Thursday, May 02, 2013

Facebook's Says 99% of People that See an Ad will Buy Something in a Store. Duh!

This is yet another weird metric that they use to show how well their ads work on their site.

How is Facebook going to pick up the pace? A hint at the answer was buried in the conference call after results were released. Speaking on the call, CFO Sheryl Sandberg dismissed the traditional idea of using clicks to measure the efficacy of online ads. Instead, FB suggests that the mere existence of the ad on FB leads to sales. Citing a DataLogix study, Sandberg noted that "99% of people who saw Facebook ads and then bought a product in a store never clicked on an ad at all."
Hmm...

Sandberg has done two things there. First she's dismissing the industry standard for measuring the success or failure of an online advertisement. In other words, because you don't click an ad doesn't mean it didn't work. As an alternative to measuring clicks, FB is following users' off-line purchases.
This suggests Facebook is working to cross-reference the influence of ads not only on users' online purchases, but on their in-store purchases, as well.

If you parse what she said 99% of people that saw a Facebook ad and bought a product in a store shows that their ad was effective. There are quite a few other factors that go into buying a product and just seeing the ad doesn't make 99% of people rush out and buy it. Also she says "bought a product in a store" and not "brought the advertised product in a store." I wonder if this was a slip of the tongue or this had some other meaning. I mean 99% of people on Facebook see an ad and will eventually buy something (not necessarily the advertised product) in a store. That is a given.

Also how exactly are they following your off-line purchases? I guess you can say that you bought the item like Amazon has that "Do you own it" button. Any other way they figure out what you bought offline seems creepy and borderline illegal. This is yet another reason why I'm glad I deleted my Facebook. I have to agree with this sentiment though:

When companies have to start inventing new metrics or methods for keeping score, it's generally a bad sign. MAU, sharing, reach. These aren't financial metrics, yet they're things FB is pointing towards as evidence of the company's growth and progress.

History hasn't been kind to companies reduced to inventing their own way of keeping score.
 
If you don't do well or merely average on established metrics you make up something in order to show you are growing at that made up thing. I had to actually look at what MAU was when I was reading their earnings report. It stands for monthly active users. I'm not sure what active means but it seems to be growing as far as I can tell. I wonder if I generated a MAU impression when I went back to check that my account was deleted or not?


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