Just in time for Advertising Week 2011, Facebook released a new metric expected to fundamentally alter the criterion for ad campaign success rates. The new "People Talking About This" metric analyzes the way users interact with a business's page. The company also introduced a forthcoming premium ad unit that will combine page posts with social context from friends, pairing right rail “Likes” with matching promotions. But while Facebook claims this new method will help business page owners better understand consumer behavior online, the company has its own reasons for stressing engagement over more traditional metric evaluations: Facebook's click-through rates have declined to about half the industry average, according to a study conducted by the research firm Webtrends
. The "People Talking About This" metric is meant to be a barometer indicating how much conversation is occurring around specific content, and spans the last seven days of interactions with that content. These interactions include:
By tracking the conversations around pages, administrators will be empowered to understand what drives user interaction and better optimize their content to increase audience size and engagement. Furthermore, the qualitative nature of these new analytics will allow business owners to more accurately gauge user responses for any number of fans, making it easier to identify user activity trends. Marketers will be better equipped to understand their earned media’s place in conventional ad dollar investments; and, because “People Are Talking About This” stats will be publicly available for every page, businesses will be able to compare their strategies with those of competitors.
One of the reasons Facebook is introducing new analytics is to offset the consistently low click-through rates for social media advertising (though Twitter is reported to have a much higher click-through rate
than Facebook); additionally, more socially integrated ads are proven to generate increased user interaction. But despite plans to revamp its ad tools, Facebook isn’t exactly in free fall: in June of 2011, Facebook “accounted for nearly one third of all Internet display advertisement impressions in the United States… more than the combined total of Yahoo, Microsoft Corp, Google and AOL Inc,” according to a Reuters
As the online ad business continues to shift, other major Web players, including AOL, Yahoo and even Google, must find new ways to stay competitive – particularly as bread and butter banner ads become less relevant and profitable. For now, these companies – particularly Google, which stands to lose the most as ad unit infrastructure continues to change – are skeptical of Facebook’s new metric plans.
It will also be tough encouraging advertisers to embrace engagement statistics over click-through rates, in part because sales departments prefer to show CEOs and stockholders hard numbers and standard indicators of success, not amorphous user interaction analyses. Advertisers have a tough time pinning down the intersection between “Likes,” “Shares” and their revenue targets, as well as believing - as yet - that the “People Talking About This” metric holds any real value.
However, Harvard’s Nieman Journalism Lab and others are quick to point out that perhaps advertisers have become too dependent on click-through rates
, which may not accurately depict customer behavior and brand interaction: a recently released Media Mind study indicates that a user’s engagement with an ad falls sharply after the first view, contributing to “banner blindness,” a condition where users subliminally train their eyes to ignore advertisements on a Web page. Additionally, some advertising and publishing organizations contend that focusing on click-through and hard data in recent years has closed off opportunities for creative, more psychologically wired advertising. Neiman Labs uses the example of the Geico Gecko, which may not inspire people to immediately purchase Geico insurance after seeing an ad, but plants an image in their mind that will pop up when they intend to buy insurance in the future.
So how should your business proceed in the meantime? Diverse investments in a range of media – online and otherwise – are the best way to keep revenue streams balanced. But don’t discount the “People Talking About This” metric quite yet: the last decade has shown us nothing if not that online engagement is the marketplace of the future.