Facebook’s Advertising Fallacy: That It Works!
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By Pam Danziger
Fewer than one-third of U.S. consumers are influenced by social media when making a purchase decision. That was an eye-opening statistic from a new consumer survey conduct among 1,512 U.S. online consumers by Splashlight, a visual content creation company.
That pretty much aligned with findings from a 2016 study by Lithium Technologies, a digital engagement platform. In their survey, conducted by Harris Polls, among 2,000 U.S. consumers, they found that all consumers, but most especially some 74% of digitally-native millennial and GenZ consumers, object to being targeted commercially by brands in their social media feeds. Lithium reports, “In fact, 56% of these digital natives report cutting back or actually stopping use of social media sites entirely due to advertisements in their news feed.”
Social media advertising is booming, reaching $31 billion in 2016, according to HootSuite and Facebook is the biggest and baddest social media platform of them all, raking in a remarkable $26.8 billion in advertising last year. But I wondered if Facebook, in particular, was delivering on its promise of more eyes, more engagement and ultimately more sales. Or whether as these recent studies show, consumers are pushing back against the increasing commercialization of their Facebook social media experiences.
Now that Facebook has defined a new mission, “Give people the power to build community and bring the world closer together,” is it was giving the same power to businesses, particularly small businesses with modest advertising budgets but big needs to drive engagement and sales to their businesses?
What I discovered is that Facebook makes big advertising promises that most small businesses take on faith, not measurable return on investment. But as the saying goes, “Hope is not a strategy,” and the only thing that will make those FB advertising efforts pull customers in the end is to make a big investment in time, and often money, to achieve success.
In my research I found numerous people quoting dramatic ROI results thanks to Facebook, like this from ConversionPoint Technologies for one of their direct-to-consumer clients, “They are currently seeing about a 200% ROI on their spend,” said Amy Chilla. Yet all the impressive ROI stats I found originated from social media agencies where companies invest big time to get equally big results.
But I found many more stories like this one, from Point Two Design Group, that offers maps as wall art, “Facebook ads are becoming increasingly expensive for a mediocre delivery of service. We were purchasing highly-targeted ads through a professional marketing service that specializes in Facebook ads with high ROI. Yes, we were able to triple our sales,” said John Owen de Lancie, company co-founder and lead designer. “But Facebook was taking a 40% cut of our gross sales. We realized that if we just stopped running the ads, we would actually take home more money.”
And another, “A lot of clicks, many requests and only 4% conversion rate,” and another “I tried paid advertising with Facebook, but it had limited effectiveness. For the thousands [of people] that the ads were targeted to, I got very few responses.”
While Facebook gives the illusion of being easy to use by small businesses, the reality is that Facebook advertising is targeted to capturing the ad spend of big brands employing highly-trained consultants who know how to tweak the system and make it work. For small businesses, it takes enormous effort to learn how to use it effectively, then an on-going commitment to keep the momentum growing.
Matt Schroeder, owner of Shelly Cove, a website that sells decorative t-shirts with the #SaveTheTurtles messaging, said “Facebook is a BEAST to fully understand, but with time and effort, it can be done to effectively market almost any product.” Here are some ideas to help small businesses tame the Facebook “beast.”
Don’t interrupt…Do interest
People are increasingly resentful of having their social time interrupted by a commercial message, as the Lithium survey finds, and this trend is only going to grow. The difference is why the consumer is visiting Facebook as opposed to the business’ own website, Amazon or Google. “Social media is a place for us to connect with our friends, not be attacked by advertisements,” said a 23-year old woman in the Lithium study.
Sid Bharath, VP of Growth at Thinkific, an online training platform, advises, “Unlike with Google Search, where people are actively looking for solutions, on FB you need to take into account that they may not even be aware they have a problem to solve, so you’ll need to start there instead of pushing them straight to the sale.”
To succeed with Facebook advertising, small businesses must bridge the gap between what they are trying to sell and what the potential customer is interested in. People’s inbred curiosity can be a FB advertisers’ greatest tool.
That’s what serial entrepreneur Gary Nealon used to drive $25 million in sales to his RTA Cabinet Store, offering kitchen cabinets online. His stealth FB strategy is to create Facebook pages focused on the customers’ interests – from gardening to coffee to cooking – and posting engaging content that invites likes and engagement. Then he leverages that interest to lead inexorably to the RTA website when the consumer is in search mode.
For Nealon’s interest-leading stealth strategy some of those interests are obvious, i.e. cooking and coffee, but a surprising one is golf, which he uncovered with the next key to success in Facebook advertising….
Pinpoint your audience
Success using Facebook advertising, for big and small businesses, depends on understanding the customers you hope to attract. “Brands will only be able to see results, if they listen to the data,” cautions Jason Nesbitt, VP of media and agency operations at Strike Social. “This statement may sound obvious, but I find it surprising how tough this is for some brands to embrace. Oftentimes, brands are stuck in a rut of assuming who their customers are.”
Facebook offers limitless options to target the right audience, said Michael Lewis, of Active Web Group. But businesses must go beyond mere demographics and location to their interests and that is where Facebook can help the savvy user.
The way Gary Nealon discovered the lifestyle interests of his customers was by using Facebook’s Custom Audience feature. He was able to load his company’s customer file into Facebook to map those customers to target a lookalike audience.
“The biggest Facebook mistake you can make is to underutilize all that FB has to offer,” said Eric Anthony, founder of StreamingObserver, a streaming news service. “Target the exact audience you want, and Facebook will make sure that who you want to see your posts, see your posts.” But the onus rests on the skillful use of those tools.
“Facebook ads are tough to learn,” reiterates Matt Schroeder. “Simply because of the amount of depth involved and to fully use the capabilities that FB ads offer. To make effective Facebook ads, you need to understand your audience, find a way to effectively duplicate that audience on Facebook, test different facets of that audience and retarget groups of people who are likely to buy.”
Define your objectives clearly
Surely the promise of driving more sales to one’s business is a desirable goal for Facebook advertising, but FB is primarily a social medium, rather than a sales channel, so its real power lies in its ability to build connections with customers and potential customers, not necessarily sales.
Steve Wimmer, senior marketing manager at Gold Eagle, a manufacturer of CPG products that used Facebook advertising to drive sales to Amazon, said, “We’ve done a decent amount of Facebook ads but the effectiveness varies widely,” he said, noting that his company’s FB ads only convert to Amazon sales with heavy discounting.
“There is an entire business model built around direct selling on Facebook, and some people are crushing it, but that’s not us. We were not able to break even on a single campaign across a dozen SKUs and a 5-digit ad spend,” he said. So the company shifted its goals from making sales to focus on improving its products rankings on Amazon. “The FB traffic converts, due to deep discounting, and that velocity drives our products higher in the ranks which yields more organic sales and a net profit,” he explains.
Wimmer’s experience underscores the research-based findings from both Splashlight and Lithium. “People are on Amazon to shop, so they buy things. People on Facebook are looking to unwind and connect and therefore are less likely to initiate a purchase,” he said.
In launching a Facebook advertising initiative, success depends upon recognizing why those people are there in the first place: to virtually meet and greet friends, get the news, have a chuckle and, as Wimmer says, unwind. They aren’t looking to buy something, and while they may not rebel against the occasional commercial intrusion during their Facebook time, the Lithium research findings suggests that they increasingly will do so.
Businesses therefore need to measure their ROI on FB advertising using a broader scale than just making a sale, but in making a good first impression to potential customers down the road. Facebook offers the chance to get your story into the feeds of billions of people, but you have to make the most of that split second of time you have their attention. To do that, put their needs and interests first before your own.
More about Pam Danziger: Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer segment. She is president of Unity Marketing, a boutique marketing consulting firm she founded in 1992.
As founder of Unity Marketing, Pam leads with research to provide brands with actionable insights into the minds of their most profitable customers. She is the author of five books including a recent mini-book, What Do HENRY’s Want?, explores the changing face of America’s consumer marketplace. Pam is frequently called on to share new insights with audiences and business leaders all over the world. Contact her at email@example.com.
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