Facebook Ads continue on the rise, with the social network reporting a 63 percent increase in revenue for Q4 2013, compared to a year prior.
Recently, I got the chance to speak with Bob Buch, CEO of SocialWire about Facebook Ads, and how advertising has evolved over the years.
Facebook announced it is testing ads in third-party mobile apps. Do you see Facebook finally moving ads outside of the walled garden so to speak, and how would this affect other ad networks?
I think this is a massive opportunity for Facebook, and it’s only a matter of time before they do this. What makes this interesting is that it symbolized what I see as a broader battle that is being staged to be fought between traditional cookie-based exchanges on the one hand, and registration-based platforms like Facebook on the other.
Facebook offers a unique data set to what is otherwise a highly competitive and commoditized area of online display advertising where everyone is chasing the same cookie data to figure out what and when to bid for a user. Facebook’s network would enable marketers to access an entirely new data set based on interests, affinities, and true-identity demographics. If Facebook is successful, companies like SocialWire will be the winners because our technology automates the way that marketers use Facebook data for targeting.
What are the benefits of AdWords versus Facebook Ads, and vice versa?
If AdWords is like picking apples, Facebook Ads is like planting trees. AdWords is a great way to harvest demand that is already there, but it’s a terrible tool for growing demand. Spending more on AdWords doesn’t get more people to search. On the other hand, spending on Facebook and hoping for the immediate 10x return on ad spend is just as foolish. Savvy marketers are using the two tools together, using Facebook to create more demand, and using AdWords to capture that demand as it trickles down the funnel.
The difference between the two, as well as the symbiosis, can be best explained with a simple example. Let’s say I’m a search marketer at Zappos. I might have a Google AdWords campaign to buy the keyword “Riding Boots.” I might spend $5k today on this, and generate $50k in revenue, a 10x return on my spend, which is great. So then I spend $10k tomorrow on Riding Boots hoping for $100k in revenue, but I only see $50k because no matter how much I spend, the same number of people search for Riding Boots on Google. This is where Facebook Ads comes in. If I want more apples, I need to plant some trees.
One example of how our clients use SocialWire would be to use a keyword like Riding Boots, and auto-generate ads out of every product in their catalog that fits the description of Riding Boots. Our product very easily filters their catalog for Riding Boots, and auto-generates Facebook Ads out of everything that matches that keyword.
The client will see some sales directly from Facebook – perhaps a 5x return on ad spend. But days and even weeks later, the client will see more searches for Riding Boots on Google, and ultimately more sales without spending more on Google AdWords. We have seen as much as 80% of purchases coming more than 24 hours after a user clicks on a Facebook Ad, and as much as 50% of purchases coming more than a week after the user clicks.
How can people leverage Facebook ads in more creative ways instead of just driving users to a product or service page?
Actually, driving users to a product page is not the typical experience, and we think that would in many ways be a better experience than what happens today. Typically advertisers will create a handful of ads using certain products that they feel are representative of their brand, and then they will drive traffic to a landing page, which is often nothing more than a search results page.
For example, you might pick a certain pair of riding boots, then say “shop now for great deals on riding boots,” and link to a search results page for riding boots. To me, this is a terrible user experience.
First of all, it’s unlikely that the product in the ad will even show up on the search results page which is a huge source of frustration for users. Second, the user experience of “stop what you’re doing on Facebook and come shop on our site” is really not a good one. But the user experience of “keep doing what you’re doing, while we occasionally show you only the products that we think might interest you” starts to look a lot more like a feature than an ad.
Overall, how has the advertising landscape evolved dating all the way back to your work in the late 90’s?
Online advertising has changed in so many ways since the early days. I think the two most interest modern developments in advertising over the last 5 years are programmatic and native. At Digg, I created one of the first native ad formats with DiggAds. This new ad type was as far from programmatic as you can imagine – the idea was to get brands to tell stories in compelling ways, and let those stories compete with other organic articles on the site.
Native has since taken off, and has become the saving grace for many publishers, and really is the engine that drives almost all of Facebook’s revenue now. As mobile ads continue to gain massive share, native will only become more entrenched as the dominant ad format because banners simply won’t work on mobile.
On the other end of the spectrum, Criteo and others led the way in popularizing the use of programmatic targeting, or effectively using the intent signal you can derive from someone visiting a product page or placing an item in their shopping cart, to re-target that user with the same product until they relent and buy it.
Then people realized you can track all the websites people visit, and build complex models that can tell you pretty accurately who these users are, and then sell those models to big brands trying to reach audiences. This is why 19% of all display ad spend is programmatic today, and it remains on the rise. Programmatic takes the guesswork out of advertising, and the precision is hard to beat.
The interesting question at the moment is whether these two trends, native and programmatic, will remain parallel train tracks destined never to meet, or whether they will at some point merge. In a way, SocialWire is merging the two by taking an inherently native format like Facebook ads, and automating the way that advertisers buy them.
Where can people learn more about you, and check out your work?
We have intentionally kept a low profile because our focus has been on building out our product. Our customers include some of the world’s largest retailers and ecommerce sites, ones that we have handpicked because they have experience running Facebook ads and stand to benefit the most from our automation.
The best way to find out information about us is to check out our website https://www.socialwire.com, and stay tuned to our blog at https://blog.socialwire.com. We also have a twitter account: @socialwire and of course a Facebook page at www.facebook.com/socialwire.