How Facebook measures offline sales
March 20, 2013 | Russ Martin | Comments
Marketers on Facebook need to look past the number of “likes” their brand has and consider whether their campaigns are achieving offline return on investment.
That’s according to Fred Leach, one of Facebook’s ad measurement experts, who spoke at Adobe Summit in Salt Lake City, Utah earlier this month. Leach provided marketers with tips on how to achieve ROI on Facebook and also spoke with Marketing about how the social network measures offline actions and sales.
Leach said he encourages the marketers he works with to set success metrics before launching Facebook campaigns and for most businesses that means driving offline actions like choosing a product off a shelf, going to a movie or test driving a car.
“We harken back to some traditional metrics that we’ve found are highly correlated with those business goals and they are things like reach – how many people did you reach, were they the right people and when you reached those people did you persuade them in any way,” he said. “Ultimately we’re really focused on whether marketing efforts actually drive sales.”
Leach explained Facebook works with a company called Datalogix to pair data about ads on Facebook with actual purchase data. By running campaigns through Datalogix’s offline measurement model, Facebook is able to demonstrate to marketers how effective their campaigns were – with the goal of getting brands to drop more dollars on its ad platform.
Datalogix splits consumers into two groups – those who saw ads and those who didn’t – and then tests things like the number of times those consumers purchased a product, how much money they spent on it and whether they’d purchased it prior to the test period.
Much of the work Facebook has done with Datalogix has been the result of counseling the social network has received from its “Creative Council” of marketers who advise the company on its ad products, Leach said.
“They’ve told us about the gaps they have in understanding consumers and we’re working with them to fill those gaps as well,” he said. “Across the board, from understanding the drivers of ROI, understanding creative and understanding consumers, that group has been really powerful for us.”
Another metric Leach said marketers should avoid on Facebook is click through rates. While clicks demonstrate a response to advertising and may be effective in paid search, he said Facebook’s internal research has shown they don’t drive ROI on Facebook. Clicks on a campaign that are not intended to be direct response, for campaigns aimed at generating demand and building brand awareness, actually don’t correlate with offline sales.
“If you’re trying to measure the value of advertising on social by just using clicks, you might as well be tossing a coin,” he said. “You’re not going to be able to capture the value.”