This article first appeared in AdAge on November 15, 2012.
by: Matthew Creamer
Sales Pitch to Industry Is All About Reach and Frequency
Back in January, we told you about research findings that engagement rates on Facebook brand pages were at about 1%. A lot has changed since then, chiefly the controversial tweaking of an algorithm that determines how many people see brand posts and a change to how engagement is counted. So what’s that engagement rate now?
Still 1%. Or, to be precise, 1.4%. That’s the percentage of fans and friends of fans of the top 200 brand pages on Facebook who are actually engaging with those pages, according to the Ehrenberg-Bass Institute, a marketing think tank based in Australia.
The small uptick, the research found, has to do with Facebook broadening what goes into its People Talking About This (PTAT) metric, a kind of proxy for engagement. PTAT is the number of people who have interacted with a page through a host of activities such as liking, commenting on it and sharing it over a seven-day period. Since late spring that number has also taken into account into friends of fans who interact with a brand’s post to account of the viral potential of the social network.
“The very slight change in the numbers are due to Facebook changing the calculation to record all interactions from non-fans as well,” said Karen Nelson-Field, postdoctoral research fellow at the institute. “For us this number is underwhelming. There has been so much hype about the whole ‘amplified reach’ opportunity — that friends of fans, while not explicitly linked to the brand themselves, offer advertisers huge potential outside of the fanbase. We don’t see it here.”
The Ehrenberg-Bass Institute carries on in the tradition of the late Andrew Ehrenberg, a mathematician who argued that the concept of brand loyalty is a myth and that marketers should worry less about reaching a few loyal fans and heavy buyers than hitting a large amount of light and medium buyers. This orientation leads to a rejection of the notion that social media should be privileged over other media that can help the marketer in its central quest of reaching as many people as possible.
Read a press release accompanying the announcement, “Facebook is becoming more and more like traditional media. It may be time for advertisers to move on from worrying about how many fans they have to instead explore how many category buyers Facebook can reach, for what cost, and to what effect.”
Interestingly, Facebook doesn’t disagree. Lately, it’s been telling the story that if you want to sell stuff reach and frequency, traditional ad metrics passed down over from TV research are more important than clickthrough, an online ad metric. Last month, Facebook talked about Nielsen research showing only a 0.07% correlation between high clickthrough and actual sales and relative high correlations between positive ROI and maximized reach and frequency.
This week, when asked about the Ehrenberg research, a Facebook executive made a parallel point when it comes to the issue of earned engagement and reach.
“[The Institute’s] meta-point is that you should think about Facebook like you think about other marketing channels and not necessarily as a new and different beast,” said Graham Mudd, head of vertical measurement at Facebook. “Broadly speaking we would agree with that sentiment, that focusing on core marketing metrics, like reach and frequency is what drives effectiveness. Engagement is an interesting and important metric for some marketers and campaigns. But it shouldn’t be standard by which Facebook as a marketing platform is evaluated.”
Mr. Mudd emphasized that PTAT is not a reach figure and, to be sure, there is engagement on Facebook that isn’t reported in the metric: Looking at brand’s post or photo but not clicking on it would be an obvious example.
More than anything, the Ehrenberg-Bass study may throw cold water on any true believers left out there who thought they were headed toward some earned-media utopia where buying ads wasn’t necessary. For Facebook’s part, Mr. Mudd said that for the top 200 brands Facebook’s ad platform drives five times the reach that earned engagement does. There is, of course, the necessary and obvious caveat that Facebook’s financial future hinges in no small way on convincing marketers to buy ads there.
Ehrenberg has done five waves of this study, each using the same methodology. Over a six-week period, they looked at PTAT as a percentage of total fans, while extracting new likes, so as to only measure interactions after initial like. The first two waves, which began in November 2011 and February 2012, yielded engagement rates of 0.5% and 0.7%.
Then the changes on Facebook’s end began. In late May or early June, Facebook changed PTAT to include the activity of friends of fans, essentially accounting for the personal network of each fan and relevant activity there. And around Sept. 20. Facebook changed the algorithm that determines who sees what and where in your newsfeed, known as EdgeRank. That opened a whole other can of worms, with many complaining that their brand posts’ reach had plummeted after the page. Facebook maintains that median reach of brand’s content hasn’t changed: 16% of the fanbase.
The PTAT change in particular led some noncommercial brand pages, like George Takei and Jesus Daily, to see their PTAT shoot up. Not so for commercial brands. After that change took effect, Ms. Nelson-Ran ran a wave. The result was 1.4%, same as the previous one, which took place before the changes to EdgeRank. To see the disparity, consider this: As of Monday, Mr. Takei had more than 3 millon PTAT to 2.9 million. Oreo, on the other hand, had 30 million likes and only 160,000 PTAT.
It should be noted that Mr. Takei, the actor and author who’s translated his fame as Star Trek’s Sulu into social media stardom, has said he’s taking on the whole EdgeRank controversy in his forthcoming book.