Less than a month ago, the third largest advertiser of USA on Facebook, General Motors announced that it will stop advertising on Facebook because the ads do not result in high return on investment and have proved to be ineffective. However, for some active Facebook advertisers the experience is contrary.
A study conducted by Facebook and ComScore reveals that marketing campaigns on Facebook prompt users to buy products online as well as offline. The study was conducted in the US market.
The findings claim that most leading brands on Facebook achieve a monthly Amplification Ratio of between 0.5 and 2.0, meaning that it extends the reach of its earned media exposure of Fans to Friends of Fans by 50-200 per cent.
“Social media continues to emerge as an important marketing channel and major brand marketers are devoting more time and attention to understanding its impact on consumers,” said Andrew Lipsman, VP of Industry Analysis, ComScore.
“While marketers understand the importance of a channel that now accounts for one in every seven minutes spent online, many are challenged to quantify its effectiveness. The ‘Power of Like’ research sheds new light on how brands are able to deliver earned and paid media at scale, amplify its effects from Fans to Friends of Fans, and understand how exposure to these media can drive the desired consumer behaviors, including online and in-store purchase,” he added.
Users who saw paid ads for another US retailer bought something from the stores' physical locations 16 per cent more often and made an online purchase 56 per cent more frequently, the report reveals. As per the report, within four weeks of exposure, there was a 38 per cent lift in purchase incidence among the exposed group. In terms of the number of users, India is the third-largest market for Facebook with close to 51 million active users. However, India continues to remain a small market from the revenue perspective.
In the fast-growing display advertising market of India, Facebook has been closely competing with other global digital giants such as Google, Yahoo! and Microsoft and has garnered a significant share in the business.
But do advertisements on Facebook have a similar impact on the buying behaviour of the Indian consumers too?
Kanika Mathur, President, Digitas India, who handles digital accounts for some leading advertisers such as Airtel and Samsung explained, “Indian buyers, too, are impacted by advertising on social media platforms. For instance, a large number of Indian consumers are impacted by advertisements and comments on newly launched mobile phones. Today, their buying behaviour is strongly impacted by social media advertisements.”
The Facebook-ComScore report elaborates on a case study of Starbucks consumers. The report claims that users who were exposed to unpaid marketing messages on Facebook about Starbucks bought an item at the coffee chain within four weeks.
For the record, Facebook has over 900 million users globally. As per a recent report of ComScore, Facebook is the leader in the display advertising business in the US with a share of 27.9 per cent in 2011. The social media network surpassed Yahoo! in early 2012.
Some key findings of the report:
• Compared to the control group, Fans of Target were 19 per cent more likely to purchase
• The report showed statistically significant lifts in the incidence of both online and in-store purchase at a 95 per cent confidence level.
• In the fourth week following exposure, the incidence of in-store purchase for the brand was 1.47 per cent, representing a 16 per cent lift vs. the control group’s 1.27 per cent incidence.
• While lower in overall incidence, online purchase behavior saw an even stronger relative lift of 56 per cent from 0.39 per cent to 0.61 per cent incidence.