Advertising ROI: a case for Facebook Ads

In a previous post, I shared the NYTN advertising budget breakdown. Today on Twitter I let a few interesting tidbits drop about how successful/not we were finding each of the methods of marketing, advertising and public relations, and enough interest was stirred that a follow up post seemed appropriate.

This is a 6 week campaign, in which we’ve purchased:

• 1–2 small print ads in each of 3 NYC publications
• Anywhere from 100,000–300,000 impressions in each of 7 online publications (including the online versions of the 3 print publications)
• Facebook ads (social advertising)
• Google AdWords (search advertising)
• Public Relations (including the cost of their retainer and issuing a press release)
• Print materials (business cards and post cards)

After the first week of the campaign, we’ve begun to see clear returns on investment. Below is the breakdown of number of visits to the NYTN site in the following categories for the 7 days ending October 3, 2010:

There are a few clarifications of terminology that may be helpful here:

• We’ve tested 6 different Facebook ads (using different copy and targeted demographics), and continue to optimize for the lowest CPC
• We’ve tested 3 different Google ads (using different copy and 109 keywords), and continue to optimize for the lowest CPC
• Direct traffic includes anyone typing into their browser our URL, as well as anyone who searched Google for any variation of our name. I’ve been generous and assumed that everyone who falls into this category was swayed in some way by our print advertising
• Public relations category includes links from our online press release and any links from articles on line about NYTN. Again, I’m being a bit generous in assuming those bloggers would not have written about us if they hadn’t learned of NYTN through our public relations team.
• Digital advertising should be self explanatory. These are links from those 7 online publications
• Social links includes (unpaid) visits from Facebook or Twitter
• Other referred links is every other type of referral — from organic searches to random links

But the real story comes in with Return on Investment.

I’ve made a few assumptions that you may want to dispute in my calculation of Cost per Click:

• Other referred links don’t cost anything. It may be the case that these links were influenced by print ads or public relations.
• Social links don’t cost anything. True — there is the cost of my time to tweeting/posting on Facebook. But I decided not to account for my time in managing any of the marketing/advertising process, nor the cost of our graphic designer’s time.
• Print advertising: as I mentioned earlier, I’m generously assuming that all direct traffic is coming from our print ads. That’s clearly not the case, as you can see in the next graph.
• Digital advertising: In fairness, our ads have only been running 3 days (so I split our entire ad buy into an equivalent 3 day chunk of money). Perhaps repeat viewing will increase our CTR, and therefore decrease the CPC.
• Public relations: In fairness, it’s difficult to break up public relations into a week-by-week accounting. It takes several weeks of follow up with any particular reporter/site, so this probably isn’t a reliable metric until the end of the campaign, looking at it instead over the entire 6 weeks.
• In general, I’ve assumed that one category has zero influence on all of the others. For example, maybe someone saw our ad in a print magazine, then noticed it on Facebook, and finally clicked on it when they were searching Google. But that effect should be relatively evenly distributed across all categories, and therefore negligible in the comparison.

Ok you say. But what about impressions. There must be value in raising brand awareness, beyond just a click through rate.

I should mention print circulation is notoriously difficult to measure (and is thus most often over reported), so I’m a little skeptical of that category in particular. I’m also assuming that our digital ads are being evenly distributed over the run of our 6 week campaign, which they may in fact not be. So a timeline of when categories went live may be useful:

Finally, Facebook ads are the only ones able to give you demographic feedback about your clicks. Ours was incredibly enlightening.

Women accounted for 2/3 of our clicks. And while the median age of people clicking through to our site was in their late 20s/early 30s, nearly 1/4 of them were over the age of 45.

The tricky thing about all of these numbers is we’re not looking at on-site conversions. Because in fact it wouldn’t matter if (for example) digital advertising cost more per click if the people who arrived at NYTN via digital advertising were spending more money on the site than those who arrived there through other means. Unfortunately, NYTN doesn’t generate revenues. We’ve got a few measures that we could substitute like “average time on site” or “exit page=buy tickets.” But that will have to be saved for another post because it requires more digging than I’m willing to do at the moment. And of course, more generally speaking, different advertising methods reach different demographic segments, each at different stages of the purchasing decision path. If you were to advertise using just one of these sources, you would likely miss out on various demographic segments and/or people in a certain frame of mind.

But for my money, Facebook offers me:

• More impressions than anyone else (at the lowest CPM)
• More clicks than anyone else (at the lowest CPC)
• Demonstrated a spike in traffic when it went live
• An opportunity to target my ads by demographics/interests
• An opportunity to continually change my ads, at a moment’s notice
• Clear statistics on who is clicking on my ads

And I definitely spent the least amount of time creating our Facebook ads. Upload a logo, think up a 20-character title and 135-character copy, wait about 30 minutes for approval, and we’re off to the races. That my friends, is real ROI.