Get Real ROI on Facebook with Sponsored Stories

April 1st, 2013 by Search Influence Alumni

Many, including big brands, are convinced that Facebook Ads are a waste of money. Under their assumptions, even high rates of fan interaction don’t correlate to new business. However, it’s clear that promoting strong organic posts beyond the natural reach of a page drives the expected post interaction and page likes, while delivering real, money-making conversions.

By focusing on the psychographics, i.e. interest groups, who might be interested in each individual post, a marketer not only saves time and energy by merging organic and paid advertising campaigns, but also leverages the better position and higher click-through rate of Sponsored Stories to expand the business’s reach among its target groups.

If a business is regularly posting good content, a marketer will have no problem finding enough material on which to base his psychographics. Every post, even one somewhat unrelated to the business, has an inherent audience. When we noticed we could do more for one of our low-spending fanbuilding clients, we moved them over to a Sponsored Story-only advertising strategy.

Marketplace Ads for Like-Building

In most cases, Facebook ad campaigns center around “Marketplace” ads, traditional display ads that link to a website or Facebook page. These ads compete with retargeted FBX. On average, 1 of every 2000 to 2500 impressions will lead to a click, where the landing page experience takes over to call the user to action. That means that for a campaign that targets 100,000 people who see the ad 4 times each, an average advertiser only has 160 to 200 chances to get a like from a user.

Despite low interaction rates, Marketplace ads are still an effective generator of Likes. For our client, one of every thousand impressions led to a click, doubling the average rate, and one of every 625 targeted users Liked the page.

Sponsored Stories for Engagement-Building

Sponsored Stories, with both their prominent placement in the sidebar and their engaging display in the news feed for both mobile and desktop users, are by comparison click magnets. Like quality content marketing, Sponsored Stories seek mostly to increase user engagement; however, with the granular interest targeting available in Facebook’s ad platform, marketers can laser-target their content to people who are nearly guaranteed to actually enjoy the content and want more of it in their feed. It’s not uncommon to see 1 of every 100 impressions lead to a click, and many Sponsored Stories can attain a 10% click-through rate from significant audiences of brand-unaware people.

Facebook Actions, the measurement for engagement on the platform, is a major factor in the EdgeRank algorithm that drives placement in the News Feed. By paying for actions at a cost of less than $20 for 1000, marketers create social views for content and boost the overall page’s quality in Facebook’s eyes.

facebook sponsored stories cases study

Sponsored Stories can be 95% cheaper per click than Marketplace Ads…

Even though most Sponsored Stories use a Cost per Thousand Impressions bid, Costs per Click are usually significantly lower, likely due to a less competitive auction and stronger bid effects from EdgeRank than in the Marketplace. However, it’s important to understand what a Sponsored Story Click really measures: content views, as opposed to Page or Tab views for Marketplace ads.

Campaign Strategy: Which is Best?

Changing a campaign strategy can obviously radically alter the way users interact with whatever ads are displayed to them. In the case of pivoting from Marketplace to Sponsored Story ads, the shift from page to content views ensures the need to slightly change metrics and goals. Comparing the Reach, Actions, and Page Likes allows a marketer to understand what strategy is best.

facebook sponsored story case study

Reach is largely unaffected by type of campaign when spends are equal.

Reach gives a marketer a basis on which to judge all other metrics – on Facebook, Reach trumps impressions because the target is users, not something like search terms. Sponsored Stories and Marketplace ads have about the same overall reach at the same spend; however, it’s important to understand that typical Sponsored Story campaigns run more ads at once, reducing the overall Frequency of each individual ad.

facebook sponsored stories case study

Sponsored Stories drastically reduce Frequency of individual ads.

This has a twofold effect: users don’t feel overwhelmed with ads from one company, while the ads can more reasonably masquerade as organic content. As we look at all metrics, remember that the same amount of people are seeing ads and the same cost constraints were in effect.

facebook sponsored stories case study

Sponsored Stories can boost Actions by over 500%!

As mentioned earlier, Sponsored Stories are Action magnets, and switching to a campaign strategy focusing on those kinds of ads will rapidly ramp up measured Actions. For Sponsored Stories showing in the news feed, this is a pretty clear metric; however, Actions includes “Photo Views,” which is simply clicking on the ad if the ad is showing at the top of the sidebar. Regardless, that this interaction is considered an Action hints that simply opening images increases the overall EdgeRank of the post, providing value from even low-engagement users.

These Actions are key to understanding the true value of Sponsored Stories. Such ads are well-equipped to introduce both brand and content to a new user. Extending ideas from eBay’s recent research on paid search, these new users are most likely the ones who will respond to an ad. If a user enjoys the sponsored post, it would follow that they would enjoy more posts in their feed and would then Like the page.

facebook sponsored story case study

Due to the more labyrinthine path to conversion, Sponsored Stories generate less Page Likes.

Regardless of marketers’ dreams and well-formed theories, that’s not always the case. Since Sponsored Stories campaigns are largely focused around EdgeRank curation through interactions and the current implementation of Sponsored Stories requires a multi-step process for converting to a Like, Sponsored Stories do somewhat worse at creating Likes for a brand on Facebook. The new display of sponsored stories may change this, as a Like button is significantly more prominent.

Sponsored Stories for Driving Real Business

What is the value of interaction if the user won’t Like the page? It’s easy to talk about social proof, exposing your brand and content to others through their friends, and other strengths of Social Media Marketing in general that won’t directly affect anyone’s bottom line.
The real value of these interactions comes from the ability for a user to get in touch with a page in a conversational way about business transactions. Though Facebook has recently implemented conversion tracking – a godsend for Marketplace Ads – there is little way to automatically count the conversions from increased reach and conversions.

facebook sponsored stories case study

Client 1’s Leads from Facebook skyrocket after switching to Sponsored Stories.

In this graph, we counted forms and calls resulting from Facebook referrals and combined those on-site conversion metrics with business-focused Facebook messages and Wall Posts. While certainly each conversion type isn’t equally valuable, all of these interactions give businesses new leads and ultimately paying customers.

Shooting Your Lead Generation in the Foot

The chart above might make it seem that Sponsored Stories are a consistently great way to drive online conversions to a business.
In short: you have to be good at organic social media to be good at paid social media.
Until we talked about leads, we showed two clients in our graphs. Here is the graph of conversions by campaign strategy:

facebook sponsored stories case study

Comparing Clients 1 & 2 paints two radically different pictures of Lead Generation with Sponsored Stories.

Why did Client 2 fail to produce leads, when it followed Client 1 in every other metric? If you’re used to social media marketing, the answers shouldn’t surprise you.

Client 2:

  • Posted far too often, sometimes more than 8 times a day. This didn’t allow any organic engagement on the posts and made it less inviting to talk to the business.
  • Blocked users from posting on the Wall. This cut off communication from existing clients or potential customers and forced the conversation to be one-way and unsocial.
  • Self-promotional posts were often only of interest to current customers, instead of showing off services to people who might not know the face behind the company.

These three factors are not the only conversion-killers, and may not be an albatross in every case; however, they outline the main tenets of getting ROI on Facebook: transparency, community, and openness.

How to Win at Facebook and Alienate Competitors

Any advertising campaign should ultimately be about one thing: new customers. Sponsored Stories, which demonstrates the added value to the user that Liking the page would bring, can also demonstrate the added value of the user patronizing the business. By maintaining a strong organic presence on Facebook, you boost your paid efforts while maintaining the relationships with your existing Fans. The Actions magnet, Sponsored Stories, is now an amplifier of your Facebook presence.

The Key to Real ROI on Facebook

  1. Combine organic and paid social media campaigns into one unified strategy.
  2. Foster a comfortable social community where your business seems responsive to client and potential client needs.
  3. Focus on real metrics that not only affect Facebook, but your business’s bottom line.