June 12, 2012

Comscore: Facebook Ads Working

Peter Suciu for redOrbit.com

On Tuesday Facebook rebuffed claims that its advertisements are ineffective. The social network giant, which has seen its stock price fall since its May 18 IPO, responded to the latest criticism with its own research data, showing that most ad campaigns actually earn $3 for every $1 spent.

The new data was released in conjunction with ComScore in a report that shows how the social network´s ads  actually benefit companies including Best Buy, Starbucks and Target. The report, released on Tuesday and titled “The Power of Like 2: How Social Media Works” looked at paid advertising on Facebook as well as earned media exposure. The latter in essence is the impact of mentions of the brands made by Facebook users in such things as status updates and likes — which would seem only marginally tied to actual advertisements on the social networking site, and yet the report does tie it back to the advertising efforts.

This report is also the follow-up of a paper, “The Power of Like: How Brands Research and Influence Fans Through Social Media Marketing,” which was published last July.

Facebook maintains that its research shows that 70 percent of its ad campaigns actually get advertisers a return of three times what they paid, and in nearly half of the campaigns, Facebook gets companies $5 for every $1.

The report from ComScore suggested that people who “Like” specific retailers — in one example Target - on Facebook actually bought from the company 21 percent more frequently, and that people who saw unpaid marketing messages from Starbucks made purchases from over the course of four weeks 38 percent more often than those who didn´t see the messages.

“This provides some strong evidence that Facebook can be an effective marketing channel,” said Andrew Lipsman, vice president of industry analysis at ComScore, to Bloomberg on Tuesday. “These are strong results.”

But not everyone is buying the findings.

“The jury´s still out on the effectiveness of Facebook Ads,” Josh Crandall, principal analyst at Netpop Research told redOrbit. “Our analysis is inconclusive at this point, but it seems that consumers are more focused on the news stream than the right column of the screen.”

It is also important to note that Facebook is a ComScore client, and the social network has hired the research firm to measure its advertising effectiveness. And according to another study, Facebook´s advertising isn´t seen as being as effective.

Reuters released the finding of its own poll earlier this month, which showed that 80 of Facebook users said the site's ads had never influenced them. The Reuters/Ipsos poll showed that four out of five Facebook users haven´t bought a product or service as a result of direct paid advertising or even from comments made on the social networking site.

Yet ComScore contends that fans — those consumers who click a button that they like a certain brand or product — tend to outspend others for that particular brand.

Given that Facebook is looking to prove that it has a value to retailers it will likely continue to tweak its efforts.

“Facebook is still developing its ad model to see what sticks,” added Crandall.