Current online measurement is “outdated”. The industry is “lagging behind”. Clicks alone are useless, basically, if Facebook's latest measurement development is anything to go by.
The social network has come up with a new way to measure conversion, by taking into account causation. It claims that the industry standard of measuring clicks and how they correlate with conversion is “outdated” and that its new way to measure conversion lift is a “scientifically proven” way to determine business results from ads across the Facebook network.
Facebook's ad revenue is rapidly increasing and for it to keep going in that direction, agencies and advertisers need to know what impact the ads are having. Facebook needs to be able to show that it has a direct relation to sales. So how can you measure between the offline and the online world?
Clicks, Facebook says, are a poor, outdated way to measure conversion. Conversion lift is a way to measure incremental sales that are caused by people seeing ads, but not necessarily clicking on them.
It claims it an determine additional sales caused just by seeing ads on Facebook. Unsurprisingly, because click through rates are traditionally low – more people see ads than ever click on them. Facebook wants to prove the causation between seeing an ad and making a purchase much like in other media.
It all comes down to attribution modelling – a complex aspect for marketers to nail and one that has traditionally given credit to the last click.
Click through rates are traditionally low. A 2013 study by Business Insider found that click through rates on Facebook were as low as 0.03% for some categories, creeping up to 0.92%. Facebook was unable to provide a comparative figure today.
Facebook says the conversion lift approach helps marketers address measurement challenges such as the “over-reliance on the value of clicks, outdated technology and Ineffective testing methods”. It is also encouraging advertisers to take it up for ads that run elsewhere online – not just on its platform.
In a blog post today, Facebook said: “Online really started with search and clicks - cut to now where display, social make up online, too, and yet measurement hasn't caught up - marketers still often use clicks to measure all of their online media. But, clicks don't correlate to in-store sales.”
It cites Datalogix studies that show 90% of people who saw a Facebook ad and went on to purchase in-store never clicked on an ad.
It creates a test group of people who see the ad and a control group who don't and in post campaign analysis determines sales made by the test group – but unrelated to clicks. Conversion lift works by applying conversion and Customer Audience pixels to ads, and using CRM and point of sale data from advertisers. It them compares the conversion rates between the two groups.
In Australia, Facebook is using Open Colleges as a case study to push how conversion life helps marketers understand the impact of their ads. It was the first brand in Australia to use it but there are a number of other executions currently in market across all vertical sectors.
Open Colleges runs Facebook link ads on mobile and desktop, using a lookalike audience to target prospective students, and drives them to an enquiry form on its website. Leads are then followed up by phone. It used a conversion pixel on its website to track and used Facebook's conversion lift tool.
It wanted to boost admissions enquires and see how Facebook ads influenced both online and offline enquires. In 10 days between 25 June and 4 July 2014, it claims to have seen:
- 95% lift in conversion rate for website enquiries
- 12% lift in offline sales
- 2.4x return on ad spend
- 23% lower cost per acquisition than what the last click model indicated
Kevin Lynch, chief marketing officer, Open Colleges, said: “Conversions can take time, especially when making a decision to invest in your future and enroll in a course. For the first time, we were able to see exactly the effect our investment in Facebook Ads had on enrollments - even if someone didn’t click on an ad. We now know exactly which Facebook Ads are helping us enroll more students. By capturing more extensive data, we can make more informed business decisions.”
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop me a line at rosiebaker@yaffa.com.au
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