The Key to an Effective Facebook Ad Formula: EdgeRank
In the early days of the internet, companies expected websites to generate consumer awareness almost by themselves. The idea was akin to "if you build it, they will come": consumers would type in a URL, see products and buy some. That wasn't quite enough, so online advertising sprang up to help brands promote their sites and sell product. The same thing is happening on Facebook right now, where a number of brands have built pages, and now need to promote those pages by advertising on the social network.
In this sense Facebook advertising is analogous to online advertising for websites, but much more powerful. When a consumer "likes" your page, she has performed an action similar to giving you her email address -- except now you can not only market to her, but also to her friends. Of course, the goal of your advertising campaign is not to rack up likes -- it's to drive brand awareness, engage your consumer base and, ultimately, induce your fans to purchase.
Some brands use the news feed alone to raise awareness and engagement, but that 's an ineffective way to reach your entire fan base. The best way to drive engagement and scale on Facebook is by leveraging a combination of page management and advertising tactics. With the right balance of standard Facebook display, targeted re-marketing and Facebook's new sponsored stories ad product, you can produce a multiplier effect on your brand's social metrics.
Engagement rates on Facebook are historically low, topping out around 10%-20% when the news feed is the sole promotional tactic. A recent Ad Age article outlined the way news feed items grow stale in about 1 hour and 20 minutes. In theory, companies could cope with this by pumping out updates every 80 minutes, but the shifting nature of the news feed would still prevent 100% engagement.
EdgeRank, a newer measure, determines the likelihood that consumers will receive certain stories in their news feeds. In Facebook terminology, an "edge" is an action taken by a consumer. EdgeRank measures exposure to this action -- whether a post, a like, a photo or something else. EdgeRank is determined by a combination of affinity score between the viewing user and the edge creator (that is , how closely they're connected), the weight assigned to each type of edge (for example, photos weigh more than text postings), and time decay, based on how long ago the edge was created.
Consumers are more likely to notice actions taken by their friends. The new sponsored stories product helps guarantee the promotion of certain actions, by promoting a consumer-initiated advertisement to one's friends.
Sponsored stories are triggered when a consumer engages with a brand's Facebook page, application, place and even a Facebook object on the brand's non-Facebook website. That activity is then promoted across the social network to friends in the form of a sponsored story advertisement, increasing the likelihood that friends will learn of these activities. Using sponsored stories helps drive engagement, and in turn improves the brand page's EdgeRank, increasing the likelihood that stories appear in friends' news feeds. And even if readers miss the message in the feed, they are now much more likely to see the story appear in a right-hand ad unit on Facebook.
Multiple kinds of actions trigger sponsored stories: page likes (someone likes your page either directly from Facebook or from the like box on your site), page posts (you publish a post from your Facebook page to your fans), and page post likes (within the previous seven days, one of your fans liked one of your page posts). Other triggers include Facebook Places check-ins, application usage or sharing, and interaction with a Facebook object on a site outside the Facebook ecosystem.
Advertisers shouldn't put sponsored stories in a silo. To achieve scale via sponsored stories, use other campaigns, including targeted display and display for the general population, to create the original sparking events. Start with a general population flight, then target friends of friends, and only then utilize sponsored stories. The Facebook audience responds better to this consumer-initiated advertisement, as opposed to one initiated by a brand. We've seen a 143% boost in click-through rate, 217% higher Social CTR, 48% lower cost per conversion and a conversion rate 187% higher.
Most brands are lucky if their message reaches 10% of their Facebook fans. The combination of Facebook advertising opportunities, though, helps brands reach both their fan base and friends of fans, raising page engagement levels to as high as 60%. Using Sponsored Stories also greatly increases the weight or affinity score, assuring greater reach for ads in either the news feed or the right-hand column.
When you use a combination of Facebook's capabilities and products, you'll be amazed at the way your message can spread, improving page engagement and all of the other metrics that drive your social media strategy. Facebook is still uncovering amazing ways to use its social graph, and it's going to get better. Consumer-initiated advertising is on track to transform display advertising.