Career News 24/7: MARKETING MONDAYS: Facebook Exec Confesses: '99% Of Sales Come From People Who Don't Interact With Ads'

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Tech

Monday, October 1, 2012

Facebook is trying to close the loop between ad exposure on the social network and real-life buying habits.

For years, it has been difficult to prove that someone seeing an ad on Facebook (or anywhere else for that matter) became more likely to buy the product.

Brad Smallwood, Facebook's director of Monetization Analytics, expanded on what the social network's new partnership with Datalogix means for marketers at the IAB Mixx Conference during Advertising Week.

The partnership will allow Facebook clients to match user data with Datalogix sales data, and draw conclusions about whether ads on Facebook actually increased purchases. (Datalogix purchased data on 70 million American households.)

"The outcomes that happen in the grocery store, at the car dealership," Smallwood said of the initiative that "for the first time ever that draws that elusive straight line from ad exposure to purchase."

One overall takeaway from the data — which Smallwood said doesn't identify consumers by name — is clear: Unless you're dealing with a specific type of campaign (i.e. direct online sales) the answer isn't direct response or clicks.

According to Smallwood, "99 percent of sales come from people who don't interact with ads. They consume the message and then when they go to the store they purchase."

Other important takeaways include:

Of Facebook's study that measured 50 campaigns, 70 percent saw a 3x greater return on ad spend, and 49 percent saw a 5x or greater return on ad spend.
"Reach is a crucial driver," Smallwood said. And digital campaigns that managed to find the proper reach were 70 percent more effective at driving purchases than ROI.
Smallwood said that marketers see a 40 percent increase in ROI by finding the "optimal frequency point." He compared finding the frequency "sweet spot" in social to other platforms: "In TV you don't want to send 50 impressions to one person, but you also don't want to send one."

Although some privacy groups are asking the FTC to investigate whether this partnership violates consumers' privacy, Smallwood portrayed the new initiative as a "move away from the models that don't maximize."

"We at Facebook are dedicated to help you understand stuff like that."

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