Facebook Is Trying To Pick Off TV's Biggest Advertisers One By One
On Wednesday, the social media giant announced the results of a study from comScore that found users who saw car ads on Facebook were 50% more likely to visit the websites of the car models advertised than those who hadn't seen the campaigns, and 14% less likely to search for similar models offered by competitors.
The news comes just four months after Facebook released a similar study it did with campaigns run by wireless internet providers, and the selection of these two product categories is absolutely not a coincidence.
Though at first glance, telephone service and automobiles have little to do with one another, the products do share two extremely important things in common: one is that they are both big-ticket items consumers purchase only once every few years, and the other is that the companies that sell them spend more advertising money on television than anybody else.
Facebook has been quite clear about its intentions to win advertising budgets from television, and now it is working to prove itself to TV's biggest clients one industry at a time.
Here's why:
As the company has grown its advertising business to a $7.2 billion-a-year operation, its continued expansion has come to depend on the social media network's ability not only to win advertising dollars that otherwise would have gone to digital competitors like Google and Twitter, but those that are being spent on other forms of media, as well.
And in the digital era, the only medium pulling in the sort of advertising money Facebook needs to make a significant increase on that $7.2 billion in annual ad revenues is television. Even with viewership in decline, the four biggest media buying agencies are still spending more than 62% of their budgets on the tube.
But while Facebook has had little trouble showing advertisers they can reach as many people on Facebook as they do on television, many media brands are not yet convinced that social media ads actually persuade users to buy the products they see.
This has been especially true of wireless and automobile companies who have no way of knowing whether it was Facebook's ad out of all the others that convinced a user to make the one purchase he or she will make in their product category for several years. Of the 10 biggest spenders on traditional media in the U.S. (TV, radio, print, outdoor, and internet display ads), six of them are telecoms or car companies.
This uncertainty came to the forefront a year and a half ago, when General Motors announced it was pulling its $10 million Facebook campaign because it didn't think Facebook's ads were effective. A year later, and with a new chief marketing officer, General Motors returned to advertising on the network, but Facebook was apparently given more than enough incentive to show GM and other auto companies that its ads work just fine.
After all, General Motors spent $1.2 billion advertising on U.S. television in 2012, a pie large enough that even a small slice would be a real boost to Facebook.
The holy grail left for Facebook, and frankly, its competitors like Google and Twitter, is the ability to show its ads not only lifted interest in the cars users saw, but increased sales, as well.
If Facebook were somehow able to show car companies that it can not only target users in the market for a new car (which it can, using data about when various leases come up), but that those ads directly lead to users going to a dealership and making a down payment, even the most skeptical media buyers would have trouble refraining from putting their money in the newsfeed.