Saturday, November 17, 2012

Facebook to marketers: We'll show your ROI

Q: Which one of the following is not a communication tool?

  1. Email
  2. Facebook
  3. Skype
  4. Google Search
Answer is obvious.  Anyone who used the tools would identify Google Search.  And that has been the biggest challenge that Facebook has been dealing with.  Most users think of Facebook as communication tool, much like email and instant messaging.  Facebook users visit to stay in touch with friends and keep up with what their friends are up to.

Hence advertising on Facebook did not work as well as Google Search.  People are looking for something when they visit  It's the perfect opportunity to pitch related products that might solve the people's problem.

Marketers have realized this problem.  And they have been asking the question to Facebook.  Marketers ask 'Facebook is good for listening to what customer has to say about us, but how well does advertising work on Facebook?'

It makes sense.  When you are handing leaflets out to people at social gathering, it's right to question how effective your hand-out effort is going to be.

Burden is on Facebook to prove that they are effective advertisement platform in addition to being a social communication platform.  Facebook's latest attempt to answer this question is conversion measurement tool.

Here's the idea.  Facebook wants to prove their ads ROI by reporting how many people bought the product after clicking on the ads posted on Facebook or participating third party sites.  If people became aware of the product and ended up buying at later time, Facebook is saying there are values in posting Facebook ads.

The secret ingredient in this report is tying the product website's customer information like email, phone number, and address with Facebook user information.  By matching anonymized user data, Facebook wants to show exactly what percentage of clicks got converted into buys.  With 1 billion user data Facebook is becoming the internet user identity clearinghouse.

The question for Facebook is whether it will work well enough for marketers to give them a second try.  But there is a bigger question for all Facebook users.  When does Facebook become web activity tracking network from a social communication network?

It's a question each Facebook user has to answer.

There may be nothing that you are expecting on Facebook.
But Facebook wants to make sure there are marketers who send you promoted posts.

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