Merkle: $14 Facebook News Feed CPMs Offer Better ROI Than Marketplace Ads

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facebook-targetingRecounting an anecdote in his opening keynote yesterday at Merkle's customer summit, Merkle CEO David Williams illustrated what a "game-changer" Facebook's Custom Audience product has been for Customer Relationship Marketing (CRM) companies like his.

Williams said that Facebook executives initially told him it would not only never let email addresses match to Facebook login data – it wouldn't even allow a test to take place.

Times changed and last year, 14 months after the initial meeting according to Williams, along came Facebook's "Custom Audience" product, which provides marketers a matching capability for online and offline databases that is currently unique among all publishers in terms of its scale and reach (back in the 00's, Aol and Yahoo trail-blazed this type of matching).

For Merkle, which has been deeply entrenched in the direct mail/offline world, Custom Audiences, along with the launch of FBX ,appears to have been a critical milestone in the development of its own digital strategy.

In a standing-room-only breakout panel today, Merkle's Digital Media VP/GM Megan Pagliuca and Facebook Product Marketing Director for Data & Targeting Bryan Schroeder took a deep dive for the marketer audience into "Facebook Techniques for Direct-Targeting," showing off some recent direct response marketing results.

Merkle's Pagliuca reiterated the huge amount of change and product development that has happened at Facebook in the past year as it relates to her world. She prefaced with a marketer's quote: "This is the first new channel I've seen since paid search that's worked this well."

Facebook's Schroeder took note of the mobile shift for his firm, saying users spend 14 hours a month on Facebook today. This is an important differentiator, because Facebook can continue to target in mobile using identifiable IDs – first-party data that goes beyond cookie challenges and creates the link for CRM databases looking to address audience across devices.

This begs the question: How much longer until Google introduces its own Custom Audience product and ID targeting instead of cookies? Only privacy challenges – and probably the anti-trust buzz (big hurdles!) – seem to be in the way of Google's ubiquitous, universal login.  Facebook may force Google's hand into potentially treacherous waters.

A few of the highlights from the presentation – see the PowerPoint at the bottom of the post:

  • Merkle clearly sees the connection between what Google and Facebook offer – unique, scalable addressability in digital.
  • Facebook Exchange provided significant incremental – i.e. unduplicated – reach for a client campaign that showed only 5% overlap between FBX and other real-time bidding display ad sources.
  • In spite of the cost of the News Feed ($14 CPMs), on an ROI basis, Facebook's News Feed outperformed its right-rail marketplace ads (75 cent CPMs), reducing CPAs by 63%.

Schroeder re-emphasized that News Feed targeting is powerful and affects offline sales, according to past studies through Datalogix.

By the way, somebody do the math on $14 News Feed CPMs at scale. The revenue opportunity here for Facebook seems huge. But there remains a big challenge around providing the optimal user experience, which factors into the reach and frequency marketers love.

For marketing geeks, the most compelling of the slides may be the comparison between the direct mail and the online world for CRM. There are still a lot of tools for both – CRM marketing isn't easy, apparently. Merkle sees Salesforce and ExactTarget as a significant new player.

It will be interesting to see if Merkle CEO David Williams can flip this unique view on Facebook and CRM, such that CRM marketing gets bumped up to the CMO level. Regardless, other agency CEOs should be taking note. This is D.R.-focused now, but brand and brand awareness understanding seems inevitable down the road.

Towards the end of the panel, display ad manager Elizabeth Seniff from Travelers spoke about her company's Facebook Exchange-only experience (so no Custom Audience stuff yet) and said that "the incrementaility we saw was huge" and "there was a huge incremental lift." She reiterated that Facebook inventory is cheap.

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