Facebook: new flexibility towards outside measurement is necessary, but not sufficient

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With great power comes great responsibility, and no-one is more powerful in today’s media industry than Facebook and Google.

Facebook and Google take over two-thirds of U.S. and over 70 percent of all worldwide digital advertising spend (including search). Facebook in particular grew strongly in 2016, with advertising revenues up over 53 percent in Q4 2016, representing 36% of all non-search advertising outside of China, according to Pivotal Research. The combination of its core social media platform, Instagram, and WhatsApp has created an unprecedented user base of over two billion people worldwide.

However, not all in the Facebook ‘walled garden’ is rosy. Facebook has been criticised for its handling of sensitive editorial, including so-called ‘fake news’, that is published on its platform without any editorial control. This matters when more people are routinely getting their news delivered via Facebook, with a quarter of all adults under 25 now considering social media their primary source.

Facebook is expected to receive $30 billion in worldwide advertising revenues in 2017, and provides most of the data used to measure and justify that spend. Yet in late 2016, Facebook had to admit to errors that had been identified in its internal calculations, including inflated viewership numbers for online video, double-counting of the time spent on brand pages, and inaccurate reach numbers. These errors matter, as the self-reported data provided by Facebook helps media planners determine Facebook’s merits compared to other options; they especially matter when viewability standards in online video are highly variable, without common standards. Facebook’s self-reported viewing figures are compared to others which are independently verified, against different criteria.

Now Facebook is opening up to outside parties and independent measurement in a bid to address negative advertiser reaction to the lack of independently reported data. At the recent IAB Leadership conference in the US, Marc Pritchard, the Chief Brand Officer for Procter and Gamble, made it clear that his company would only invest with publishers who provide accredited third party measurement and verification, with viewability metrics to an independently accredited standard.

Generally Facebook’s more flexible stance to outside measurement has to be welcomed by advertisers as a step in the right direction, but Facebook remains primarily a ‘walled garden’, where it controls most of the meta-data based on its users’ private behaviour on the platform, which drives the personalization that is critical to its advertising revenue.

However, while independent measurement is welcomed, it is important to note that 50% of Facebook’s users are mobile-only, and 80% of its advertising revenue comes from advertising on mobile devices. All mobile advertising is more difficult to measure than on fixed devices, and cross-device measurement of people’s exposure to advertising is harder still. Consequently, the industry’s ability to independently measure Facebook’s audience and engagement metrics is still limited.

Given the sheer scale of its audience base, many advertisers need Facebook as part of a ‘diet’ of media options, but it has to earn its place on the schedule just as much as any other publisher and the volume of spend on Facebook has to be interrogated closely with independent metrics in short supply.

Here are three practical steps that advertisers should take when reviewing their investment in Facebook and the amount they should invest:

  1. Investments in all advertising properties (especially in ‘walled gardens’) should be justified by business metrics, not just audience and engagement measurement.

The return-on-investment of Facebook advertising should be measured independently in terms of its profit delivery, both on a standalone basis and as part of the media mix. Although powerful, Facebook doesn’t exist in a vacuum and it should be evaluated in terms of its two-way relationship with other channels such as TV and Search, and even other social channels such as Instagram. Sophisticated analytics are required to measure the return-on-investment of the marketing and media mix across multiple channels and devices.

Advertisers need to constantly monitor investment and results to ensure effectiveness, and move money to chase a better return. To achieve this, constant monitoring of business KPIs is essential, including the systematic measurement of exposure metrics such as viewability and fraud. Ads unseen or viewed only by machines cannot work.

Understanding people’s online behaviour requires close tracking of people’s digital ‘footprints’, especially with mobile devices playing such a key role for Facebook. Advertisers need to understand what tools are available to achieve this in a world where the ‘single customer view’ is still hard to achieve across multiple channels owing to technological shortcomings.

For response-led advertisers, the tracking of these journeys is critical to understand the true contribution to ‘cost-per-acquire’, website traffic generation and ultimately conversion rates, ideally benchmarked versus other channels and continuously tracked. Attribution models are still in their infancy and do not include offline influences to a high degree of reliability.

To improve the chances of success, advertisers should ensure continuous testing of both content and format options, with associated metrics clearly set in advance. While any measurement of exposure such as video completion rates should be assessed, harder measures of engagement actions such as click-through rates should be preferred. Other metrics such as ‘likes’ and shares should only be viewed as indicators.

  1. Wherever possible, independent measurement should be used to support recommendations and results.

‘Walled gardens’ have the advantage of inner knowledge but the disadvantage of potential bias. Advertisers should ensure that their media partners review data derived directly from platforms alongside data sourced independently, especially in relation to audience measurement. In the absence of independent data, planners should interrogate self-reported metrics, with preference given to channels that provide independent measurement to Media Ratings Council or equivalent standards.

Advertisers should actively participate in their trade associations’ efforts to require accreditation for social platforms akin to those traditionally provided for offline media, such as the ‘call-to-arms’ initiatives from the ANA in the US.

  • Media agency trading agreements should allow flexibility to move investments from channel to channel.

Media agency networks typically conclude volume deals with media suppliers, and these can adversely influence media planning choices, as described in the K2 Intelligence study conducted in the US in 2016.

It is noticeable that the glitches in measurement reported by Facebook are not considered to have affected its billing processes nor harmed Facebook’s revenues; this may be because media agencies do not have the contractual freedom to divert budget away from unreliable channels owing to volume deals, irrespective of those channels’ performance.

Advertisers need to ensure that they are not locked into trading agreements that prevent them from moving investment from under-performing channels to more productive ones. They need to understand the nature of their media agencies’ trading arrangements and the potential consequences of being part of volume deals.

Advertisers should use the undoubted strengths of Facebook and capitalise on its ability to engage audiences with a wide range of ad formats and branded content options, within a rigorous measurement framework. Given the lack of independent verification, it is essential that advertisers ensure that specific metrics are set for Facebook and the results measured closely. ‘Walled gardens’ should be as accountable as any other channel for their true contribution to effective communications.

Facebook has been enormously successful through providing effective advertising options and smart use of data, and it has earned its place on the advertisers’ roster, but Facebook needs to recognise that the enormous power it wields carries the responsibility to provide a productive business environment for the advertisers who fund it.

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About Author

Chief Strategy Officer

Nick has spent 30 years in the media industry, principally having co-founded Manning Gottlieb Media (MGM) in 1990. MGM became one of the most highly respected and fastest-growing Media Specialist agencies before becoming part of Omnicom in 1997. His most recent position was CEO of OMD’s operations in the UK. Nick also co-founded OPera, the media negotiation arm for OMD and PHD, with billings of £1 billion. He joined Ebiquity in October 2007 as Chief Operating Officer with special responsibility for the Analytics division before becoming President, International, in overall charge of Ebiquity’s non-UK based operations. Nick is now Chief Strategy Officer, with responsibility for developing and implementing Ebiquity’s strategy across its three business segments.

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