Does Facebook still work for direct response?

Two years ago, Facebook moved into direct response advertising in a big way with their new pixel product. Since then, CPMs have risen and tactics have changed—so, is Facebook advertising still a viable performance marketing tactic?

I recently spoke at Social Media Week New York on this topic, providing insight into the market for Facebook impressions via tried-and-true best practices and real-world case studies. This article sums up my response to the question – does Facebook still work for direct response?

Facebook revenue per user (rpu)

In recent years, Facebook has become more expensive. There has been:

  • A 7.6x increase in RPU since 2010
  • A 48% rise in Q4 revenue YoY
  • A 30% rise in Q4 CPMs YoY
Facebook revenue vs. users

It won’t come as a surprise when we say Facebook is really smart. They can use their data and knowledge on their users to find people who are ready to buy. This is otherwise known as intent data, with those wanting to use it targeting the intent pool.

At Croud, we target Facebook’s intent pool in several ways:

Lookalike audiences

The idea behind a lookalike audience is simple: upload a list of customers and let Facebook find similar people, who are likely to buy. Each lookalike audience is available from 1% to 10%; as the percentage increases, the similarity of your group declines.

Retargeting / reengagement

For most websites, only 2% of initial website visits result in a purchase. Retargeting is a cookie-based technology which allows websites to use a simple JavaScript to anonymously “follow” and share content / ad serve to visitors as they move across the web. By creating a Facebook website custom audience, brands can promote content to previous visitors – those who have already registered an interest with your brand.

oCPM / Conversion bidding

On Facebook, advertisers are provided with four bid types:

  • Cost per click (CPC)
  • Cost per acquisition (CPA)
  • Cost per mille, i.e. 1,000 impressions (CPM)
  • Optimised cost per mille (oCPM)

The last, oCPM, is the least well known, but is also Facebook’s most versatile bid type, and enables advertisers to optimise spend towards users who are more likely to convert or complete specific actions.

When does it work best?

In order to get the most out of Facebook advertising, there are a few things advertisers should consider:

Established categories

The intent pool is an important driver for Facebook performance. When you ask Facebook to find people who will convert, they will go after the intent pool first. Therefore, advertisers should utilise established categories and focus on larger intent pools.

The right price point

This is a key point, as even if you have a great intent pool and the best creative, you need to bid high enough for CPA and low enough for a conversion.

Lots of creative

Facebook provides lots of ways for advertisers to be creative. With photos, videos, carousels, slideshows and collections, there are many options for catching and keeping the interest of the intent pools audience.

Realistic Goals

Facebook direct response doesn’t scale indefinitely, meaning you need to set realistic goals for your campaigns in order to achieve the most from them.

What else to consider

In short, yes – Facebook does still work for direct response. It is still just as relevant and a channel which we would always consider including in the mix. However, there are plenty of other channels, all with their own merits – here’s a handy overview:

Contact us if you’d like to find out more about how Facebook could work for your next direct response campaign.

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