Facebook’s New Sponsored Results: Preliminary Findings
Published: August 29, 2012
Author: Jon Fendrich
Last week, Facebook publicly launched “Sponsored Results,” a search type-ahead ad unit, and we at Ampush have been testing these ads for a casual gaming app. The ad unit can be created using the Power Editor from the same general ads tab. While our sample size is small thus far, here are some positive preliminary findings and observations.
1) CTR is quite high when compared to right-hand side ads.
We observed Click-Through Rates ranging between 0.5% and 1% on sponsored results. This outpaces average non-mobile marketplace ad CTR by a factor of 10 (at minimum). Click-through rates improved as the “targeted entities” gained relevance to the product being advertised, but it’ll take time and growing competition for top searches to determine whether these rates are sustainable.
2) Advertisers can control both “Targeted Entities” and user interests and demographics.
In Sponsored Results, Facebook has combined the power of its highly targetable ads product with the “demand fulfillment” model of search advertising. Search keywords are replaced by a list of “targeted entities” that may only include Facebook pages, apps, or places. Audiences can be further segmented, however, by applying demographic and interest targeting. This will allow advertisers to both target and bid aggressively on searches by their most desirable users, and to narrow search keywords and reduce bids for those less likely to become users or fans.
3) Sponsored Results can be used offensively or defensively.
Offensively, advertisers should avail themselves of the opportunity to reach users seeking something specific and relate their product to a user’s demand. This should open up opportunities for smaller brands or apps to connect with Facebook users through search without having to build up a sizable enough user-base to top organic search results.
Defensively, advertisers can (and may be forced to) bid on searches of their own brand or product in order to ensure competitors don’t poach users showing intent. While these ads create costs associated with a previously free organic search feature on Facebook, they provide a method of customizing messages to groups of immediate users.
4) The ability to customize messaging using “connections” targeting is powerful.
Facebook allows for inclusive or exclusive targeting of existing fans (of a page) or users (of an app). By segmenting sponsored result ad audiences with custom messaging, an advertiser can efficiently move people through a cycle of engagement or purchase. By excluding connections, potential new users of a social game searching for a similar game would be shown copy around trying out the newest or best game in the genre. By including connections, existing users of a social game searching for a similar game could be shown copy highlighting new features to re-engage them. Finally, by including connections and using the advertiser’s own game as the search keyword, motivated users could be pushed toward purchasing virtual goods or inviting friends to share their experience.
5) Sponsored Results produce high CPMs for Facebook.
Our initial tests saw costs between $1.00-2.00 per thousand impressions. While inventory for this ad unit is limited by user searches and the number of sponsored results Facebook will allow per query, revenues for these ads appear to be significantly higher than for equivalent impressions of marketplace ads.
Search advertising on Facebook is currently in its formative stage, but early results indicate it will be an important part of the Facebook ads picture moving forward.
– Jon Oberlander