What’s the value of a like or an ad on Facebook?
It’s a question with implications for merchants of all sizes, as social commerce continues to grow both in popularity and as a means for converting online and offline sales.
Yet as a series of recent reports – and run in with the State Department – show, social commerce’s effectiveness in terms of branding, advertising and ultimately converting on sales has come under question. And that’s especially true when differentiating between online and offline commerce.
As the Washington Examiner noted in this piece from July 2, State Department officials spent $630,000 to earn more likes on Facebook. In terms of sheer numbers, the campaign was a success. The State Department jumped from 100,000 to more than 2 million likes on its pages, and to more than 450,000 likes on its foreign languages pages.
It’s the utility of those likes, though, that’s come into question by the inspector general, who says that only about 2 percent of fans actually engaged with the pages via liking, sharing or commenting.
“Many in the bureau criticize the advertising campaigns as ‘buying fans’ who may have once clicked on an ad or ‘liked’ a photo but have no real interest in the topic and have never engaged further,” the IG said.
And as Marketing Vox points out, the State Department was also “duped” by a change in Facebook’s policy, which now doesn’t let those who “like” a page see that page’s social content feed.
“In essence, it may have had a communications strategy justifying the spend, but Facebook’s policy change removed most of the benefits,” Marketing Vox stated.
The State Department’s case isn’t completely analogous to the commercial world, of course, since the agency isn’t selling a tangible product. When actual goods or services are provided, gaining tangible results is an easier task. But questions over the value derived from Facebook popularity, or ads on the social media platform, apply to merchants and retailers everywhere.
According to an eMarketer report from April, Facebook is actually more successful than many of its social peers in terms of converting ads to online sales: even if the success is modest. The report noted that Facebook enjoyed a 2.6 percent conversion rate in 2012, compared to the 1.1 percent rate enjoyed by Twitter and the 0.9 percent rate with Pinterest.
Facebook also led in revenue per session, at $2.5, average pageviews per session, at 7.0 and hare of sessions at 86 percent. While far behind retail sites, Facebook also proved comparable to brand sites and blogs in terms of influencing purchasing decisions, while Twitter and Pinterest lagged far behind.
In fact, the only area in which Facebook lagged was average order value, as Pinterest($169) bested Facebook ($95), and Twitter ($71) once again brought up the rear.
So while the overall return rates form social commerce may be underwhelming, Facebook is generally leading the pack amongst its peers in terms of conversion to eCommerce.
Yet when it comes to offline sales, the value of a Facebook ad is harder to determine. Last year, Facebook works began working data specialist Datalogix in an attempt to monitor such spending. Datalogix received a $25 million funding round in April of this year.
Others such as Epsilon, Acxiom and BlueKai also play in the space, as TechCrunch noted, which figures to become increasingly competitive.
“Offline purchase data is only going to be worth more as time progresses and mediums like TV and print die out,” TechCrunch noted. “In the long-run, offline purchase data could make online eyeball owners a lot richer.”
A recent Nielsen report praised not Facebook, Twitter, or Pinterest for their effectiveness in online-to-offline conversion, but rather Yelp. According to that study, a whopping 93 percent of the time, Yelp users said they ”occasionally, frequently or always” made a purchase from a local business after using the social site.
So as recent reports suggest, there is value to be found in social media sites and the conversions – both online and offline – they can bring. Exactly what that value is, however, isn’t always so clear.
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