Facebook Educates Advertisers: Forget the Click

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At the ad conference IAB MIXX this week, Facebook laid out its argument to advertisers, based on a recent study it conducted with Datalogix: Clicks are meaningless. The value of online advertising comes from the impression a brand makes, not whether somebody chose to interact with it online. The social network compared Internet ads to television where in-store purchases and branding effectiveness are the name of the game.

Facebook pointed out the research supports the conclusion drawn from a recent Nielsen study, which pointed out that advertisers needed to look beyond traditional web metrics to assess the true value of their impact.

“…There is emerging evidence that brand metrics – which show attitudinal response to online campaigns – can predict offline sales,” Facebook summed up on its blog. “The research further shows that there’s virtually no relationship between click-through rates and brand opinion or offline sales.”

The company studied nearly 50 digital ad campaigns, each selected by the social networks’ Client Counsel, not Facebook, so they weren’t cherry picked to skew results. The study sought to understand whether Facebook’s ads drove sales and what campaigns proved most effective. Researchers walked away with three main lessons.

Impressions are the point, not interaction. About 99 percent of sales generated through online advertising come from people who never clicked on an ad, proof that just because a user doesn’t click through doesn’t mean they weren’t hooked by the brand.

Reach drives revenue. Campaigns that maximized reach had about a 70 percent higher return on investment. It’s a concept TV marketers have operated under for years, but the online world until now had no proof that online ads followed similar laws of advertising physics.

The right message is essential. The study found that reallocating high frequency impressions to viewers seeing too few impressions increases ROI by 40 percent. A “sweet spot of effective frequency” maximizes return on investment.

“These findings demonstrate a clear road map to success for digital marketers, focused on reaching the right consumers at the right frequency,” Facebook concluded. “And while these conclusions might seem familiar to traditional marketers who use TV, they represent a substantial shift from the focus on click-optimization that is more typical of digital campaign planning.”

Of course, Facebook is doing its own branded advertising to the advertisers themselves with this study. The social network has been criticized for having a low click through rate, but it doesn’t take a genius to realize that a brand can stick in the mind even if the viewer does nothing but subconsciously salivate. It does take science to prove it, however, and Facebook practically put it on a billboard.

Facebook’s partnership with Datalogix has raised eyebrows in the tech world for privacy concerns. The partnership is part of the Facebook Exchange, an online system enabling advertisers to bid on ads in real time. Facebook pointed out that the two companies only aggregate hashed data and not individual data on individual users. The data is used to indicate how many people saw a given ad and actually went out and bought the product.