Facebook released its quarterly earnings report for Q2 2017. What the report made very clear is that Facebook is running out of News Feed ad space in 2017. This means simply that there is increasing competition among advertisers in the News Feed.

As a marketer, how do you react to that? Does it mean that you have to invest less in Facebook? The answer is no!

You should instead make your social media strategy smarter by optimising the segmentation and targeting of your audience, by creating and promoting the content loved by your audience, by optimising frequency, and by using advanced advertising options to further nurture your audience. Once you optimise you can deploy with confidence the same budget or even more. In either case, an improved social strategy will lead to better ROI.

But why a better content strategy? Because improved content quality leads to improved engagement. Improved engagement leads to improved relevance score, and improved relevance score leads to lower Cost-per-Click (CPC).

Unfortunately, many brands are still not on board with optimisation. Data suggests that 44% of content that marketers are putting budget behind on Facebook is poor quality content. This can not only potentially affect brand image but it significantly impacts advertising costs.

As you can see from the chart below, CPC is 10x higher for ads with 1% Click-through-Rate (CTR) than ads with a CTR of 2%. When looking at CTR of 5%, the difference in costs is more than 30x. Click-through-Rate here can be considered as a measurement of how valuable the content is for the audience as it quantifies users’ motivation to interact with the ad.

Facebook made the measurement of ad success easier for marketers by introducing the Relevance Score metric. The score ranges from 1 to 10, representing the ratio of positive vs. negative feedback on each ad, with 10 as the best possible score.

If we take a look at the relationship between Relevance Score and CPC, we can see that ads with a very low Relevance Score have 40x times higher CPC.

All of the data we’ve reviewed above suggest that optimising your advertising strategy has a significant impact on costs and therefore on increasing social ROI. But in the end, it’s about the potential customer and what impression an advertiser can make within their limited News Feed.

But let’s look at a hypothetical situation and evaluate the estimated advertising performance outputs for two extreme situations - an extremely low relevance score vs an extremely high relevance score given a certain amount of money spent, in our case $100.

In the chart below you can see the predicted performance gap for ads with these two different Relevance Score intervals. This gap demonstrates a potential return loss in the investment that is caused by the fact that the ad is not optimised well.

The horizontal line represents the $100 spent and the vertical lines represent the predicted output - number of clicks for a very low Relevance Score of 1-2 vs the predicted number of clicks for a highly relevant ad with Relevance Score of 9-10.

If the advertising space is getting so saturated, there’s an opportunity for you to now really start focusing on better understanding your audience and knowing what they want.

It’s not about mass advertising and blanketing the News Feeds with your branded content.

Now more than ever marketing is about understanding your audience, their needs and wants, carefully creating content that will resonate with them, and delivering it to them in a cost-efficient way – tying outcomes to business goals.

If you’re really strong on measuring and understanding your audience, in the end you will end up optimising your advertising costs. You aren’t sending your content to audiences that aren’t interested in it, and you’re focusing your efforts instead on creating relevant content for the most relevant audience groups.

Social media marketing optimisation is critical to preventing marketers from making mistakes and inefficiently deploying budgets. Marketers cannot resolve this on their own, they need to be equipped with social media marketing solutions that help them make smarter marketing decisions.

 

By John Malatesta, chief marketing officer and executive vice president at Socialbakers


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