In their recently released initial public offering, Facebook mentions that advertisers may view some of their social ads as unproven. Although advertising spend has significantly grown on Facebook, the savvy marketer must stay conscious of advertising performance trends. While paid search has established trends with CPC pricing models on Google and Bing, the paid social trends on Facebook are more mysterious and harder to define.
New Formats with New Concerns
In early February 2012, Facebook filed for an IPO of $5 billion. With so much positive publicity over the past few years, Facebook outwardly seems to be an unstoppable force posed to match or overtake other internet giants such as Google and Bing. While the IPO highlighted many positive aspects of Facebook’s business model (including nearly $3.7 billion in profit), it also mentions that advertisers may view some of Facebook’s social ads as unproven. Also discussed was how an increase in mobile viewership could adversely affect ad revenue due to minimal revenue currently generated through mobile devices.1 When Social Media Week commenced in New York City a few weeks ago, advertising experts warned attendees of the unproven nature of Facebook’s advertising platform. In addition to unproven new ad formats and placements, ad fatigue that hampers the effectiveness of a large portion of Facebook’s advertisements gives way to understated concern.
What is Facebook Fatigue?
According to PC Magazine, the average Facebook user “spends almost eight hours on the site during any given any month”,2 which is nearly four times longer than the average Google user. This is supremely attractive to both Facebook itself and advertisers looking to buy media. Who wouldn’t want their advertisement to be seen from a targeted consumer at such a vast length of time? The caveat, however, is this longer exposure period tends to lead to lost interest in the ad at a much quicker rate than standard paid search ads on Google and Bing. While Facebook allows advertisers to target users on a more finite level, the double-edged sword is the advertisement being shown to a much smaller base of people who are seeing the ad at a much greater frequency. Thusly, users can become significantly more disillusioned with the advertisement after seeing it multiple times. The more targeted the audience (for example, targeting to women over 25 who are married and live in New York), the more likely a user will see the same ad multiple times. If the user didn’t click the first five times he or she was served an ad, it is unlikely the ad will be clicked on during subsequent impressions. As a result, advertisements lose their effectiveness and can lessen the reach of a brand.
Vary Copy Solution
How can advertisers combat Facebook ad fatigue? The most important step is to vary ad copy and images as frequently as possible. Facebook ads tend to perform best right after they launch due to particulars within the Facebook ad system and that ads are freshest when first served to the user. Re-launching ads with new copy and images, even if they are the same ads, tricks the system into thinking the ads are brand new. As a long-term solution, varying ad copy and images frequently will keep ads fresh. As a short-term solution, creating supplementary interest targeting will create new opportunities for ads to serve and raise click through rates.
CPC v. CPM Strategy
A more experimental strategy to combat Facebook fatigue is the use of a CPM bidding model instead of a CPC bidding model. With a CPC bidding model, Facebook is only paid by the advertiser if the user actually clicks the ad. If the click through rate is particularly low for a certain ad, the CPC will rise incrementally to the point where it is no longer cost efficient for the advertiser. While Facebook used to be a cheaper option for advertisers as opposed to Google and Bing, the demand for media space and brand visibility has substantially increased cost. In Q2 2011, the average CPC on Facebook increased over 54%, similar to the 25% increase in Q1 2011.3 These numbers only figure to grow as 2012 continues and more global users join the service.
As CPCs and demand continue to rise, substantial increases in spend and decreases in efficiency may seem inevitable to the advertiser. However, as an alternative to CPC bidding, CPM bidding has distinct advantages within Facebook. While CPM bidding has fallen out of favor within paid search, CPM still has a market within paid social. By optimizing creatives to maximize the click through rate, CPCs should be lower in a CPM bidding model then they would be in a CPC bidding model. The negative of a CPM bidding model, similar to paid search, is the risk of losing budget in a much shorter time span. CPM bidding should also be combined with changes in ad copy and images as well. Neither CPC nor CPM bidding is officially advocated one over the other by Facebook and methods should change depending upon the goal of the campaign. In general, however, utilizing CPM bidding is becoming an effective practice to combat against Facebook fatigue.
In addition to ad fatigue, there are signs that Facebook users are generally becoming more fatigued with the service. While the total number of global users is on the rise, there are indications extracted from Facebook’s ad tool that the social media giant is losing users.4 In the meantime, as long as total number of Facebook users increases or keeps at the same levels globally, advertisers and users alike will continue to flock to Facebook for the latest gossip, news, timeline pictures, and much more. Continually changing ad copy and experimenting with bidding models are important strategies for advertisers to spend money effectively in the world’s largest social network.