Last week, Google reported they were making $100 million a day, primarily on 5.5 billion search impressions per day. That works out to about a $20 CPM, which is the same as a 2% CTR with a $1 CPC or a 4% CTR with a $.50 CPC.
Now, consider Facebook at a $.50 CPM and a 0.040% CTR. That’s 1/40th of what Google earns (not completely apples-to-apples) and the same ratio for CTR. In some verticals, clicks are cheaper in social than search, but they’re becoming more comparable if you exclude branded search terms and sponsored stories.
We’ve been running Sponsored Results (Facebook search) ads and are seeing the same CTRs as in Google search, but a CPC that is 1/7th what we pay on Google. We discussed earlier how volumes are low, but clicks are pennies. The same is true of Promoted Posts, which also exhibits search-like CTRs, as well as FBX.
If Facebook can provide the tools to increase relevancy for advertisers and also teach them how to use them, they can bridge this revenue gap. We know of only a couple Facebook advertisers that are doing one or more of the following:
– using the conversion spec to tune the actions they want to drive
– running page post ads and page post like stories in combination to drive exposure and engagement together
– running Facebook search ads on competitor terms with no interest targets, while running on any search term with narrow interest targets
– using landing pages on Facebook to drive retargeting on other networks or running FBX to retarget on Facebook
Yet of the sharpest Facebook advertisers, not many are using these common tactics in the paid search world:
– measuring assisted conversions on their website or offline
– split-testing copy and landing pages
– forecasting spend, traffic, and revenue for FY13
– integrated reporting across multiple channels
Until these strategic gaps are bridged, the revenue gap won’t be either, as the marketing dollars will still live at the bottom of the funnel. Because of search on Facebook and retargeting, social can have conversion-like qualities. And since Google has been pushing social from the reviews angle, search can have brand and word-of-mouth metrics associated with it.
Those who succeed in 2013 will be able to weave together top-of-funnel and bottom-of-funnel techniques. And that would pull significant traffic away from Google. Would you agree?
– Dennis Yu