December 17, 2012, 3:25 PM

GameFly finds customers through Facebook ads

But those ads require the right measurement tools.

Zak Stambor

Managing Editor

Lead Photo

GameFly Inc. last year tried using Facebook’s display ads to drive consumers to sign up for the online video game rental subscription service on GameFly.com.

The ads, the retailer thought, did not work. “We found that it was really difficult to get people to leave Facebook,” says Steve Hartmann, vice president of marketing at GameFly. The ads’ click-through rate was .02% and the cost for each customer acquired ranged between $100 and $200.

After about six months of those subpar returns, the retailer switched its Facebook ads’ focus to attract Likes of its Facebook page. Targeting specific niches—for instance, men 18 to 34 who Like top-selling video games, video game retailers and video game systems—the retailer was able to acquire fans for between 30 and 40 cents each. That’s a good deal, says Hartmann, because once a consumer Likes GameFly, he’s exposed to its posts, which include special discounts.

Even so, garnering a Like isn’t as valuable as getting someone to sign up for its subscriptions, which start at $15.95 a month. That’s why the retailer decided to give customer acquisition ads another chance In October after Facebook launched Facebook Exchange. The real-time bidding system allows advertisers to use cookies on consumers’ computers to target consumers based on their off-Facebook activity.

To get a better sense of what happens after a consumer sees one of its ads, GameFly worked with Convertro, a vendor that places a pixel on consumers’ computers to detail the full digital path a shopper takes before seeing an ad and completing a purchase after seeing an ad. GameFly had been working with Convertro for nearly two and half years to understand shoppers’ actions after viewing its other advertising formats. But the vendor began enabling retailers to understand what shoppers do after viewing Facebook ads only after the launch of Facebook Exchange.

While the ads once again had a low click-through rate, GameFly was able to see that the ads are valuable, says Hartmann. “You’re getting your brand’s name in front of the right people,” he says. “There’s value there.” By examining what shoppers do after being exposed to one of its customer-acquisition-focused Facebook ads, the retailer has found that the ads do lead to new subscribers—even if those shoppers don’t generally click directly from Facebook to sign up. Hartmann says GameFly’s cost per acquisition is now between $8 and $15 for the Facebook ads.

“Without having view-through conversions we couldn’t justify running the campaign the way it is set up,” he says. “But now we know that what we’re doing is actually working.”

GameFly is No. 150 in the Internet Retailer Top 500 Guide.

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