Do Facebook ads really work? Pt. I

By Amy McIlwain

Financial Social Media Marketing


It’s crucial for businesses interested in investing in Facebook ads to understand that it’s not just about paid media, but more about earned media — advertising that is passed along or shared among friends and beyond.

According to an eMarketer newsletter, Facebook ad revenue in the U.S. grew by 471 percent in the United States in 2010, with a whopping 1,468 percent growth in the rest of the world. Online ad and marketing hub Advertising Age pointed out that the majority of the revenue, 60 percent, or $1.12 billion, earned from smaller companies in 2010 is greater than the $740 million coming from major marketers like Coke, P&G or Match.com.

Those kinds of numbers signify smaller companies are more likely to be using self-serve tools rather than working through a media agency.

In November, ComScore figures revealed Facebook was the largest online display advertising publisher, with over 23 percent share. It would be silly to say that the impressive growth in Facebook ad usage and revenue meant that Facebook ads didn’t work. Somebody’s doing something right here; the question is, what exactly are they doing?

In order to delve into this question a little deeper, it’s important to showcase the Nielsen study from over a year ago that studied three different types of Facebook ads and their success. Nielsen’s study followed 800,000 Facebook users interacting with over 125 ad campaigns created by about 70 brands. Nielsen estimates that about 1 million users saw organic mentions of the companies included in the study without seeing their ads and 18 million saw ads measured by the study.

On average, Nielsen’s study found ads on Facebook users’ homepages resulted in a 10 percent ad recall increase, a 4 percent brand awareness increase and a 2 percent increase in purchase intent compared to a control group that did not see the ads.

Here’s the most interesting finding of the study, and an answer to the question, "Do Facebook ads work?"

The success of the ads in the Nielsen study almost doubled when the ads took flight in a user’s social network. Users whose friends mentioned a brand in their news feed in conjunction with a “become a fan” ad were three times as likely to recall the ad. Brand awareness jumped 8 percent when a social ad included the names of friends who were brand fans and 13 percent when a home page ad appeared along with a mention of friends who were brand fans in the users’ news feeds.

So, what does this all mean? Facebook ads perform better when brands purchasing them can leverage their existing fan base. What’s important is what Facebook users already think of the company. A brand trying to launch on Facebook will find itself in trouble unless it can expand its network by getting people to “like” and share its content.
It’s crucial for businesses interested in investing in Facebook ads to understand that it’s not just about paid media, but more about earned media — advertising that is passed along or shared among friends and beyond.

The Nielsen report states that “study after study has shown that consumers trust their friends and peers more than anyone else when it comes to making a purchase decision.”

So, do these findings answer the question, "Do Facebook ads really work?" It definitely sheds light on the successful Facebook ad strategies. It would appear that those utilizing Facebook ads successfully already have a solid fan base to call on when it comes to sharing and expanding their brand. If you’re interested in seeing more in-depth numbers on the study, stay tuned for part two, where we’ll post more of Nielsen’s findings from the Facebook ads report.