Wednesday, July 25, 2012

Is ROI an irrelevant metric for Facebook ads?


Facebook has said all along that CTRs are irrelevant as a metric for social ads, instead trotting out the line that “you can’t click on a TV ad, but we know that they still work.”
If you were cynical you may think this was a way of masking the fact that people don’t click on Facebook ads in huge numbers.
But should social ads be treated differently to other digital channels such as display ads found on other sites or Google’s PPC ads, which are judged to a varying extent on their CTR?
A recent infographic from Wordstream compared the effectiveness of ads placed on Google and Facebook, highlighting that the average CTR for Facebook ads is 0.051% compared to 0.4% for Google.
But this discrepancy is to be expected, as Google ads are presented when a user is actively searching for information about a particular topic or product while Facebook ads appear when the user is essentially socialising.
Facebook would counter that the longer term impact on brand value is more important and that can’t necessarily be measured in clicks. But does that mean CTR should be ignored?
A new report released by TBG Digital shows that Facebook CTRs in the UK are 0.32%, rising to 0.41% in Germany.
This roughly tallies with a report that Marin Software published in May which set Facebook CTRs at 0.04% in the UK.
However TBG’s report states that Facebook’s Sponsored Story ads, which basically flag up the fact that a friend has liked a brand or product, led to a 53% increase in CTRs.
This indicates that social ads do have a higher resonance with consumers, but the fact that TBG used CTR as a measure of success shows that it is still a relevant metric.


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