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Summary:

A study of Black Friday cyber-shopping said that social media advertising was a big bust with few people buying things in response to an ad from Facebook. The story is very different if you use other metrics to define “responded.”

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They say Facebook has an ad problem because, unlike Google, the social network is like a party — and no one wants to leave a party to go shopping. This theory got a boost this week when an IBM study of Black Friday suggested that social media’s effect on cyber-shopping was nearly zilch.

D’oh! This is precisely the sort of thing that retailers who have just laid out a million bucks for Facebook or Twitter ads don’t want to hear. But here’s the study, showing that Facebook ads only led to 0.68 percent of shoppers making an online purchase on Black Friday (and Twitter ads produced no sales at all!) :

Fortunately for retailers (and Facebook), there is more to the story. According to a media intelligence service, Aggregated Knowledge (AK), Facebook ads have a big effect on online purchase decisions — leading to a 51 percent increase in conversions (the term for when people buy or do something in response to an ad). AK also says Facebook ads are a way for brands to reach big target audiences they wouldn’t reach elsewhere online, and that “conversion rates” are 72 percent cheaper than for other online channels.

AK knows this because it works with large social media advertisers to collect data about Facebook user behavior. This data collection is possible because Facebook recently provided e-tailers with tools that will let them track users to see who responded to an ad. (Yes, there’s a creepy factor here though major sites like Amazon and Google have long used similar tools).

AK’s numbers are good news for Facebook but the social network will still have to persuade advertisers and the media to accept them. The challenge lies in getting ad types to accept the notion of “multitouch attribution” rather than “last touch.” In plain English, this means that conversions should be counted even if the occur hours or days after you leave Facebook — for instance, you see a bath salts ad on Facebook, surf dozens of other websites, and then buy those bath salts the next day. (TechCrunch’s Josh Constine has made the same point well here).

Seen from this lens, Facebook’s “party” problem isn’t so bad. After all, we discover lots of new desires at a party — that girl’s dress, that guy’s cowboy hat, those delicious cocktail wienies — that we go out and buy for ourselves later on.

(Image by Ariwasabi via Shutterstock)

  1. Facebook grew by hundreds of millions of people last year and their referral contribution decreased from a .69% in 2011 down to .68% in 2012. Social as Percent of sales decreased from .53% down to .34%. With the hundreds of MILLIONS of new users and still a decrease. As big as facebook is, and as much they tout their platform, i have to say these numbers are somewhat pathetic if they believe theyre the next amazon or google.

    If their ads are truly pushing purchases then their “last touch” referrals wouldnt be so low. If their ads were truly effective we’d see a higher percentage due to impulse purchases, but facebook wants us to believe that people see their ads and make all their purchases at such a late date that it cant be directly tied back to them. But of course facebook is trying spin all these numbers and try to take credit these sales.

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  2. “After all, we discover lots of new desires at a party — that girl’s dress, that guy’s cowboy hat, those delicious cocktail wienies — that we go out and buy for ourselves later on.”

    Thst is precisely the problem – you notice what OTHERS have – and not some display ads here and there. Facebook needs to monetize by entering the real “feed” – they tried this once (beacon) and that backfired big time.

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  3. Procera Networks Thursday, November 29, 2012

    Very interesting article. If you are into broadband analytics around the Thanksgiving holiday weekend, we just published an informal report to our Analytics in Motion blog analyzing Black Friday and Cyber Monday web traffic among the top retail websites; what kind of an impact that traffic had on networks, and visualizing how traffic spiked one one major retailers website during one specific time. Cool stuff– link is below!

    http://aim.proceranetworks.com/2012/11/27/holiday-broadband-analytics-shopping-shopping-shopping/

    We publish bandwidth consumption analytics to this page often, so check back regularly and see what else we come up with!

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