“You’re not on Facebook?”
Asked no customer ever since we ditched the Big F back in 2015. At the time, we approached our decision from a business perspective, carefully analyzing the return on investment. The same way we do for marketing and advertising; the way any company should evaluate how it allocates its resources. The math just didn’t add up.
It’s adding up for FB though…
“But smart marketers and agencies have been in on a secret for years: The actual sales revenue advertisers generate from Facebook ads is much smaller than what Facebook or their agencies report back to them,” Lirtsman writes.
“If a brand’s ultimate goal is revenue, then it’s critical we optimize toward actual incremental revenue and not let Facebook take tens of billions of dollars’ worth of credit for existing or inevitable sales,” Lirtsman continues. “The question that must be asked isn’t whether or not Facebook is driving sales, but rather how much of that revenue is incremental.”
This didn’t happen out of the blue. Facebook was clearly strategic in their approach, leveraging view-through (rather than click-through) reporting to justify ad results.
“However, view-throughs don’t acknowledge that customers typically see multiple ads prior to purchase and that one additional exposure has a marginal impact on a consumer’s ultimate purchase decision,” Lirtsman explains.
They also prioritized advertising to a brand’s existing customers.
“Acquiring new customers costs five to 25 times more than selling to existing ones, meaning there’s little incentive for brands and agencies to drive incremental sales when they can take home a profitable reporting win that requires much less work,” Lirtsman notes. So Facebook got credit for the “easy wins,” making it easier for brands to justify their ad spend on the platform.
What this did was position Facebook advertising as a final driver of sales, rather than a top-of-funnel awareness channel, like other display ads. Lirtsman believes companies would be better served to approach Facebook ads “the same way they do display ads, TV commercials and physical billboards as essential parts of their entire purchase journey.”
There’s nothing magical about Facebook ads; they’ve been manipulated by a very shrewd algorithm to deliver the metrics a brand is looking for. As Lirtsman says, “In the immediate, brands need to start viewing Facebook ad spend with both eyes open and avoid being seduced by inflated conversion metrics.”