Facebook Tells Marketers That Clicks Don't Matter, Sales Do

Company Extends Conversion-Measurement Tool Worldwide

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The Facebook logo is reflected in the eye of a woman in this arranged photograph.
The Facebook logo is reflected in the eye of a woman in this arranged photograph. Credit: Andrew Harrer/Bloomberg
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Every day 864 million people around the world check Facebook. Those people probably see a lot of ads. They probably don't click on many of them. But Facebook has been making the case for years that those ad impressions still count and is expanding its effort to prove to advertisers that the social network deserves more credit for pushing sales.

Starting on Tuesday, Facebook 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.

Facebook started testing this so-called "conversion lift measurement" with a small number of advertisers over a year ago, but is now making it available to any advertiser in any country, assuming that advertiser has a Facebook sales rep and can track its own sales. There are no formal budget requirements.

Facebook's underlying goal is to move advertisers' away from awarding credit based on whether people clicked on their ads by showing them the value of ads that people see but don't click. That is, Facebook wants to move advertisers away from the current method of crediting ads that favors Google.

Google has built a multibillion-dollar business based largely on its ability to tie search ads, and to a lesser extent display ads, to sales. If someone searches for a product on Google, clicks on an ad for that product that takes them to the advertiser's site and then buys that product, the advertiser typically gives Google all the credit for that sale. And as a result, the advertiser gives Google more money to promote more products in order to drive more sales.

However, Facebook and others argue that awarding credit based on the last ad someone clicked ignores all the other ads that may have led to the sale. For example, someone may see an ad for a GoPro camera on Facebook. A week later that person might search for GoPro cameras on Google, click on a search ad that links to GoPro's site and buy the camera from GoPro directly. In that case, Google should get some credit for the sale, but Facebook wants some credit for potentially influencing the search.

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.

Last-click attribution has become the default way for crediting ad clicks for driving sales, in part, because it's easy. An advertiser can usually see how someone navigated directly to their site. They usually have no view as to how someone indirectly arrived over an extended period of time. So Facebook has taken up the work of forging a way to credit ad views for driving sales.

Here's how Facebook is able to measure conversions. The company takes the list of people who were shown the ad on Facebook. Then it compares that list with a list from the advertiser of people who converted in some way, such as purchasing a product from the advertiser's brick-and-mortar store or adding it to an online shopping cart.

For Facebook to track an advertiser's online sales, the advertiser must place a piece of code on its site that lets the company see when a Facebook user visits their site and performs a certain action. The advertiser tells Facebook what actions to look for -- like whether someone adds a product to their shopping cart or buys the product -- and then Facebook marks the people who take those actions.

To track in-store sales, the advertiser must collect information from a person when he or she checks out that can be used to match against Facebook's list. Usually that means a person's name, email address or phone number. The retailer can collect that information through purchases made with a credit card or loyalty card, but can also include cash transactions if the retailer asks for more information at check-out, like if the person wants their receipt emailed to them.

Both the advertiser's and Facebook's lists are scrambled through a process called "hashing" that converts the email addresses or phone numbers into seemingly nonsensical strings of letters and numbers. That process makes it so that the entries on Facebook's and the advertiser's lists can be matched without either Facebook or the advertiser knowing which individual person's information matched.

Facebook then aggregates the anonymized matches and is able to report that X number of people who were shown the ad on Facebook bought something from the advertiser while the campaign was running.

To measure conversion lift, Facebook runs a test. It shows the ads to one group of people but doesn't show them to a second group. Then after the campaign ends, it compares the two to see if people who were shown the ad were more likely to buy something from the advertiser than those who weren't shown the ad. That difference is then reported as the campaign's "conversion lift" within Facebook's Ads Manager dashboard.