Tuesday, February 18, 2014

Facebook advertising and the value of a ‘like’

You might be wasting your social marketing budget.

In a recent upload by YouTube educational science channel Veritasium[1], Derek Muller exposes what he believes to be a major problem and conflict of interest with Facebook’s page promotion services.

Muller describes his recent page promotion results and finds that the massive amount of ‘likers’ he gained engage far less often and less deeply than his initial fan base.

The reason, he thinks, is simple:  they’re fake. Click farms generate the likes.

His hypothesis is supported by the fact that the likes are almost exclusively generated in parts of the world notorious for the forbidden practice: India, Egypt and the Philippines.

Although Facebook does employ algorithms to detect fake accounts, he says these likers avoid detection by indiscriminately ‘liking’ just about everything, regardless if they’ve been paid by that particular client to do so. The real ah-ha moment comes when Muller explains that even if Facebook were to detect these likes, it has a vested interest in perpetuating the status quo.

Facebook makes a profit with the initial advertising fee and once the client has their new ‘likes’, the engagement level is so low that they have no choice but to invest further with Facebook’s page promotion services.

The problem is that once these fake likes have been added to your page, they don’t go away. Any subsequent marketing campaign is then distributed to a subset of your likers and the truly engaged fans never get a chance to see the content. Your campaign is lost in a sea of fake accounts and the vicious cycle continues.

In my research, I found some very interesting mobile metrics, reported by the Search Engine Journal [2] in which they compare iOS and Android Click-Through rates (CTR) with marketing spend ROI.

The study shows that iOS devices have the lower CTR of 1.25% with an astonishingly high 162% return. Conversely, Android operating systems show a CTR of 2.73% with a ROI of -10%.

This information was puzzling at first. Why would iOS users convert at such a high rate in comparison with Android users?

I realized this too can be attributed to click farmers. Android phones are particularly dominant in the emerging markets and in developing nations. It is certainly possible, if not likely, that click farmers are performing their duties on Android devices!

Although this seems like an insurmountable obstacle, the problem of social advertising cannot be ignored; there is simply too much opportunity.

In the April 2013 Syncapse research paper, “The Value of a Facebook Fan 2013: Revisiting Consumer Brand Currency in Social Media[3],“ they report the average value of consumer brand fans has increased 28% since 2010 to $174.17.

One of the most valuable fan bases appears to be BMW, with a fan value of $1613.11. This makes sense considering the price of an average BMW is much greater than say an average cart of goods at Wal-Mart. The value of a Facebook fan then, increases at a rate in proportion to the average retail purchase price.

Another key finding in the Syncapse research points to the actual revenue these companies are deriving from engaged Facebook users. Fans spend upwards of $257 more, on an annual basis, than non-fans.

So, for the brands in the Syncapse study, it appears to be paying off, but how? There is one major distinction with the Syncapse data.

Most brands in the study have reached an established, mature presence in their respective markets and some have attained the coveted lifestyle status. In addition, their marketing budgets and count of Facebook likes far exceed that of a start-up or a fledgling blogger.

They can afford to bear the burden of fake likes. Their ubiquitous brand can reach enough fans that the impact of fake likes is far less burdensome.

This really is an issue of conflicts of interest. If Mark Zuckerberg wants to create his own mini version of the Internet, he has an obligation to users and advertisers to maintain objectivity. At the very least, Facebook should be providing some level of transparency with its paid promotion practices.

Most importantly, Facebook must find a way to identify and delete fake likes and associated accounts. Until then, small to mid-size companies and their marketing teams will continue to suffer on an uneven playing field.

Small scale marketing teams would be wise to use Facebook's promotion services sparingly and keep a close eye on the results. At this point, once the damage has been done, it is difficult to overcome. 

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