Details: Online Advertising

Facebook Doomed? Facebook Ads Found Not To Be Profitable For Business To Business Focused Companies

Just last week I saw a news headline that caught my attention. It was titled "Facebook Doomed? Forrester Says Ads Tell a Sad Story". The data in the article matches that of our own data on the ROI of advertising on Facebook. Click on this article to see exactly how bad the ROI (return on investment) is when advertising on Facebook.

Executive Summary

- Facebook advertising is not a positive ROI marketing method for business to business focused companies

- Facebook is the least effective online marketing strategy for business to business focused companies

- Business to business focused companies should not spend any money on Facebook advertising and instead set up thier free Facebook business page and utilize that page by asking customers to leave reviews and feedback on it, using it as one option customers can use to get support or ask questions and use it as another destination to push blog posts to if your company blogs

- It is unclear if Facebook advertising have a positive ROI for consumer focused companies

- Consumer focused companies should limit their spending on Facebook advertising to a very small amount until they can determine what the actual ROI is

- Consumer focused companies should test a small amount of marketing spending on Mobile App Install Ads on Facebook if they have an app that generates them sales to see what kind of ROI they can get

The Article From The Daily Ticker

Conclusion:

In the report Facebook advertising ranked last for the business value it creates in a list of possible marketing methods. This data was collected by interviewing 395 business executives.

Data:

Data Source:

A study released by Forrester Research that has the conclusion that ""Facebook creates less business value than any other digital marketing opportunity ... [so] ... Don’t dedicate a paid ad budget for Facebook."

Article Links:

Dailiy Ticker Article URL: http://finance.yahoo.com/blogs/daily-ticker/facebook-doomed-forrester-says-ads-tell-sad-story-142946812.html

Forrester Research Blog Post URL: http://blogs.forrester.com/nate_elliott/13-10-28-an_open_letter_to_mark_zuckerberg

Our Own Conclusion:

Facebook Advertising Has A Negative ROI For Business To Business Focused Companies

From our experience advertising on Facebook we have made the conclusion that Facebook advertising is not profitable for business to business focused companies. Instead we see that Facebook ads appear to be a bottomless money sucking pit. This intuitively makes sense as when people are on Facebook they are not in the frame of mind for purchasing products or services for their business, they are in the frame of mind of their social life and socializing with friends and family. They are not actively searching for products and are instead being interrupted by the ads. We did not come to this conclusion lightly as we spent 3 years testing and tracking the results from Facebook advertising. We tested everything we could to try and get it to work including multiple ad types, multiple ads (over 75 different ads), different target demographics and different ad bidding levels. From the results below you can see the results speak for themselves. Instead of advertising what we would recommend is that you set up your free Facebook business page and utilize that page by asking customers to leave you reviews and feedback on it, using it as one option customers can use to get support or ask questions and use it as another destination to push your blog to if your company blogs. Beyond this we do not recommend spending any additional time, dollars or energy on Facebook because the results are just not there.

We do not have any experience or data to determine if it is profitable for consumer focused companies. It may be profitable given when people are on Facebook they are in the mind set of home life and consumers purchases, we do not have any data to support this though. We would still assume though that people are in the mind set of socializing and not purchasing products when they are on Facebook. We would advise consumer focused companies to test it with a very limited budget and track the results before spending any sizable amount on Facebook ads.

The one area that Facebook advertising might be useful as well for consumer focused companies is if they have a mobile app that results in increased sales when users download it, then it might be worth while testing the Facebook Mobile App Install ads.

Our Data On Facebook ROI From A Very Small Micro Test

Find Out The Most Profitable Marketing Methods For Small Businesses - Click Here

Total Impressions = 3,893,797

Total Clicks = 1,187

Total Cost = $727.85

Total Sales Generated = $0.00

Total Profit = -$727.85

ROI = -100% (click here to see what has a better ROI)

Despite the fact that 14% of customers said that they saw the ads, none indicated that the ads influenced them to purchase. We were not able to collect any data on what % of prospects saw the ads but we do know that 0% associated finding us or being influenced to purchase as a result of the Facebook ads.

We really tried hard to make this medium work by testing all of the following variables

Target Audience:

All of our ads were run with very specific target audiences to ensure our ads were not being clicked by people who would not be interested in the products and services being advertised. Most of the targeting was limited to Kitchener Waterloo Business Owners. In some instances we tried opening this targeting up to men that had certain interests like business, marketing and sports and may not have been a business owner (trying to capture sales and marketing managers). In these cases as well we kept the geographic target limited to Kitchener Waterloo where our prospects are. The results were always the same....zero sales.

Ad Text:

We tested of 50 different text copies for the ads including the benefits of the company, a description of the product we were advertising, contact information for the company, call to action lines, product details, questions, statements about what the product is good for, statements about when to use the product, statements about when to buy the product and the benefits of the product over other options. We tested these different options in both the heading and the ad body. Although the click through rate would change from ad to ad the sales results were always the same. The ads delivered zero sales.

Ad Image:

We tried over 30 different images in our ads. We tried images of the product, images of people using the product, images of our logo, image of the product with text overlay, images of the product various different color borders, images of people using the product with various different colored border outlines. Although the different images would decrease or increase click through rate they did not impact sales. All ads still resulted in not a single product or services sale.

Bidding:

We tested bidding below and above the Facebook suggested bidding price, including bids from $0.01 to $0.99. Although this impacted our impressions it did not change the sales results. We still got zero sales.

Landing Pages:

We tested over 10 different landing pages, many of which were our best converting sales pages. We also tested having the clicks go to our Facebook page. None resulted in any sales.

Ad Type:

We tried every kind of ad type available from Facebook including standard ads, sponsored stories, promoted post ads. The only ads that we did not try were app or event ads and mobile app install ads. To see a description of what these different kind of Facebook ads are go to http://adespresso.com/academy/guides/facebook-ads/types-of-ads. Despite trying all of these different types of ads the results were still zero sales.

My name is Chris R. Keller. I work at Profitworks Small Business Services helping various business-to-business, small businesses in Waterloo and Kitchener Ontario generate new customers via our full marketing & sales service, our website traffic and sales service and our marketing plan services. Feel free to connect with me on Google+ or learning more about Profitworks by visiting our Google+ Page. If you are interested in getting new customers for your small businesses enter your email in the box provided below and click the "Send Me Free Marketing Insights" button.

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