What Facebook’s IPO Means For Social Advertising ROI

With Facebook’s IPO buzzing about lately, Facebook value is not only rising in the eyes of investors, but for marketers, as well. From an Internet marketing perspective we could see some real added value with the forthcoming IPO, as it will increase pressure on Facebook to monetize traffic more efficiently.

Retail marketing executives are still in the early days of understanding how advertising on Facebook can be applied on a strategic level that aligns with business objectives, ultimately resulting in a positive, measurable return on advertising spend. Social spending is very new when compared to more traditional SEM/Paid Search done primarily through Google, and the strategy certainly differs in a few big ways, each having their own clear objectives.

As an average, 40-60% of all transactions that originate from a Facebook ad will end in a different channel. When analyzing the data, it can make the return on spend within the social network look lower than it really is.

However, considering a full circle strategy, online interaction on Facebook has also led to more monetization offline;  consumer interaction with brands on Facebook is likely to result in more frequent product purchasing and at higher values.

New, innovative ad formats will also influence advertisers in their decision to increase spend. Facebook pushing out Sponsored stories is an initial example of this; however there is unfathomable potential in creating ads and apps that are inherently social, leveraging even more user data that Facebook already has.

The Media Mix Is Shifting

It’s a fact, money for social media based ads will continue to be extracted from existing media budgets such as print and TV rather than negatively impacting search and display.

Considering consumer behaviour when viewing social ads on Facebook, the response is much like when they see ads on TV. There’s a positive initial response, however when presented with the same ads again, the response rates tend to drop significantly.

Therefore, the most efficient marketing strategy for both Facebook and TV have:

  • A brief but powerful campaign designed around maximizing reach, increasing frequency and word of mouth;
  • Strategically planned pulse media buys to eliminate ad saturation for consumers;
  • Powerful, creative ads that will draw attention, increasing engagement and interaction with the brand.

The application of Facebook and TV can’t be ignored, either. Most people use Facebook while watching TV and tend to engage most in relation to the show while it’s live. If a TV brand wanted to reach out to an audience and increase engagement and buzz online, it would be wise to advertise on Facebook. In 2012 we’ll be seeing a much more coordinated effort between Facebook campaigns and TV, especially as media spend continues to shift away from TV and print to social media platforms, with Facebook taking the lead.

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