This article was published on July 20, 2011

Facebook’s Sponsored Stories will decrease your CPA in ads by 32%

Facebook’s Sponsored Stories will decrease your CPA in ads by 32%
Lauren Fisher
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Lauren Fisher

Co-founder at Simply Zesty. I love everything social and I think I have the best job in the world! I'm particularly passionate about bloggin Co-founder at Simply Zesty. I love everything social and I think I have the best job in the world! I'm particularly passionate about blogging and seeing innovative uses of social platforms by organisations. Feel free to drop me an email if you've got any questions, comments or you just want to say hi - [email protected]

Advertisers and brands that run ad campaigns on Facebook will know that sponsored stories provide an incredible return on investment, as a viral ad platform that drives new fans to Pages and spawns incredible word of mouth marketing. One of the reasons that sponsored stories work so well is that friends of fans don’t necessarily realise that what they’re seeing is an ad, because you’re not directly advertising a product or promotion, but feeding back organic Page activity to people’s walls. A recent report by TBG shows just how well sponsored stories are working for advertisers, as it reveals that sponsored stories can decrease the cost per acquisition (CPA) in an ad campaign by up to 32%. This represents a huge savings for advertisers, particularly those with larger budgets and it shows the importance of adapting your ad campaign strategy to stay fresh with Facebook’s functionality.

Ads getting more expensive

This is magnified by the report finding that Facebook ad campaigns are becoming steadily more expensive. While you would expect this as more companies flock to Facebook to run ads and allocate increasingly large chunks of the ad budget there. In the UK for example, the average CPC across different industry sectors rose by 55% year a year showing that Facebook advertising isn’t always going to be a cheap and cost-effective channel, unless of course you run a smart Facebook ad strategy and make the most of the specificities of advertising within Facebook.

While many brands simply throw a chunk of money at Facebook ads, or look at costly activities such as homepage reachblocks (equivalent of takeovers) , the smart advertisers are those that recognise that Facebook advertising is a unique beast and that you must employ different strategies than other online ad campaigns. This is largely due to the fact that Facebook ads are social by nature, and there are different ways to make this work to your advantage, provided you run an effective ad campaign and closely optimise it day by day. Using ad capabilities unique to Facebook can also drive costs down. According to the report for example, running an ad campaign targeted specifically at fans instead of non-fans can improve your campaign conversion rates by a staggering 435%. The question is of course, whether you want to run an ad campaign targeting someone that’s already converted, or whether it’s better to focus your attention on converting non-fans. While this might be more costly, it could be ultimately more valuable in the end. Sponsored stories are certainly proving one of the best ways to grow new fans on the Page.

Facebook on sponsored stories

Commenting on sponsored stories, Vice President of Advertising and Global Operations at Facebook – David Fischer- says, “The key reasons it works is that it is engaging, it is social, and it is reflective of what brings people to Facebook overall, which is to share and connect…Intuitively that makes a lot of sense…the reason people come back to Facebook is to engage with their friends. That’s exactly what Sponsored Stories do–they’re showing [those actions] to those friends users have already decided to share with.”

Fischer goes on to claim that in some instances, sponsored stories are even outperforming traditional Facebook ads by 2 to 1, though the exact metrics of this aren’t expanded on – whether it’s cheaper CPC, CPM, CPA or just providing better return in general such as a 200% increase in click through rate. It’s evident however, that sponsored stories are the best ad product Facebook has introduced, as they support the claim themselves that it is a purely social ad format. Therefore the initial investment keeps on providing return, driving increased word of mouth. Though another ad format may be just around the corner, as Facebook ad campaigns become more expensive, brands should be focusing on sponsored stories and how they can become an integral part of the ad campaign and overall strategy.

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