Traditional wisdom—and online ad budgets—measure success in clicks. While that may work for ads on Google, Facebook says that focusing on the per-click return isn't the best method for businesses seeking to spread brand awareness. Per-click metrics don't show the "outcomes that happen in the grocery store, in the car dealership, or in the local coffee shop," said Brad Smallwood, Facebook’s director of pricing and measurement, as TechCrunch reported Monday.
Instead, the real value lies in overall impressions, according to Smallwood. Reach and impressions have long formed the backbone of TV advertising, but online ads have tended to favor per-click metrics, a concrete way to know how many people saw an ad. Yet, click-throughs typically make up a tiny 5 percent or less of an ad's overall impression numbers.
Facebook hopes to determine the true value of an ad impression. It wants to know, for example, if Facebook users exposed to a multitude of V8 ads more likely to buy the tomato juice at the store than those who were not.
Facebook thinks so, and it hopes Datalogix's data can prove it. Datalogix says it has sales metrics from more than 100 million U.S. households, 10 billion-plus individual transactions, and more than a trillion dollars' worth of purchases, all obtained by tracking customer loyalty cards issued by retailers.
If Facebook and Datalogix can statistically prove that impressions trump clicks, that will be the social network's ticket to monetizing on mobile platforms.
Digging into the numbers
Facebook claims that in a trial study of 50 brands, the participating companies—all sellers of packaged goods—saw up to a 40 percent increase in ROI if they stopped repeating ads to the same users. Instead, they redistributed ads to appear to users who had seen them less often, distributing repeat impressions more equally.
In the long term, Facebook wants to provide data about the ideal number of impressions for an ad campaign, and it hopes to break the information down to specific campaign types. A new product or service will need more impressions to raise awareness than a well-established one, for example, and the number of impressions needed will likely change based on product type.
What does all this mean for small business owners? In the short term, not too much, since the data mining project is still in its infancy. In the long term, though, it could prove to be a treasure trove of data about ad targeting, especially for companies that sell products at retail.
Datalogix pulls in sales information from a staggering number of purchases. Assuming that Facebook launches the feature in full force down the line (and especially if it includes regional filters), that data should come in handy for fine-tuning your social ad strategy—and deciding whether a Facebook ad campaign is worth the cost of admission.
That’s assuming, of course, that Facebook's theory about the value of impressions holds true under scrutiny.