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How Are Your Customers Behaving?

June 26, 2009

A new post for Business Zone.

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Hop into my Tardis, I want to take you back to those heady, glorious, recession-free days of 2007.

Two of the largest deals that year were based around advertising. Google acquired online ad company Double Click for a $3bn. In the meantime, and keen not to be left out, Microsoft stumped up $250 million for a less than 2% share in FaceBook. Sure, these figures seem a little crazy today, but the truth is that online marketing really works.

Last year, online marketing accounted for 25% of total UK advertising outlay. Back in 2007 when those deals were going through, the British business was spending £3bn a year in this space. Now, in the midst of a recession, companies look like they will shell out more than £5bn. In 2008 Google made nearly $20bn just from advertising. That’s $50 for each man, woman and child in the US!

It is clear our appetite for online marketing is only getting bigger, but what are the current trends?

The hot technique at the moment focuses around behavioural targeting. In layman’s terms, you make your advertising more effective by targeting only those that are most likely to buy. It’s nothing new. There is a reason adverts for feminine hygiene products appear during Judge Judy and you don’t see them on reruns of Top Gear on “Dave”.

As a former website developer I used to spend hours dedicated to SEO. It is hard work and doesn’t always cut it. As a result, and especially in the world of ecommerce, PPC schemes continue to blow natural search out of the water.

Within this market Google doesn’t just dominate, it obliterates. However, if Google is Goliath, FaceBook is certainly making an attempt to be David. If it’s not doing so already, I believe FaceBook advertising will put a serious dent in Google’s finances. Looking at the HitWise reports for last month, one in every 20 UK web visitors ended up on Facebook. That’s staggering.

So, how do FaceBook ads stack up against Google?

I recently experimented with a five-day ad campaign on FaceBook as well as the more traditional PPC schemes of MSN and Google. This is my third attempt at advertising on FaceBook, and I am happy to report that it has significantly moved forward.

The very first thing to notice is the ability to segment your advertising into demographics. Usefully, the merchant I was testing this for had spent a lot of time analysing product sales and speaking to customers, and knew his core market – UK males aged between 20 and 30.

The budget for this experiment was low, but looking at the results, FaceBook managed to serve up ads a phenomenal number of times. In fact, I was frankly staggered that it was around one thousand times more than traditional PPC. The result is that both the average cost per click and the cost of visitor acquisition are significantly lower when compared with Google.

Diving a little into the results, I was very keen to understand just what had happened. Analytics tells me the visitors spent about two minutes on the merchant site. However the key stat turns out to be the percentage of visitors that instantly left the site, the bounce rate. Bounces from FaceBook visitors were 50% less than Google and 60% less than MSN!

The answer is simple; It’s all about behavioural targeting. FaceBook is delivering adverts to the most relevant people. No wonder Google wants to know more about all of its visitors!

So, looking back at 2007 again, maybe that $250M was the more sensible investment.

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