Facebook Advertising Strategy

Facebook Advertising
How addressable are Facebook Audiences?

Millenium Consulting Services America has managed over
700 display ads in the last three years, and we work closely
with a variety of data providers and ad exchanges to figure out
the best targeting available to advertisers and agencies. When
it comes to comparing the availability of the biggest sets of
targeting data, age and gender, Facebook wins hands down.

Wilma Colon Ariza
8/25/2011

2 Facebook Advertising

Table of Contents

How Addressable are Facebook Audiences ? .............................................................................................. 3
Here’s a chart that shows these figures graphically. ............................................................................... 5
Do “Likes” and “Interests” Targeting Improve Performance ...................................................................... 5
New Age of Critical Mass Marketing ........................................................................................................... 8
Here are a couple of examples of what these may look like: .................................................................. 9
Making Sponsored Stories More Engaging ............................................................................................... 12
CONTACT INFORMATION ......................................................................................................................... 13

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2011 Millenium Consulting Services of America © All Rights Reserved


How Addressable are Facebook Audiences ?

The circles above roughly represent the sizes of U.S. Facebook audiences addressable by
the various targeting criteria available to advertisers. Working from the outside in, we
have gender, age, relationship status, education, and workplace.

As you can see, just about everyone on Facebook is reachable by gender and age criteria,
while only very few people are reachable by workplace. More interesting than the
absolute numbers, though, is why the circles above are roughly concentric. Information
3 on Facebook is sticky; the more a user shares one thing, no matter what it is, the more
likely that user is to share other things.



For example, a user who shares information
about their workplace on Facebook is 24%
more likely to share a relationship status than
an average Facebook user. More broadly,
women have higher propensity to share
information than men, and younger users
have a higher propensity to share than older
users. In fact, a 14 year-old is twice as likely as
a 45 year-old to LIKE something on Facebook.

Facebook Wins Time and Time Again in ‘Targetability’ Comparison
with Traditional Display Advertising

Millenium Consulting Services America has managed over 700 display ads in the
last three years, and we work closely with a variety of data providers and ad exchanges
to figure out the best targeting available to advertisers and agencies. When it comes to
comparing the availability of the biggest sets of targeting data, age and gender,
Facebook wins by a country mile.

The US total internet audience is about 215 million people, according to comScore
(July 2011 dataset). At best, via third-party data one can see age and gender estimates
on 40% of that audience, or about 86 million Americans. Quoting comScore data, if
you compare that range to Facebook’s 162.1 million users x 95% = 154.0 million users.

Facebook wins by a staggering 79%!
Please note that the accuracy of data provided by third parties
like TargusINFO, BlueKai, eXelate and so on is probably
weaker but certainly no better than that of Facebook’s.
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Here’s a chart that shows these figures graphically.

Do “Likes” and “Interests” Targeting Improve Performance

Facebook advertisers have tremendous flexibility when it comes to targeting their ads.
This can be tough to navigate for both newcomers and for seasoned Facebook buyers:
with so many options, it is often difficult to make decisions. Facebook Likes & Interests
targeting lets advertisers proactively target users who have expressed interest in certain
objects, categories, products, pages, or brands. This leads to a very straightforward
question: does targeting Likes & Interests on Facebook improve campaign performance?

Looking at all Facebook campaigns that have been planned and executed through
Millenium Consulting Services of America in the past year, we find that
campaigns that include Likes & Interests targeting perform significantly better than
campaigns that do not include Likes & Interests targeting. Specifically, the average
click-through rates of interest-targeted campaigns were 45% higher than the average
click-through rates of non-interest-targeted campaigns; and those clicks, on average,
5 were 19% less expensive to the advertisers.



Does this mean that every single advertiser should allocate huge
swaths of their budget to Likes & Interests strategies on Facebook?

Well, not necessarily. In order to get a clearer sense of how Likes & Interests targeting
can affect Facebook Ads campaign performance for an individual advertiser, we filtered
our data for advertisers who 1) ran both interest-targeted campaigns and non-interest-
targeted campaigns through MCSA 2) delivered at least 100,000 impressions to each of
these campaign types, and 3) saw no significant volume discrepancy between the
interested-targeted campaigns and the non-interest-targeted campaigns.

Among these advertisers, 52 percent saw better CTRs using Likes & Interests targeting;
only 36 percent saw lower CPCs with Likes & Interests targeting. But in these middling
numbers lies a very important insight: when Likes & Interests targeting does well, it
does extremely well; when Likes & Interests targeting does not do well, it just barely
underperforms non-interest-targeted campaigns.

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On the chart below, we graphed the relative (log) CTR performance of interested-
targeted campaigns to non-interest-targeted campaigns (x-axis), against the relative
(log) CPC performance (Y-axis). Advertisers in the right half of the graph saw better
CTRs in their interest-targeted campaigns; advertisers in the bottom half of the graph
saw cheaper CPCs in their interest-targeted campaigns.

First, note the general and expected correlation between CTR and CPC: the more likely a
user to click your ad, the less you have to pay for that click. But more interestingly, note
how much more dispersed the CTR outperformers (right half) are than the CTR
underperformers (left half): successfully implementing Likes & Interests targeting
makes it much more likely for your campaign to ride the wave of internal Facebook
optimization to ten cent clicks.

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New Age of Critical Mass Marketing

I believe Facebook’s Sponsored Stories are a novel (and to be fair, perhaps not yet
entirely polished as a product) new form of “critical-mass” based marketing where for
the first time in modern marketing, sequential exposure to smaller audience groups may
get the chance to trump simultaneous mass reach in terms of brand impact. I’ll explain
what I mean, and I’ll begin by looking at television and online advertising.

Online advertising has always struggled to deliver large buckets of reach to advertisers,
with campaigns usually having to be split across a number of advertising networks or
exchanges (aggregating thousands of smaller sites), large general interest sites/networks
like AOL, Yahoo! and MSN and content sites like ESPN or Weather Channel. The
number, size, and placement of ads on each of these sites varies considerably – few sites
are able to deliver a single, consistent advertising experience for an online advertiser
where they know the exact parameters of the creative execution.

There are some exceptions, such as the front page of Yahoo!, MSN or YouTube, where
prices start at $250k and up per day, but more importantly, due to their scarcity they are
booked up to a year in advance. In contrast, television advertising delivers sizeable
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audiences weekly in well-accepted (and highly interruptive ~effective!) formats. A
negative side effect of this “fractured reach” is the large administrative cost component
that results for most broad online advertising campaigns.



Despite its large audience, Facebook has a very broad range of targeting options
available to advertisers leading to its own brand of highly fractured reach. If you are a
user with a high-value “interest” (like “marketing” or “seo” or “kiteboarding”, it seems)
you will see a LOT of the same kinds of ads.
Recently, Facebook added 3 new types of Sponsored Stories for advertisers to use – Page
post like story, App used & game played story, and Domain story. Each addition revolves
around the main premise behind Sponsored Stories – to focus on creating engaging and
sharable content.

Sponsored Stories allow marketers a way to promote and heighten brand awareness
around activities that happen throughout the News Feed. Companies can choose to take
certain user actions such as Likes, Checkins, actions within custom Applications
and Page posts, and feature them in the column on the right side of the News Feed.
Sponsored Stories get best placement and appear above standard Facebook Ads. They
are social by definition and thus drive higher engagement with users

Here are a couple of examples of what these may look like:

In the left-hand sponsored story case above, one of my friends played a game on
Facebook. In the other case, three of them did. A sponsored story that has three friends
doing something is much more effective at encouraging someone to check something
out than one that sports just a single friend. According to psychologist and persuasion
expert, Dr. Robert Cialdini, critical mass of social proof can occur at lower absolute
levels on social networks like Facebook (meaning it takes fewer people showing a
concentrated interest in something online vs. offline, to push us to pay attention or
respond in kind):

See full referenced interview at http://www.mischacoster.com/2010-10/psychology/interview-dr-robert-
cialdini-on-social-media-influence-with-audio/
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Actually, I think Social Media requires a lower breaking point than offline media,
because they incorporate the concept of similarity in ways that offline media often do
not. In Social Media we know that the people in our network share our interests, share
our background. That’s how we selected them to be in our networks (and how they
selected us to follow). And that similarity feature allows smaller numbers of individuals
to still be a breaking point because “There are a lot of people like me who are doing
this”. They don’t have to be as many people as dissimilar others. So actually, I think
Social Media provides a lower breakpoint.

Another way to think about CRITICAL MASS might be: if I had only $1,000 to spend on
a guerilla marketing promotion and wanted to get as much buzz as possible nationwide,
would it make more sense for me to spend 1/100th of that money ($10!) in 100 different
cities, or to spend all of it in one city, perhaps in one well-trafficked neighborhood with
the idea that I could call a few reporters and then do enough that the buzz created would
spread nationally via newspapers, blogs and other influencers?

Coming back to Sponsored Stories once more, with the right analysis under our
belt, we might decide that the “Avocado Eaters” group would be a great place to start,
and then move from there to the union of our friends of fans (or posters, or game
players) group and NASCAR enthusiasts, building critical mass in these overlapping
markets which would get larger and larger.
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There are three important factors to consider here:

 first, the likelihood of multiple-likes per friend of a fan in that subgroup;
 second. the overlap of that subgroup with the next subgroup;
 and finally, the share of the fan overlap as a percentage of the overall group.

A successful critical-mass builder needs to have high percentages in all of these.

This is why, assuming a lot of Avocado Eaters are in my fan group, even though the raw
overlap size of 18-24 year olds and NASCAR enthusiasts is similar, NASCAR is a better
target for the next campaign than the 18-24 year olds, because it would be far more
difficult to get critical mass (namely an average number of friends per sponsored story
approaching 3 instead of just 1) within such a large group:

To summarize, if we buy that building critical mass in smaller audience subgroups
under constrained budgets (which, let’s face it, is most marketing budgets!) may trump
simultaneous mass reach as a way of maximizing brand impact, the critical factor is
optimally identifying the nature of, and order of addressing, these audience subgroups
to maximize the likelihood of sequential spread. Where do you start, and how do you
move from one group to the next? For finding Critical Mass, order matters more than
size.
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Making Sponsored Stories More Engaging
You can use associated social actions to promote your Page, Place, App, Game or
Domain in a number of Sponsored Story types:

Page like story: When people like your Page, their friends see a story about it.

Page post story: When you post an update to your Page, your fans see a story about it.

Page post like story: When people like your Page post, their friends see a story about
it.

Check-in story: When people check-in to your business using Facebook Places, their
friends see a story about it.

App used & game played story: When people have recently used your App or played
your game, their friends see a story about it.

App share story: When people share from your App, their friends see a story about it.

Domain story: When people like or share information about your Domain, their
friends see a story about it.

To maximize the performance of these new ad units, it is important to note that unlike
most Facebook Marketplace Ads, Sponsored Story Ads utilize the default images of your
Apps or Pages. Making changes to this creative element and testing a variety of images
over time can refresh the look/feel and help improve performance, as we’ve seen thus
far in early Facebook Marketing campaign tests.

Not all marketers can easily make a similar creative change, due to branding
considerations, but it should be considered in the makeup of your Page given that it will
be shown to a lot of the same people multiple times. Adding some variation can make a
lot of sense and in many cases will increase performance in the same way that we help
our clients optimize performance in the standard Facebook Ads process

Facebook Sponsored Stories Marketing Campaigns are fast becoming Millenium
Consulting Services of America expertise and can easily be created according to your
specified daily, weekly or monthly marketing budget.

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CONTACT INFORMATION

Wilma Ariza, Principal

Millenium Consulting Services of America

Mobile Direct: 407.234.1744

Message Center: 973.553.2788

Email: mcsa.principal@gmail.com

Visit Our Blog:

http://MilleniumConsulingServicesAmerica.blogspot.com

Find MilleniumWilma On LinkedIn

http://www.linkedin.com/in/wilmacolonariza

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http://www.twitter.com/milleniumwilma

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