Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

When and Why Does Facebook Liking Add Value to the Brand?

Joel RubinsonPresident and Founder, Rubinson Partners, Inc.

Mike PerlmanVice President, Compete, Inc.

Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Background on the value of Facebook liking for brands

· People on Facebook like brand pages (fans) which means that updates from those brands show up in people’s newsfeeds

· These “impressions” and the advocacy effect of declaring you like a brand supposedly add great value to brands.

· Often the greater sales value of fans is cited as evidence but there is potentially a bad assumption about causality as those who like a brand might already be much more loyal to it.

We intend to sort all this out…

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Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Key questions

· Predisposition: Are those who like a brand already much more loyal to it?

· Causality: Does liking a brand on Facebook make that consumer more valuable to the brand?

· Conditions: If yes, are there conditions under which value is added?

· Meaningfulness: Even if value is added, how big is the lift in brand performance as a result of this effect?

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Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Sorting out causality

· Compete’s multiple data sources create the industry’s largest panel with 2 million people in the US

· Ability to see historical clickstream behavior (sites visited, search terms used, etc.) for each panelist

· Utilize data to provide insights to marketers, agencies, and publishers in areas such as:– Social Media Consumption– Advertising effectiveness– Consumer “path to purchase” analysis– Site design effectiveness

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The Data Source

Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Sorting out causality

· Our measure of value is “sessions”, defined as a visitor coming to a page in an owned media domain and exiting after some variable number of page views and minutes.– Especially when online purchasing is available on the site, sessions is

like shopping trips and therefore is a good proxy for sales activity

· This allows us to look at the number of sessions for 30 days before they liked the brand and 30 days after.

· We analyzed 63 brands rolled up into 3 industry categories: (beauty, restaurant/food, retail)

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Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Predisposition

· Yes, those who like a brand on Facebook are nearly 8 times more predisposed towards it.

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1. 19 restaurant/food, retail brands, excluding Amazon

2. Sessions/user for all internet users

Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Causality· Yes, those who like a brand on Facebook show an 85% increase

in their sessions vs. baseline in the 30 days after liking.

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63 restaurant/food, retail brands, beauty

Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Conditions

· Nearly all of the increase comes from the small number of new fans who revisit the brand page after liking

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revisited brand pagelikers didn't revisit

13,934

45,535

Sessions in prior 30 days: fans who revisted vs. didn't revisit

revisited brand page likers didn't revisit

63 restaurant/food, retail brands, beauty

Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Meaningfulness

· In February and March, there were over 1 BILLION sessions/month for the 63 brands analyzed.

· The percentage of sessions, 30 days post liking, accounted for by those who liked any of these brands in a given month was 1/100-th of a percent

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Empirical Generalizations in Advertising II: What Works in the New Age of Advertising & Marketing

Conclusions and generalizations· Domain: national brands and retailers engaging in e-tailing practices· Generalizations:– Facebook fans are much more predisposed to the brand before the act of liking

the brand on Facebook– Liking a brand does, in fact, greatly increase brand value for a given user– The lift in owned media sessions, which reflects positive business activities, of

liking almost exclusively comes from repeated visits to the fan page– Success at creating Facebook fans (likes) has a positive effect on overall brand

performance but it is quite small even if the effect persists over time

· Implications: – Findings suggest that newsfeed impressions per se are of little value to brand

performance but “time with the brand” on its page does have value– Begin monitoring time with brand and consider Facebook as only one way of

increasing that metric.– Marketers should do whatever they can to get users to revisit the fan page and

to go to owned media after such visits.

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