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Facebook Doesn't Want Advertisers to Focus on CTRs. Is It Right?

The latest series of changes unveiled by Facebook this week include a package of analytical tools that help companies more easily measure the effectiveness of their pages on the site. The product, Page Insights, lets brands track the "friends of fans" as well as the most talked about issues on their pages, which are highlighted under the number of fans. There is also a "people talking about this" feed that aggregates discussions.

These products clearly have several themes in common, not the least of which is giving advertising more tools to monetize the many, many conversations that are occurring on Facebook.

Goodbye CTRs?

Another, perhaps less noticed theme, as the Financial Times points out, is Facebook's attempts to shift advertisers' focus away from click-through rates with this new tool set. Right now CTRs for Facebook are less than 1%. Instead, the FT says, Facebook is hoping to get advertisers to place ads based on the power of social influence.

When put into that context, a far wider audience opens up for advertisers. Conceivably, Forbes notes, advertisers could shift budgets away from television to the site if it is viewed as a branding medium with a huge and loosely-defined reach.

The Starbucks Story

The case for this approach to ad measurement comes in part from recent stats provided by Nielsen that found that when people see their friends' names in Facebook's existing "social ads," they’re twice as likely to remember its message and four times more likely to buy the product. Run in conjunction with Sponsored Stories, they get twice the number of clicks, Likes, and comments.

Carolyn Everson, Facebook's vice-president of global marketing solutions, made a similar case as the products were unveiled at the launch of New York's Advertising Week. "Starbucks has 25 million fans but what is the value of those? They are more likely to spend more time in Starbucks and friends of the fans are more likely to spend more time in Starbucks," she said, via The Telegraph. "Combined, they spend 8 percent more time in Starbucks and they spend 11 percent more frequently".

Do People Go to Facebook to Engage With Brands At All?

While Facebook and its 800 million users make a compelling case, other data suggests brands move cautiously in this direction. First of all there is the transient nature of Facebook's Like - and presumably other actions on the site as well. The vast majority, 93%, of Facebook users click the "Like" button every month - but what that indicates is subject to debate. A new study by ExactTarget concludes that the meaning varies depending on the age of the person and the context.

Gender also plays a role, according to Facebook marketing consulting firm SocialCode. Overall, women are 11% more likely to click on an ad than men. Like rates, however, are almost even for men and women, with men actually 2.2% more likely to like an ad than women. In addition, when broken down by age, age has a much more pronounced effect on CTR for women than it does for men, whereas for men there is a stronger effect on like rate than for women.
For all these reasons, some retailers view the Like as a misleading metric.

Perhaps even more fundamentally, it can be argued that people don’t go to Facebook to engage with brands - and when they do it doesn't necessarily translate into sales. "Facebook, for all its talk about cozying up to brands and marketers, is still mainly a hangout — a destination for friends who want to commune and waste mind-boggling amounts of time together," writes Simon Dumenco at Advertising Age. "The truth about social-media sites is that they've never been particularly great environments for advertising."

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