The online retailer has spent nearly $300 million acquiring three shipping software vendors over the past nine months.
A new report suggests that the social network’s ads influence consumer behavior.
Since announcing last year it planned to go public, Facebook Inc. has faced intense scrutiny over whether ads on the social network are effective—especially as some large marketers like General Motors have said they fail to see the value in advertising on Facebook.
But a new comScore Inc. report, sponsored by Facebook, suggests that social media marketing can show a clear return on investment by directly influencing sales—but it has to be viewed holistically. That means understanding the intersection between the social network’s various ad units with what comScore calls free earned media, which is essentially the posts and other actions by brand and consumers on the social network.
That’s particularly important because Facebook’s ad units don’t all appear like ads. For instance, a Sponsored Stories ad can be the actual post by a consumer’s friend that includes a note about a brand. The brand can then pay to expand the distribution of the post, which appears in a consumer’s news feed (the first page he sees when logging on to the social network) with a note that the post is sponsored.
The comScore report cited examples of how advertising on Facebook could be traced to sales increases. For example, by tracking consumers who were Starbucks fans on Facebook against a control group of shoppers who weren’t exposed to those messages, comScore found that over a four-week period, 2.12% of the brand’s fans and their friends made a purchase at the coffee shop. That’s 0.58 percentage points higher than the 1.54% for the control group. That suggests that fans and their friends made 37.7% more purchases than those not exposed to the brand’s earned media.
A similar study of Target Corp.’s fans found that 4.0% of Target fans said they were likely to make a purchase after seeing an organic Target-related message, compared with 3.3% of the control group, a 21.2% increase. For friends of consumers who Like Target, 3.8% of the test group said that they were likely to make a purchase, compared to 3.0% of the control group, a 26.7% increase.
Examining the effects of Facebook Premium Ads for an unnamed large multichannel retailer, comScore used its AdEffx product suite, which can measure consumers’ behaviors after viewing an ad. Using the same test and control format, comScore found that four weeks after viewing an ad, 1.47% of consumers made an in-store purchase and 0.61% made an online purchase. That compares with 1.27% of the control group that made an in-store purchase and 0.39% who made an online purchasesuggesting that ad exposure had a 15.7% lift for in-store purchase and a 56.4% lift for online purchases.
ComScore’s study was conducted over the holiday season. ComScore did not immediately provide more details about the Facebook study.