Facebook's IPO May Boost ROI For Advertisers

The forthcoming initial public offer will increase pressure on Facebook to monetize traffic more efficiently, a win for all involved.

Facebook’s value is rising in both the eyes of investors and marketers alike. The forthcoming initial public offer will increase pressure on the company to monetize traffic more efficiently.

Right now, retail marketing executives are still learning how advertising on Facebook offers a return on investment in a way that’s different from other types of promotions — as this understanding grows, so will social ad spending.

Based on our client data, 40 to 60 percent of all transactions that start on a Facebook ad end in a different channel. That can make the return on investment in Facebook ads look poorer than it really is.

However, online interaction on Facebook seems to lead to more monetization offline; consumers who interact with brands on Facebook tend to buy their products more frequently and at higher values.

New ad formats will also inspire advertisers to spend more. Sponsored stories is just the beginning, as there’s huge potential in making ads and apps even more inherently social while tapping more of the user data Facebook already has.

Shift In Media Mix

Money for social media ads will continue to come from budgets for ads on TV and print rather than search and display.

Consumers’ behavior when they see ads on Facebook is a lot like when they see ads on TV. They initially respond well and strongly but when they see the same ads again the response rates drop significantly.

Thus, the best-executed marketing strategies on both TV and Facebook have:

  • A short but intense campaign to maximize reach, frequency and word of mouth;
  • A pulsed media buying strategy so consumers are not saturated with the same ads; and
  • Very strong, creative ads that encourage people to look, engage and interact with the brand.
  • Many people use Facebook while they’re watching TV and engage with shows’ brands most while they’re on the air. So, if a brand wants to reach out to an audience of a particular show it should advertise on Facebook, too.

    So, we expect to see more coordinated TV and Facebook campaigns as well as a shift of media dollars away from TV and print to Facebook.

    Guest writer Sid Shah is director of business analytics at Adobe.

    Image courtesy of Shutterstock.