Does it still make sense to purchase likes? Absolutely. But how many you buy depends on lifetime value.The decline of organic Facebook reach, a result of growing News Feed competition, raises questions for brand marketers. Among the most burning are questions about fans. In the early days of Facebook advertising, marketers sought to acquire as many fans as possible, assuming they were building an owned audience for messaging at scale.

Now that marketers can only reach a small percentage of their fans organically, questions linger around whether fans still have value and whether investing in fan acquisition is still a smart strategy.

by

Addie Conner Chief Innovation Officer

Ben Weiss Marketing Content Strategist

Does It Pay to Buy Likes?

Does It Pay to Buy Likes? 2

Let the data speakFans are still valuable even as organic reach declines for a number of reasons.

1. Less expensive reach costs

Though marketers need to pay to reach many of their fans, the fact that fans opted in to receive brand messages means they respond positively at higher rates. They also react negatively less often (hiding posts, marking posts as spam). These engagements signal high quality to Facebook’s ad serving algorithm and can reduce reach costs (CPMs) significantly.

2. Greater ad impact through social context

When target consumers get product or service recommendations from a trusted person, that interaction is invaluable to marketers. Facebook imitates this concept when fans engage with brand content by serving ads with “social context.” This means when fans engage with an ad, their friends are served ads with the context that someone in their network liked, commented or shared. Kind of like an unofficial recommendation. And since fans engage with brand content at higher rates than other audiences, they produce more stories with social context. This is a huge benefit.

For example, a Nielsen study found that users seeing ads with social context had greater ad recall, awareness and purchase intent compared to those who saw ads without social context. More specifically, a blog post written by Facebook’s VP of Ads Product Marketing Brian Boland describes how ads with social context drive, on average, 35 percent higher online sales lift.

Our data corroborate this idea. A rollup of five early 2014 campaigns run for one of SocialCode’s highest spending clients shows ads with social context drove, on average, 11 percent greater offline sales lift than ads served without social context.

Note: We are only assessing the validity of campaigns that measure success strictly through likes. Brands putting out quality content that’s true to brand standards and personality will always pick up new fans and gain a degree of added performance from that audience. It’s the decision to pursue fan-specific KPIs that requires consideration.

Ads with social context drive, on average, 35 percent higher online sales lift.

Does It Pay to Buy Likes? 3

Are likes valuable enough to buy?The question remains, are fans so valuable that marketers should advertise to acquire them?

The answer is two fold.

1. From one perspective, brands want enough fans that their target audiences see ads with social context, which as explained above, achieves high impact.

2. The other important consideration is lifetime value — a prediction of how much actual revenue marketers can secure from a person, in this case a fan, over time.

With all that in mind, here’s how to determine how many fans to purchase.

Compare fans against non-fansIn some cases, fans have a lifetime value so much higher than non-fans that an always-on campaign to purchase as many fans as possible is justified by high returns. When this is not the case, advertisers are better off acquiring just enough fans to achieve social context goals, using remaining budget against valuable, non-fan segments. This is why we urge comparing fan versus non-fan value before building an acquisition strategy.

Here are examples of two different fan approaches surfaced through fan versus non-fan comparisons. Both examples are based on real campaigns run for SocialCode clients in 2014.

Example 1: When Fan Lifetime Value is Low

Epiq Pictures is a fictional film studio that’s harnessing Facebook to sell tickets to its new comedy The Hot Knife. The studio finds fans do indeed convert on purchase offers at less cost than non-fans. Nonetheless, through the lens of lifetime value, launching a limitless fan acquisition campaign for The Hot Knife Page doesn’t make

sense. Even if fans convert more efficiently, revenues are confined to low-cost purchases like tickets and digital downloads. Further, movie tickets and personal copies are generally one-off purchases, meaning that added efficiency won’t continue to accrue over time.

Even still, Epiq Pictures wants to make sure the The Hot Knife Page has enough fans to serve its target audience ads with social context.

Since Epiq Pictures provides a low-cost product that is not bought consistently, lifetime value for fans is low.

Does It Pay to Buy Likes? 4

The studio concludes it wants to serve 500,000 impressions with social context. We know from a random sample of 2014 SocialCode client campaigns that every time fans engage (like, comment or share) with a piece of content, they generate, on average, eight viral impressions with social context. Assuming a 5 percent engagement rate for fans, we would therefore recommend Epiq Pictures acquire roughly 1.25 million fans to achieve its social context goal (see diagram for more details).

Example 2: When Fan Lifetime Value is High

Great Stay is a fictional travel brand that wants to harness Facebook to sell premium packages for its luxury resort Sapphire. The brand surfaces that fans convert on these packages at 5x lower cost than non-fans.

In this case though, scaling a fan acquisition campaign aggressively is a smart decision. Why? Because travel is a much different industry than film. Consumers take vacations multiple times each year and purchase packages worth thousands of dollars. So when fans are determined to convert at markedly lower cost than non-fans, advertisers can capture that efficiency through both immediate and long term gains.

Acquiring Enough fans To Achieve Social Context Goals How To Approach Fan Acquisition When fans Do Not Yield More Revenue Than Non-fans

Establish the Social Context Goal

Steps to Acquire Enough fans Examples

Establish an Engagement Rate Benchmark for fans

Determine How Many Social Context Impressions A Fan Engagement Generates

Assuming 5% of Your fans Will Engage, Identify How Many fans Are Needed To Achieve 62,500 Engagements

Identify How Many Fan Engagements Will Achieve the Goal

Launch a Campaign To Acquire 1.25M fans

Epiq Studios wants to serve 500K impressions with social context

The studio knows one fan engagement (a like, comment or share) leads to 8 viral impressions with social context

1

4

2

5

6

3X 8 = 500,000

X = 62,500 Engagements

X 5% = 62,500

X = 1.25M fans

Historical data illustrates fan’s of Pages managed by Epiq Pictures have a 5% engagement rate

Does It Pay to Buy Likes? 5

For example, Great Stay scales a fan acquisition campaign with a $1.00 cost per fan (CPF). The brand continues to acquire as many qualified fans as possible, watching closely for a point of diminishing returns. Once the brand acquires 5 million fans, its team recognizes fans no longer convert higher than non-fans. Great Stay turns off the fan campaign to focus on other initiatives.

Identify How Much More ValuableFans Are Than Non-Fans

Great Stay identifies fansconvert 5x more efficientlythan non-fans

1

Acquire As ManyQualified Fans As Possible Cost Per Fan (CPF) = $1.002

Watch PerformanceClosely as Fans Scale

After 3 months of aggressivefan buys, Great Stay finds fans’added conversion value stops.The Page now has 5 million fans

3

Turn Off Page Like AdsOnce Added ConversionValue Ends

Great Stay turns off Page like adsand focuses on other campaigns

4 Like

Acquiring fans at Scale How To Approach Fan Acquisition When fans Yield More Revenue Than Non-fans

Steps to Acquire fans Examples

Does It Pay to Buy Likes? 6

Advertiser Mandates1. Business goals first. Always.

Never acquire fans for the sake of acquiring fans. Only launch campaigns with fan-specific objectives when it is clear they will achieve ROI or create social context for target audiences.

2. Beware diminishing return.

Even when it makes sense to acquire fans aggressively, it’s important to constantly refresh the fan versus non-fan analysis. It is likely that fans will eventually grow to a point where they no longer justify acquisition costs. When that happens, it’s key to pivot strategy quickly.

3. Look for learnings.

When running a fan versus non-fan analysis, advertisers will likely surface additional learnings beyond “Yes, I should buy more fans” or “No, I should not buy more fans.” For example, fans might be better for awareness versus direct response initiatives. Whatever the case, explore the data deeply to extract insights.

4. Get enough fans to serve target audiences ads with social context.

Social context is one of the most powerful tools in a Facebook advertiser’s arsenal. Make sure a Page has enough likes to achieve the huge benefit that accrues when target audiences see that their friends have engaged with a piece of brand content.

5. Never forget other targeting options.

Facebook is a huge platform. There will rarely be a case when targeting people who don’t like your Page (think Custom Audiences, Partner Categories, interests) wouldn’t be a no-brainer.

6. Focus on quality in Page like ads

Facebook announced that motivating users to like a brand Page through “like-baiting” (incentives that exist for fans only) is banned. So even when using the Page like ad unit, ensure your content is as inherently “likeable” as any other post being published.

About SocialCode: SocialCode is a Strategic Preferred Marketing Developer (sPMD) and Twitter Marketing Platform Partner that builds marketing technology and solutions making the world’s most valuable brands successful using social platforms. Over 30 Fortune 100 firms and over 100 leaders in every major category, including their agencies, rely on SocialCode to lead their social advertising, improve messaging and media strategy, and become better marketers.

Get more resources on www.socialcode.com