A year ago, advertisers running ads on Facebook expressed the following results: low CPMs, atrocious click-through rates (CTRs), and virtually no conversion rates. This reminds me of the old quip, "But other than that, how was the play Mrs. Lincoln?"
Now, one year later, Facebook has reached the tipping point in the second half of 2010.
Impressive Facebook Advertising Results
We recently ran a campaign for our client (Intel) on paid search and on Facebook. The campaign was designed to drive visitors to a specific landing page designed specifically for the campaign.
The campaign was run in seven countries: Argentina, Indonesia, Malaysia, Mexico, Philippines, Thailand, and the U.S.
In the past, we would get low CTRs on decent, but not great impression counts. The CTR rates were "display like" -- in the .02 to .04 percent range -- compared to search results in the 2 to 5 percent range. Essentially, a two-order of magnitude difference.
Facebook would deliver more impressions, but not so much to overcome the CTRs and deliver noticeable, significant inventory.
With this recent campaign, we saw 100 times the impressions delivered on Facebook as we saw delivered through paid search on Google, Yahoo, and Bing during the campaign run. The CTRs were still a two-order of magnitude below the search CTRs -- essentially, for the same $1, the same number of clicks were delivered. We haven't seen this before.
Facebook is a Growing, Global Force
The key point, however, is that the inventory available on Facebook ishuge, its global, and its growing. On a dollar-for-dollar basis, Facebook and Google are performing the same on this particular campaign.
However, when the budget was ramped up by 10 times, the statistics didn't degrade for Facebook in any way. For 10 times the spend, we delivered 10 times the results -- with no end in sight.
With Google performance often gated by the ability of a brand to build brand awareness and drive visitors to the search engine, Facebook seems to have accelerated growth in its inventory. Facebook is both the top of the funnel and the bottom.
And, it isn't just the U.S. As stated above, we saw results in seven countries. Facebook was consistently strong -- and, in fact, even stronger within APAC countries.
"We are seeing Facebook moving from a fan page to an effective advertising vehicle for promoting our campaigns and programs," according to Corey Carrillo, senior manager of paid search at Intel Corp., which has done several promotions and campaigns on Facebook -- and performance has been ramping up throughout the year. "We expect to be using Facebook as a consistent part of our overall media mix in the coming year."
Where Should the Budget Come From to Pay for Facebook Campaigns?
Up until now, social media investments remain small enough that they are usually financed through incremental media budgets and not really "taken" from any established media. In 2011, however, our clients are planning on major budget increases for Facebook advertising.
My estimates are that advertisers are planning to spend between 10 and 20 percent of their pay-per-click (PPC) budgets on Facebook next year. So if a firm has a $10 million PPC budget, they are planning on $1 million to $2 million for Facebook throughout 2011.
Note: This budget is not coming out of PPC. It's coming from display or offline budgets, or as an incremental override to the overall digital budget, specifically increasing the shift toward digital more aggressively.
Facebook Has Passed the Tipping Point
Search is still performing. Facebook is performing too -- better than display and comparable to search.
This isn't an indemnification of paid search. Rather, it's a recognition of the powerhouse that is Facebook, which is delivering truly big time inventory, at comparable pricing to PPC, and with display-like CTRs.