44pc of people won’t click on Facebook sponsored ads

17 May 2012

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As Facebook’s business model comes under closer analysis in the run-up to tomorrow’s IPO new research claims 44pc of users say they would never click on Facebook sponsored ads.

In the same week that GM pulled its advertising from Facebook saying that it just didn’t work, new research by Greenlight found that 30pc of people ‘strongly distrust’ Facebook with their personal data while 44pc say they would never click on Facebook sponsored ads.

According to Greenlight Facebook is the third most popular website after Google and YouTube. Half of the 500 people surveyed say they use Facebook for social engagement, sharing photos and catching up with friends and family.

Upward struggle for Facebook’s advertising programme?

Facebook ranked as the third most popular website (after Google and YouTube) when asked ‘How regularly do you use the following websites/services?’. It ranked second when asked ‘Which of the following do you use on your mobile phone?’, with roughly 30pc of those surveyed saying they use Facebook on their mobiles and tablets.

“Facebook’s popularity doesn’t come as a surprise. However, with over 30pc of respondents saying they ‘strongly distrust’ Facebook with their personal data, Facebook’s advertising programme has an upward struggle," says Hannah Kimuyu, director of paid media at Greenlight. 

“Facebook’s advertising programme allows brands to connect with more than 800 million potential customers, through targeting their age, gender, location and interests, in other words – personal data."

Asked ‘Do you click on advertisements or sponsored listings in Facebook’, just 3pc of respondents answered with regularly and 10pc often. The alarming response was the 44pc that answered never.

“For Greenlight and many other agencies and brands, advertising on Facebook has become part of the ‘usual mix’, says Kimuyu. We specifically saw our Facebook investment (client media spend) overtake both Yahoo and Bing collectively at the start of 2011, hinting the channel has constant growth and is delivering a strong enough return to invest more."

What delivers the highest click throughs on Facebook?

Global Facebook Advertising Report compiled by TBG Digital in Q2 2011, examined 200 billion impressions across hundreds of advertisers in 21 markets. The study revealed that retail delivered the highest click through rate (CTR) when compared to other sectors. 

Furthermore, retail saw the largest increase in growth, going from being non-existent in Q3 2010 to showing steady growth by Q2 of 2011 (a 36pc increase).
“Pulling this study back to Greenlight’s client base, we have seen similar performance levels, especially with retail getting more from Facebook.  On average a CTR of 0.5pc – 0.8pc is considered positive, however retail brands typically achieve 0.8pc – 1.0pc." 

Kimuyu points out that similarly to Google’s Display Network (GDN), Facebook has spent the last 12 months developing its advertising programme, slowly moving from offering just branded advertising (Fan Acquisitions) to becoming a serious direct acquisition channel. 

“Many of the developments are appealing to retail brands, especially with retail being the most active in the space.  Most recently we have seen one high street retailer achieve a 15pc higher average basket value and a 20pc increase in conversion rates on Facebook, when compared to its Search activity."

When is Facebook most effective?

The most popular and effective ad format is the Sponsored Story. The format delivers, on average, a 32pc decrease in cost per acquisitions (sales) and an increase in CTR (engagement).

“When running both the traditional ad format alongside a sponsored story format, we tend to see at least a 30pc increase in conversion rates, again with retail leading across the sectors," says Kimuyu.

“Although 44pc say they would ‘never’ click on advertisements or sponsored listings in Facebook, it is interesting to see that those who do find the targeting effective and engaging," Kimuyu concluded.

Moreover, given the positive growth figures, we at Greenlight predict that more of us will be advertising and hopefully ‘clicking’ on an advertisement or a sponsored listing on Facebook this year.

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com