Facebook is preparing to launch a new system for measuring the impact of advertising on its platform at the same time as allowing external agencies to buy premium ad slots in the news feed for the first time.
The moves are critical to Facebook’s wider attempt to bolster its advertising business and refocus towards bigger brands, at a time when investors in the company that listed last week have been concerned about slower revenue growth. General Motors’ high-profile decision to stop buying ads on Facebook was a lightning rod for simmering disquiet among advertisers, many of whom have yet to figure out whether their investment in the social networking site is generating real results in sales or brand perception.
Facebook has demonstrated a new measurement system to members of its “Client Council”, an advisory group of ad agency heads and chief marketing officers who meet several times a year.
One client council member, David Jones, chief executive of agency group Havas, was confident that Facebook would act to salve the concerns about calculating return on investment (ROI) expressed by GM and others. “What I have seen Facebook working on in ROI is very compelling,” Mr Jones said. “They know they need to prove it. You will see that come out in the future.”
Keith Weed, Unilever’s chief marketing officer and another Facebook adviser, said he is “very happy” with the results his company’s brands gained from the social network, adding Facebook was making “good progress” on calculating its clients’ ROI.
One idea under discussion is for Facebook to meld clients’ data with its own to better measure the impact of activity on its site, according to one person familiar with its thinking. For example, email addresses of a TV company’s customers could be melded with Facebook’s to track whether a subscriber renews his contract after spending more time on its fan page on the site. This could, however, raise privacy concerns, a key area of tension as Facebook seeks to balance the interests of its investors with those of its users.
Facebook is also preparing to take down the walls between its own sales force that sells ads directly to brands, and the outside firms that use automated systems to buy ads on the site on behalf of marketers, according to two people briefed on the plans. Previously, those outside companies did not have access to broker the so-called premium ads that appeared within a user’s “News Feed” updates or on mobile, which can command higher rates than the standard ads that appear along the border of a page.
In recent days, Facebook sent an email to those outside ad firms to alert them that it was opening up access to those premium ads in the coming weeks, the people said.
Such agencies already tap into Facebook’s ad platform to buy its cheaper ads but opening up its higher-rate ads would free up capacity among its employees to focus on consulting over engagement and measurement, one person said.
A second person said Facebook also has started working more closely with those outside agencies in recent months to help the firms develop new tools to get the most of their ad spending on the site, offering the ability to optimise ads based on the people who signal that they “Like” the ad, for instance.
At the same time, several of those outside firms have developed their own metrics to help marketers better understand whether a person buys a product or changes their perception about a brand after a person clicks on a Facebook ad.
Facebook said: “We’re always working with our clients to help them better understand how their campaigns on Facebook are performing, but we have no further details to share.”
Facebook has previously talked about the need to move beyond clicks and “Likes” as the main way to measure the effectiveness of its campaigns. The company is looking to emulate concepts from the tried-and-tested TV advertising world to improve its measurement system, with brand perception and real-world sales as key metrics.
“The challenge is that every client measures performance differently,” said Simon Mansell, chief executive of TBG Digital, a social marketing firm.
“Facebook provides a lot of demographic information about who is engaging with the page and for how long. But it’s about translating that into sales.”
