Perfect Your Facebook Ad Strategy This Holiday Season

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“Data Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Laura O'Shaughnessy, CEO of SocialCode.

This holiday season, analysts expect sales growth to come in a percentage point lower than the previous two years at 4.1% (National Retail Federation). With good reason retailers and brands will likely remain judicious when allocating advertising budgets to maximize efficiency in their spending.

At the same time over the last two quarters, there has been an increase in the referral traffic coming to U.S. retailers from social media sites. Facebook alone contributed 54% of all traffic to U.S. apparel websites in May 2012, comScore reports. This increase has been fueled by the platform’s ever-growing user base, heightened user engagement and the introduction of new, innovative ad types and targeting capabilities.

To lend clarity to the ever-changing social landscape, here are some trends recorded last holiday season accompanied by key opportunities to help guide brands this year. (The numbers shared here and below come from 150 SocialCode campaigns run last holiday season, across client verticals.)

Holiday Advertising Traffic

In the fourth quarter of 2011 SocialCode saw a 40% heavy-up in advertising over a 10-day period that straddled Christmas Day — from December 18 to December 28. There was no dip on Christmas Day itself. However, advertising dropped nearly 60% over three days of the Thanksgiving weekend — from Thursday through Saturday — and again plummeted on New Years Day to only 3% that of average levels, rebounding on January 3.

Opportunity: Thanksgiving weekend presents a relatively “quiet” platform from an advertising perspective and there is the potential for increased attention directed toward existing ads. It is the number one shopping weekend of the year, and don’t forget that many users still go online on Black Friday, Small Business Saturday and Cyber Monday. Go against the grain and keep your campaign consistent through that weekend.

Projected Spend

In Q4 of 2011 the inventory demand nearly tripled, driving up prices. SocialCode advertisers experienced a notable increase in CPM -- 48% on average -- on Facebook as compared to the first quarter. Fortunately, this mark-up was accompanied by a corresponding increase in click-through rate (58% on average) that lead to an overall lower cost per click (CPC) -- 6%.

Opportunity: The investment in social media for the holidays is worth it. While inventory is pricier during the holiday months, the response rates actually enable brands to get a bigger bang for their buck.

Favored Ad Types

Taking a closer look at the performance of individual ad types, the Domain Ad (previously known as the Standard Ad) experienced a 29% rise in CPC when CTR didn’t keep pace. The Like Ad (previously In-line Fan Ad) saw similar increases in CPM and CTR, rendering CPC flat.

The top performer among the three ad types compared was the Sponsored Like Ad with a 235% increase in CTR driving a 65% decrease in cost per click.

Opportunity: Why did the Sponsored Like Ad out-do the alternate ad types last year? This is an ideal method for users to discover what to buy their friends and determine what the ‘hot’ gift of the season is. During the season of giving, consumers are faced with an abundance of ads, coupons and promotions; the value of a shopper’s opinion tied to an ad is insurmountable.

Likewise, the Sponsored Like Ad doesn’t lose value after the holiday season – consumers always trust their friends. Savvy advertisers caught on after this breakthrough performance last year. In Q4 of 2011, Sponsored Like Ads accounted for only 15% of like-type ads. Today they account for 78%.

Obviously this year there are additional ad types that have rolled out during 2012 and, most importantly, new ways to leverage the power of social to drive holiday shopping.

Follow Laura O'Shaughnessy (@lgraham) and AdExchanger (@adexchanger) on Twitter.

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