We’ve all heard about the effectiveness of combining online and offline marketing initiatives; the whole is greater than the sum of its parts. That got me thinking about how running paid online marketing campaigns side-by-side can also make each more effective than if they were running in isolation.
In late 2013, Kenshoo issued a report stating “that Facebook advertising has a direct, positive effect on paid search marketing performance.” To inform the study, Kenshoo analyzed the results of a retailer with 2,500+ locations in the US. One segment of potential consumers were exposed only to paid search, while the other segment of potential consumers was exposed to both paid search and Facebook ads
The Ad Context
Paid search ads were largely presented with unbranded keywords, between positions 3 to 6.
Facebook advertising was done with page post link ads (left side) and page post photo ads (right side), both in the newsfeed.
Both the Paid Search + FB group and Paid Search Only group used the exact same ad creative and users were forwarded to the exact same landing pages on the company’s website. All the correct precautions were taken to ensure that data was not skewed including evaluating multiple markets in different regions, accounting for historical & forecasted sales revenue, and measuring in-market advertising spend just to make sure the two groups were really in fact comparable.
So what happened?
The consumers that were exposed to both Facebook and paid search ads yielded a 30% greater Return On Ad Spend (ROAS). ROAS is just a simple calculation of Ad Revenue / Ad Spend; if a brand spent $20,000 of co-op marketing funds on PPC and Facebook advertising for 30 channel partners in X region and those channel partners generated $140,000 in sales then the campaign had a 7x ROAS. Of course the ad revenue generated has to be attributed to the exact ad campaign that spend is tied to, or else the campaign could look more successful than it really was (this could all be done over a marketing resource management platform with closed loop analytics). So how impressive was the improvement in regards to Return On Ad Spend achieved?
According to Kenshoo, the combination of paid search and Facebook ads produced “significantly higher” Click-Through-Rates (CTRs), Average Order Value (AOV), and a lower Cost-Per-Acquisition (CPA). How significant? The 30% higher Return On Ad Spend was made possible by a 7% higher CTR, 4.5% drop in CPA, and a huge 24% in AOV.
The Paid Search + FB group ended up spending (on clothing and consumer electronics) 24% more on average per order than the Paid Search Only group. Perhaps it is because brands that appear in multiple spaces project more legitimacy, increasing buyer confidence and willingness to spend. Either way, the study proved, at least for this particular retailer, that the Paid Search + FB group yielded higher-value customers.
The 7% increase in CTR when comparing Paid Search + FB to Paid Search Only is significant because it shows that when Facebook ads are run in parallel with paid search, those previous FB ads increased buyers’ motivation to click paid search ads. This is big because consumers that click paid search ads have strong buyer’s intent.
The 4.5% drop in CPA seems small, but when you consider those customers are also spending more per order is starts to look more significant.
Understanding how different ad combinations can make a paid online marketing campaign whole greater than the sum of its parts is the lynchpin of effective digital marketing strategy. We saw that for this specific 2500+ location retailer, a dual-touch point paid campaign definitely worked.
What you should take away from that is that you need to investigate and test your success when implementing both paid search and paid social media advertising concurrently. The final paid search ad that generated the conversion should be assigned most of the credit, but the other touch points leading up to that conversion ought to be attributed some of the credit as well. Figuring out the ad combinations that truly impact overall campaign performance will ensure you get the most out of your paid online marketing spend.
About the Author
Gary Ritkes, President of SproutLoud, oversees all Business Development and Marketing for the company. Gary, a pioneer in the emerging vertical of Distributed Marketing Technology, is an industry leader and innovator with 20+ years experience in graphic communications and marketing strategy. Gary has been involved with SproutLoud since the inception of the company. Prior to joining SproutLoud, Gary was VP of Marketing for Rex Three, Inc., SproutLoud’s first and largest vendor among its network of providers. He has served many Fortune 1000 clients and worldwide advertising agencies in providing marketing technology direction and optimization. He was an original founder of U.S. based Earth Color Group and co-founder of Advanced Digital Services (ADS), which was sold in 1996 to publicly traded Katz Digital Technologies. He has served as a board member of the local chapter of the American Advertising Federation chapter and other national industry associations, including the DMA and AGA.More Content by Gary Ritkes