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David Ziguras April 3rd, 2013

Facebook – the famously free social media mecca that is (currently) supported entirely by advertising to you, the user. It’s a comment we hear all too often – “I don’t know how Facebook makes any money, because I never click on their ads, and my family and friends tell me they don’t either” So, the question remains: how does Facebook expect to make money or become the next google if most people you know never click on their ads?

Whilst it’s not well understood or appreciated by the average Facebook user, it’s well known to Social Media Marketers and advertising firms – on Facebook, clicks don’t matter. You probably don’t know it, and certainly would not want to admit it, but the ads you see on Facebook are working on you and your buying habits.

Even though you believe you ignore sponsored ads in your feed, and you certainly don’t click those ads, sponsored messages that appear in your feed change your behaviour. They silently encourage you and your friends to buy certain products instead of others. How do we know this? Facebook themselves have released numerous reports based on research and studies they have performed to show whether and how its users respond to ads on the site. The results might surprise you, as they show us that Facebook ads influence purchases without being clicked on, meaning clicks don’t matter. Some of these reports also supply a sneak peak into the long-term business strategy of Facebook.

Most of us know that Facebook and Google are in a battle with each other over users and advertising dollars. However, there is a major difference between the two – Facebook’s studies suggest that its advertising revenue may not necessarily come at the expense of Google. Facebook believes that people respond to ads on Facebook much the same way they respond to ads on television.

In 2012 Facebook started working with Datalogix, a company that records the purchasing patterns of more than 100 million households. When you buy something at your local supermarket, there’s a good chance you’ll use a loyalty or reward card of some description to earn reward points or get a discount on your shopping bill. That same card links your identity to your purchases. This sales data is then sent to Datalogix, which has agreements with hundreds of major retailers to procure such data.

Facebook and Datalogix have figured out a way to match their data sets whilst maintaining the privacy of each user. So, Facebook now has the ability to link its users to the products they buy in their local supermarket. As a result, Facebook could begin analysing and crunching this data to better understand the relationship between advertising campaigns on its site and the buying habits of the people that use Facebook.

Facebook protect advertiser data, and hence only release general information to the general public, however this general information speaks volumes for Facebook ads. Sean Bruich, Facebook’s head of measurement platforms and standards says “Of the campaigns we look at, 70 per cent have a three times or better return-on-investment, with half of the campaigns showing a five times return”.

However one of the most interesting results was the total lack of connection between actual purchases and clicks. “On average, if you look at people who saw an ad on Facebook and later bought a product, fewer than 1 per cent had clicked on the ad,” Bruich says. Proof, clicks on Facebook do not matter. It’s more important to simply be advertising on Facebook, than to be focused on getting clicks.

Facebook is getting better at targeted advertising. They are becoming much more intelligent with the types of ads they show to you, meaning the ad they show to you will probably different to the ad they show to Jim, or Jenny or Bob. With their reporting systems becoming so sophisticated, they have an abundance of information on you that allows them to profile what you do and don’t like meaning as time moves forward they will become specialists at showing you ads that have greater appeal to you, and are less annoying.

You may not like the ads you see on Facebook and you may be 100% committed to never clicking on them, but the data is there to prove they work on you. Facebook ads work, there is no denying it.

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