Why Facebook Ads Are Undervalued By 800%

Facebook advertising is even more powerful than previously thought.

Advertising efficacy is usually assessed using the “last click,” meaning that the point of interaction right before the conversion is considered.  But this methodology has become outmoded in the context on Facebook advertising because people simply aren’t in buying phase when playing around on the social network, making it highly unlikely that a brand advertising on the site will get an immediate conversion.
Most Facebook ad clicks lead to a conversion at a later time and through a different channel. But last click analysis would have inaccurately attributed these conversions to last channel in the purchase path.
Quite often this shows search as the beneficiary because when people are ready to buy something online, what lazier way is there to navigate to your chosen brand website than by quickly searching for the site?
My experience of analyzing advertisers’ Facebook advertising conversions shows that between five and eight times as many sales from Facebook happen on a first click basis rather than last click.
Last click valuation refers to focusing on the advertising channel that a customer most recently interacted with before converting to a sale. Let’s instead consider Facebook to be the first click in a sequence of interactions that ultimately leads to a conversion on any channel.
For higher consideration purchases, where the length of time to conversion can be several days or weeks, this type of analysis is particularly important.
A typical example is the travel industry where we are seeing more than 30 percent of conversions take longer than 7 days from the first visit to final conversion. This has a big impact on measurement.
The result for travel is that awareness creating forms of advertising such as Facebook are often either the first click in this process or an assisting click. In the samples we analysed Facebook was the first click in the transaction over 3.5 times more than when it was the last click. This ratio increases up to six for assists.
When compared to other channels this is one of the highest ratios — showing the power of Facebook’s influence on other channels. The main beneficiary being paid search where more than 40 percent of transactions converted on price per click where Facebook was an assisting click.
Another interesting statistic we uncovered was that the average order value increased with the longer paths to conversion. This makes sense since the bigger the purchase, the more
thought goes into it. This adds another dimension to the importance of accurate tracking andattribution, particularly if last click (as a method) is undervaluing the order values as well as the transactions.
Grant Muckle is the managing director of I Spy Labs.

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Google Leads Investment In Facebook Gamer Kabam

If you play Facebook games, then you are familiar with Kabam games. The company is the maker of Kingdoms of Camelot, Dragon of Atlantis and Glory of Rome. The company receives $85 million in a financing round led by Google’s venture arm, helping the startup expand in Asia, hire developers and make acquisitions.

The investment is also being co-led by Pinnacle Ventures, and now values Kabam at about $500 million. The Bay Area company has raised $125 million since it started five years ago as a sports and social media group, but transformed into creator of social games. Kabam was formerly called Watercooler, and changed name last year. The size of its personnel has shot from 25 to 400 since 2010.
Click here to read more on Social Times.

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PastPost Recalls What You Did On Facebook Last Year

Can’t remember what you did yesterday? Yeah, we can’t either. Well, a new application intends to fix that.

PastPosts, created by tech veterans Jonathan Wegener, Matt Raoul and Benny Wong, sends users a daily email — if you didn’t log in every day last year, you only get messages on days that correspond to when you’d used Facebook in the prior year.
The daily missive comes in an easy-to-read format showing wall comments, posted photos, status updates, and more from your personal Facebook archives.
Wegener said the idea came from an app the guys created for Foursquare a few months ago called 4SquareAnd7YearsAgo that does pretty much the same thing.
“The response to that product has been really positive and thousands of people have signed up and told us they love it,” he said in an interview. “PastPosts is the next logical extension, bringing that same proven concept to the largest personal data creation platform, Facebook.”
“More philosophically, the interesting trend here is personal data exhaust — as we use web services, we’re constantly leaving behind a trail of digital information. We’re helping people re-experience that content as a daily email a year after the fact,” Wegener said.
He brings up a good point. This service is not only a cool idea that can help remind you of what your life was like a year ago, it serves as a reminder that just because an old post isn’t showing up on your wall anymore doesn’t mean it isn’t there.

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Ex-MySpace Exec Launching Facebook Alternative

This is probably the most far-fetched pitch I’ve heard yet: a social network billing itself as an alternative to Facebook, created by MySpace alumni.

MySpace, for the few of you that don’t know, literally was the Facebook alternative until Facebook beat them at their own game.
Now there are plenty of social applications looking to fill gaps in Facebook’s experience. There are even a few that are trying to use privacy as the key selling point, just as Altly is.
However, most of these startups never received traction and thus never received an investment of any significant size. Altly appears to be the exception, starting off with a round of funding from some influential investors.
I can understand where the investors are coming from: Use Facebook’s branding to build a brand off of being “the alternative.” Unfortunately, it’s a horrible idea.
Rather than actually launching anything, the company is making its big debut with a long blog post which is nothing more then a rant about why Facebook sucks.
Dmitry Shapiro, the former MySpace executive behind the project, has so many connected friends that he was actually able to convince some of them to give him money on the basis of hatred against Facebook.
Shapiro’s blog post ranting about why Facebook sucks is so long that he needed to post a follow-up summary at the end of it. Rather than posting his summary, I’ve decided to take the liberty to translate what he’s really saying — I’m going to alternate between quoting him and then commenting:

Many people are friends with their co-workers, their bosses, business partners, and casual acquaintances. In fact, we feel pressured to become friends with all kinds of people that we would not normally have frequent communications with.

Dmitry clearly gave in to the pressure and now his life has suffered because of it. Like he rants:

Facebook makes it difficult to configure privacy settings and to target messages towards specific groups of friends, therefore encouraging us to broadcast our activity to every one of our friends. And since many of us have our share permissions set to friends and friends of friends, a Facebook default, we are inadvertently sharing not only with our friends but also anyone that is friends with them. With the average Facebook member having 130 friends (Source: Facebook statistics May 2011), sharing with friends of friend” means that you are not just sharing with your 130 friends but with 16,900 people.

In other words, “I’m mad because I accidentally broadcasted out something that I didn’t want one of my friends to see. I really have no idea to use Facebook’s privacy settings and frankly I could have made $1,000 in the time it would have taken me to configure them.” He also says:

To add to the complexity of understanding who sees our personal information and interactions, Facebook has a long history of changing privacy settings, without first alerting users, and exposing our private information in ways that we did not intend.

Get mad! Facebook is screwing you over and you have to put up with it. Do you really want to live life being pressured by Facebook when you are sitting in front of your computer? Hell no. I’m leaving and you should too. Who’s coming with me?!  Nobody? Okay, well how about this:

Mark Zuckerberg, Facebook’s founder and chief executive officer, claims that Facebook is simply creating a tool that facilitates our natural movement away from privacy. What he fails to acknowledge is that Facebook EXERTS its power over how we communicate and is FORCING social norms to change.

Mark Zuckerberg is telling you how to communicate. Are you going to put up with that?!

A recent CNN story titled “Young job-seekers hiding their Facebook pages” says that “A recent survey commissioned by Microsoft found that 70 percent of recruiters and hiring managers in the United States have rejected an applicant based on information they found online.”

People should be able to act like stupid idiots and it should have no repercussions on them! Don’t you want to act stupid? I know I do! Come join me on Altly where you can act stupid all the time and nobody will see it! (We know the real reason nobody will see it: nobody will be on it.)

Facebook, by forcing our communications to be more and more public, creates an environment where they can allow advertisers to better target advertising to us. Targeting of ads online is not new, but the amount of information that is collected by Facebook, and then exposed to advertisers for targeting purposes is DRAMATICALLY beyond that of any service that has ever existed.

Look, I know that MySpace used your information to target ads to you . But seriously, folks, Facebook has much more data than MySpace ever did and it’s far better structured! (Damn, Facebook was smart.) Do you really want Facebook knowing all that stuff about you?!

There is clearly nothing wrong with Facebook making money, as all business has to do. What IS clearly wrong is when our privacy, our personal information, our digital lives are being subjugated for the sake of profit, without us having any meaningful capability to opt out, or even know the extent of such activity.

Have you ever tried deleting your Facebook account? Go and try it! Your account is never disappearing and Facebook is going to keep your information even if you don’t want it to.
In fact, they’re going to sneak under your bed and when you are sleeping they are going to steal your wallet. (Someone says, “Really?”) Yes, Really … Facebook would steal your wallet, and your lover. You better hide yo’ kids and yo’ wife, because Facebook is coming after you!!
Now that you know that the Facebook boogeyman is coming for you, don’t you want an alternative? Hell yeah, you do. Well at Altly, we’ve got the solution that will make your life less miserable. Get this, we honor your privacy! That’s right, we are going to let you control who can see the 10 million photos, status updates, messages, comments, likes, wall posts, and all the virtual cows you purchased in FarmVille.
When will it launch? I have no idea because building a system this complex required me to get $1 million before I even started building it. How will we make money? We don’t! We are here to make your life better and that’s all you need to know.

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SURVEY: 2 In 3 Small Businesses Are On Facebook

Roughly than two-thirds of small business owners have a presence on Facebook.

That comes from a survey of 1,132 small business owners by Webs.com.
Webs.com found that 68.6 percent, or 591 respondents, use Facebook the most for their business.
Over three quarters of the survey respondents plan to increase their use of social media this year, while almost one in five plan to maintain the same amount of effort they did in 2010.
And 25.3 percent said they update social media several times a day, while 16.7 percent said they posted once a day.
When asked whether they see social media as a viable way to communicate with their customers, 62.1 percent responded “definitely,” while 34.3 percent said “sometimes,” and 3.7 percent said “not at all.”
However, 40.5 percent of the surveyed small business owners said that social media has either met or exceeded their expectations; some 42.8 percent said that it only somewhat met their expectations, while 16.6 said the experience hasn’t lived up to their expectations at all.
It seems like small businesses are only just beginning to hit their stride on Facebook. Readers, what insights do you have based on these numbers?

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D.C. Facebook Employees Get A New Boss

Joel Kaplan, a former staff member under George W. Bush, will join Facebook and lead the Washington D.C. office.

Previously an executive vice president at Energy Future Holdings, Kaplan has very strong ties to the Republican party.
Facebook is in need of growing the company’s D.C. efforts as they want to “demonstrate to policy makers that [they] are industry leaders in privacy, data security and safety,” the company said in a press release.
Evelyn Rusli of the New York Times is calling this a “significant coup.” Given the increasing scrutiny surrounding Facebook’s privacy practices, it’s critical that they continue to add staff members to increase their influence within the beltway.
It also sounds like a great career change for Joel Kaplan. According to the Times, he’s leaving a private equity firm that’s currently “sitting on billions of dollars of losses.” Sounds like the perfect time to jump ship and head to a company which is sitting on billions of dollars in new revenue!
In addition to Joel Kaplan, Facebook has hired another Republican, Myriah Jordan, who “recently served as general counsel to Senator Richard Burr, Republican of North Carolina,” the Times said.
I’m sure we’ll be hearing much more about the D.C. office in the coming months as it attempts to convince Congress that Facebook’s privacy practices sufficiently protect users.

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How To Succeed At Facebook Advertising

Gordmans opened two new stores in Minneapolis and promoted them with several Facebook campaigns, working with BlitzLocal.com.
They created two different types of campaigns: one advertising an event, and another advertising a tab. Both were targeted at the city level. Because the scope was so narrow, tests included adding the city name as part of the ad image itself. Overall though, these ads definitely helped in garnering more visitors.

Sponsored Stories Outperformed Regular Facebook Ads

There are two types of sponsored stories – a sponsored like, which targets friends of your fans, and a Sponsored post, which shows messages to existing fans. Gordmans ran a highly targeted sponsored like ad:

• within the regions where the retailer has its 68 retail locations
• female demographic
• keywords related to bargain-hunting

While most Facebook ads are lucky to get a 0.05 percent clickthrough rate, this campaign drove a .4 percent CTR on the first day, which fell by 45 percent within 48 hours to .2 percent.
Generally, anything at or above 0.1 percent is highly optimized. Sponsored likes also cut the cost per click by 70 percent and cost per fan by 83 percent overall. That’s like getting a 77 percent discount off from Facebook.

In two days, this ad drove 515 clicks for $76 and gained 418 new fans. That works out to 18 cents per fan and a click-to-conversion rate of 81 percent.
Most brands out there are getting fans at between $2 and $10, the former via self-serve and the latter via premium ads. $0.18 for a new fan, one that is giving your brand permission to talk to them, is a great cost of acquisition.
Gordmans found the key to success with Facebook advertising is leveraging the endorsement of their existing fans. People are far more likely to click on events that are associated with what their friends are doing.

Highly Engaged Content Equals Positive Fan Growth

The creative refresh demand of social requires you to be able to iterate much quicker, to refresh your content and creative much more quickly than other types of online marketing.  Gordmans knew they needed to rotate ads to keep them fresh. Facebook ads are typically served to the same users multiple times, often in the same day, so they quickly tune-out repeat ads.
Gordmans also used the Webtrends Apps platform to develop fresh and engaging applications rewarding customers for engaging through fans-only promotions.
While apps have about a 10-to-14 day shelf life before people start to drop off in interaction, ads have around three-to-five days before you see a dramatic drop off. But because Gordmans’ wall postings resonated well with the brand, only five percent of fans have unsubscribed from the page.

Geo-Targeting Works

The average human attention span is about 30 seconds. In fact, successful Facebook advertisers try to relate images to their audience, for example by serving an image of a local landmark or in Gordmans case including the city name is another way to garner more attention.


By injecting the city name in the ad image in conjunction with the geo-targeting, the ads were more appealing and relevant.
Gordmans found that geo-targeted ads with the city name on the ad image performed better than the ads without it. With geo-targeted ads that offered fans the opportunity to check in and claim deals, Gordmans was able to drive customers to their brick and mortar stores.

More Earned Media At A Cheaper Rate

By measuring the number of impressions the Facebook page generated over time, then estimating a $5 cost per impression, we can determine the earned media value of the brand.
Earned media represents impressions generated for free, from efforts outside of the traditional ad spend, which includes viral and word-of-mouth publicity such as likes and shares.

This type of exposure has a high quality because  it leverages the trust of friends. With over 38 million impressions over a period of 79 days, at the aforementioned $5 CPM, we get $190,000 earned media value for that time period, which represents how much ad spend would have been required to achieve the same number of impressions via paid media.
Extended out over a year’s time, the value is $879,000 per year, or $4.5 million in perpetuity, assuming we’ve applied a 20 percent discount rate to the projection of earned media over time.

What’s Next?

Now in the works is a new Facebook places strategy— to drive check-ins, shares, and coupons.
Gordmans has had a lot of success in running Google Adwords campaigns with a focus on letting users redeem coupons. Running similar campaigns on Facebook will reinforce the Google campaigns, and with Facebook’s social twist tied into the coupon redemption strategy, they expect to see excellent results.

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