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How Big Brands Use Facebook to Measure ROI

March 08, 2018 - By Ginna Hall, Senior Writer, Visual IQ

How Big Brands Use Facebook to Measure ROI

Advertisers have gradually shifted their budgets away from traditional media (e.g. TV, newspapers and magazines) toward online ads, with spend on social media, online video and search increasing 15% year-over-year on average.

Among online platforms, Facebook offers advertisers an unparalleled opportunity. With its massive scale and the depth of information it has about each user, it allows brands to deliver contextually relevant ads across devices that engage each individual.

This makes Facebook advertising essential for most brands. According to Statista, Facebook now receives 18% of global online advertising revenue and 7% of total media advertising revenue.

As more brands invest their marketing budgets in digital advertising in general, and Facebook in particular, they look for insights for how to maximize their investments.

"It's important to understand with as much precision as possible how many extra dollars in booking value we bring to the business with each extra dollar we spend on a platform," Airbnb's director of data science, Alok Gupta, told Business Insider. "It has become an increasing priority because we have a finite marketing budget and want to maximize ROI."

Increasingly, big brands are using lift tests to run ads across different audience segments and using the results to shift budgets to higher performing media. These tests use control groups to identify winners and losers in particular campaigns or across an entire channel. Facebook saw a 40% increase in the number of lift tests advertisers ran in 2017 compared with 2016.

A recent article in Business Insider, Big marketers like Airbnb and eBay are using Facebook to see which ads are a waste of money, described the benefits of these tests.

Reporter Tanya Dua wrote: “Facebook is pushing the concept of measuring advertising based on its ability to drive business outcomes as an industry-wide initiative along with multiple third-party researchers.”

While many big brands such as Airbnb and Ebay have relied on data to drive marketing, testing how well different ads perform with different audiences and on different platforms is a recent strategy.

Here are three insights from the article:

1. Lift Tests Help Justify Marketing Spend

Not only are brands seeking to identify incremental gains using test and control groups, they’re using this information to shift budgets to ads or tactics that are performing best.

By comparing results from ads served to distinct audience segments, many big brands have been able to calculate lifts in ad performance and justify marketing spend on specific campaigns or channels.

2. Facebook Testing is Powerful

Ad testing on Facebook yields uniquely powerful insights due to its rich data sets on over two billion users worldwide and its ability to deliver different messages to different users.

Facebook has encouraged the ad industry to focus on how incremental ad spend can boost business outcomes, and positions itself as a leader in this. The social media giant can arguably boast that because it has more data than any other platform, it has a greater ability to test and prove ad effectiveness.

3. Partnerships Reveal Attribution Insights

Until recently, Facebook’s third-party tracking limitations prevented brands from accessing its vast stores of impression data.  This restriction was lifted when Facebook announced measurement partnerships with select third-party vendors.

Through its Lift API, Facebook has partnered with Nielsen Catalina to help measure offline sales from Facebook ads, and vendors like Visual IQ to help measure multi-touch attribution. These partnerships allow brands to gain a more complete picture of conversion activity than they get when they only focus on last touch -- for example the final click that led to a purchase.

By combining Facebook’s people-based insights with the multi-touch attribution capabilities within the Nielsen Visual IQ Marketing Intelligence platform, marketers can now quantify the true effectiveness and ROI of their Facebook spend, and understand how the social platform works in combination with other channels and tactics to drive specific KPIs for each type of audience.​

Being more scientific about how different ad tactics perform can help "you identify the best scheme to match your specific customer behaviors,” said Tony Flanery-Rye, the senior director of global growth analytics at eBay.

Read the complete article on Business Insider.

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