure to others. The result is viral delivery of a brand message from the Fan to Friends of the Fan. Amplification, the study argues, is the most important of the three dimensions.

The study goes on to report through various examples that exposure to both paid and earned media—whether independent of or in conjunction with each other—induces higher spending behavior among consumers across both online and in-store channels. The key take-away then is that brands should work towards discovering an optimal balance of both paid and earned media.

So was General Motors justified in pulling their paid media from Facebook? Probably not. GM chose to focus on only one side of the twofold story that is social marketing. Although the GM Brand Page has over 390 thousand “Likes,” they may be leaving money on the table by assuming such a metric is a sufficient measure of marketing success. The study makes it clear that supplementing an earned media campaign with a paid one is the most effective way to leverage the Facebook marketing framework, and that doing so will definitely pay off.

For all our readers who have engaged with both paid and earned media on Facebook, let us know what conclusions you’ve come to in the comments below.

The full Whitepaper is available through comScore here: http://www.comscore.com/Press_Events/Presentations_Whitepapers/2012/The_Power_of_Like_2-How_Social_Marketing_Works

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