The Changing Face of Advertising: An Experiment with Facebook Ads

The vocalization of social media supporters has become more and more prominent over time. “It’s the savior of advertising,” some say. “It allows us to more effectively target and sell stuff,” others say. A less vocal group are the social media naysayers: “Social media is nothing but a bubble,” these people claim, “it’ll crash in no time!”

So, who’s right?

Are the social media advocates right? Is social media really the advertising platform of the future? Or maybe the traditional crowd is in the green, and social media is a nothing but a blip that will inevitably burst.

To determine the benefits of social media advertising I took Facebook Ads to the chopping board. With a multi-thousand dollar budget, I ran an experiment. How did it hold up?

According to the Ad Contrarian blog, the average CTR of all Facebook ads is a paltry 0.05% (meaning, on a random Facebook ad, only 5 in 10,000 people would click). This assumption–along with a few more said by national account executives and social media experts at the L2 Facebook Clinic–would be scrutinized.

Some assumptions tested:

• The acquisition per fan on Facebook Ads is about $1 (meaning, if you want 10,000 new fans and do not push it organically, you should spend $10,000 dollars!)
• The average CTR for a Facebook Ads flight is 0.05%
• Ads grow stale quickly, so run them over a short period of time
• You need Facebook Ads to have a successful page presence

The ads ran for an established Facebook fan page with a few thousand fans. Before the ads, I recorded the fan numbers every day at 11 am or 1 pm to get a solid base reading for average follower growth per 24 hours.  Additionally, I recorded two separate weeks to make sure the growth one week wasn’t an anomaly caused by abnormally high traffic.

Similarly, I recorded the numbers for our fan growth during the Facebook Ads run.  We started the ad flight at 10 am on 4/19, and we ended it at 11:45 pm on 4/21.

Here’s a chart with the amount of fans at a specific time, before and after the ads ran:

As you can see, we posted much higher growth with our ad run.  We saw about a 0.9% increase day-to-day without the ads running, but with the ads running with saw a 3.1% increase in fans (triple the amount we normally would!).  Here’s a graph below charting the differences in growth:

Furthermore, these are the granular numbers while we were running the ads campaign.  As you can see, we were achieving the same increase in followers in 8 hours with the ads on as we were in 24 hours without running the ads.  So, we were acquiring new fans for about $0.87 each—a bit under Facebook’s average (outlined above), but still expensive.

To accomplish these numbers, we ran five ads with recommended CPCs.  This is what the ad looked like after 7 hours in:

As mentioned, the average CTR for all ads across Facebook is 0.05% (yup, that low).  7 hours in, we were are a 0.15% CTR.  The social percentage, or the percentage of people who saw an ad that at least one of their friends liked, was nearly 70%.  The most successful ads were targeted to a relatively small niche: those people who had friends connected to one of our other fan pages, but were not connected themselves.  The ad targeted to a larger demographic didn’t fair nearly as well.  Although counter-intuitive, we were seeing more impressions and clicks by targeting less people (i.e. being more specific with our targeting).

Although still successful, over the next 65 hours, we saw the numbers decrease rapidly (which proves the point that Facebook ads get stale very, very quickly). These are the results from the ad 60 hours later, after the ad flight had completed:

So, in summary, the things learned:

• Cost per fan acquisition is less than Facebook’s claimed average: average is $1 per fan, we managed to average $0.87 per fan during this ad flight
• We finished about 5x higher than the average CTR of all Facebook ads combined; probably due to the niche targeting in the ads
• Facebook ads go stale extremely quickly; over a 60 hour time span we saw our social percentage drop 20 points, and our CTR drop 66%.

QOD: What are your thoughts about online advertising?