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June 12, 2012

Facebook Ads Work and the Numbers Prove it, Says comScore

By Steve Anderson, Contributing TMCnet Writer

A recent report released from comScore, a consulting firm, says that marketing on Facebook (News - Alert) of all types plays a role in customer decision making and yields increased purchases. The report, however, makes mention of multiple types of marketing, so just how important the paid advertising components actually are is somewhat in doubt.

comScore's (News - Alert) report "The Power of Like 2: How Social Media Works", took a look at both paid advertising on Facebook as well as what's called "earned media exposure", referring to brand mentions made on Facebook posts and status updates directly by users. Based on large brands' experiences like Target and Best Buy (News - Alert), it follows up an earlier report entitled "The Power of Like: How Brands Reach and Influence Fans Through Social Media Marketing".

Marketing on Facebook has taken a lot of hits recently; with GM pulling its paid advertising out of Facebook to instead focus on the earned media exposure part, and a recent Reuters (News - Alert) / Ipsos poll stating that four out of five Facebook users haven't bought a single thing as a result of anything they've seen on Facebook. But the comScore report brings a lot of credibility to the concept of Facebook marketing by means of its sheer methodology.

comScore, and by extension Facebook, studied two separate groups. One group was made up of Target (News - Alert) fans, and their friends, who saw the earned media exposure advertising about Target, with Target's updates and similar mentions in news feeds and such. The second group had no fans of Target and saw no messages, but the two groups had identical purchase behavior in Target stores. The study ran for four weeks, and afterward, the fans who saw messages from Target were 19 percent more likely to buy from Target. Their friends were 27 percent more likely. A similar study was conducted around paid advertising, and yielded a 16 percent increase in likelihood of purchase. Facebook then conducted its own study showing that 70 percent of advertising campaigns yielded a return of at least three times what was spent, and nearly half showed a return of at least five to one.

The methodology, however, had some unusual quirks. A comScore spokesman, when asked about the earned media exposure testing, said he didn't know just how much messaging the groups were exposed to, an important part of any study. Since only those who actually expressed a like for Target were given messages in the first place, an issue of bias may be involved rather than effectiveness of the advertising. The results even bear some support for GM's plan, as the focus on earned media exposure provided better results than the paid advertising did; 19 percent to 16 percent.

But with Facebook shares still on the decline from their IPO levels--they're up slightly from yesterday's close, nearly a dollar up at last report--Facebook needs this kind of information to get its advertisers back in the fold and keep its revenue streams going.

Edited by Brooke Neuman
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