4 Ways In Which Facebook Is Winning Ad Dollars From Direct Response Advertisers

Direct response advertisers are more concerned with ad clicks and product sales so Facebook has introduced 4 features to win their confidence in 2015

How Facebook Calculates CPC

Facebook wants to be a platform to drive engagement as well as make performance advertisers happy by focussing solely on so-called “link clicks.”

In the last six months Facebook has shown keen focus on direct response advertisers, a group more concerned with ad clicks and product sales than ad impressions and brand awareness. These are the types of advertisers that would rather have 100 people click on their ad than have 1,000 people see it. These are the types of advertisers that would rather pinpoint the exact audience it wants to show its ad — getting as specific as that audience’s income and purchase patterns, than just hunt around the demographics.

These are also those type of advertisers who don’t mind paying more for their specific audience and right now buying most of the digital ads available today in the US. 

Keeping all these factors in mind, Facebook has introduced four major features that have not only regained the confidence of direct response advertisers but also brought in ad dollars.

1. Conversion lift measurement

Earlier at the start of the year, Facebook was still trying to convince that a lot of users might not click on ads but they are still useful. It announced that it is going to tell more advertisers when someone who saw their ad on Facebook ended up buying something from the brand online or in stores and how that compares with the people who bought something without seeing the ad.

The new feature named “conversion lift measurement” was initially tested with a small number of advertisers but from the beginning of 2015 the feature was made public.

Subscription-based food-ordering site Graze found that using last-click attribution only accounted for 72% of the online subscriptions that Facebook contributed, according to Facebook. And Australian online education company Open Colleges measured a 23% lower cost-per-acquisition using Facebook’s conversion methodology compared to using last-click attribution, Facebook claimed.

2. Auto filling profile data

Earlier last month, Facebook introduced a big feature that promises to make the lead generation exercise smarter.

Labelled as Lead Ads, Facebook informs that the mobile signup process is easier since the ads automatically populate contact information that people have given to Facebook, like email addresses. “We’re testing different versions of lead ads that would let people sign up for things like newsletters, price estimates, follow-up calls and business information.”

Facebook also informed that Lead ads use a native signup flow within Facebook, thereby solving the problem of leaving one app and landing on other to fill up all the details.

Privacy would be a question for many with such ads but Facebook states that it is taking care of it. While the feature was being tested by a set of SMEs, hopefully practices like re-selling lead information to third parties shouldn’t kill the feature before it gains traction.

3. Buy button

Last July, Facebook had revealed that it is testing a new feature with ‘a few’ small and medium-sized businesses in the US – a Buy button. The goal was  to help businesses drive sales directly through Facebook via News Feed ads and Page posts.

Until now Facebook was testing the Buy button feature with select merchants but recently it opened up to more retailers on Shopify‘s ecommerce platform. With this feature, people on desktop or mobile can click the “Buy” call-to-action button on ads and Page posts to purchase a product directly from a business, without leaving Facebook. The expanded test is with a set of invited US-based Shopify merchants.

This is another push from Facebook to marry commerce with social networking. Earlier Facebook tried introducing features like Collections feature with buy buttons, on-site payments to charities with its Donate Button and the most recent being the testing of an “Auto-Fill With Facebook” feature that automatically enters your payment details when you’re making a purchase in a third-party eCommerce app.

This is a big step from Facebook towards making the Buy button available to a wider audience. For now the feature remains free.

4. New model to charge click based campaigns

Finally, the latest major update on how it is changing the way it has been calculating cost-per-click, should bring a smile to performance advertisers. With the recent update, advertisers that want to drive app installs or traffic to their websites, the cost-per-click (CPC) will no longer take into account engagement actions such as comments, likes and shares. The calculation will focus solely on so-called “link clicks”.

This means brands will be able to track users once they move from a Facebook ad and are taken to a third-party site or app. The link click price calculation will also cover when a user clicks a call-to-action button, which include ‘buy now’ and app installation buttons. This further includes Facebook canvas apps and clicks to view a video on another website such as YouTube.

While this is good news for performance advertisers to pay only for clicks that lead to their website if that’s the marketing objective they have in mind, but at the same time the change in calculation could mean fewer clicks at higher CPC. But then direct advertisers wouldn’t mind paying if their objective is fulfilled.