One of the least understood aspects of Facebook's advertising business is its move into "Big Data."
Back in Q1 2013, Facebook signed deals with Datalogix, Acxiom, BlueKai, and Epsilon. They are all companies that either hold or process vast troves of consumer marketing and purchase information.
The problem for many advertisers — particularly grocery companies — is that the vast majority of consumer purchases take place offline, in a grocery store or on a car dealer's lot, for instance. So the question becomes: "If I buy advertising on Facebook, how do I know that someone bought a can of beans in the supermarket because of it?"
Eric Roza, the CEO of Datalogix, believes he has the answer to that question, now that his partnership with Facebook is rolling. Datalogix's clients include Pepsico, Dr. Pepper Snapple Group, Mondelez and Ford.
Basically, advertisers use their own offline data, via Datalogix, to target potential consumers with ads on Facebook. They then compare the sales results from that campaign with a control group who saw none of the advertising. The statistically significant difference can be attributed to the Facebook advertising, he says. Datalogix has run 50-plus campaigns on Facebook, Roza told Business Insider recently.
For consumer packaged goods advertisers (CPGs), "It's a large, highly targetable audience, and it's reasonably priced media."
Until Facebook's partnership with Datalogix and the other consumer database companies, Facebook had a bit of a problem with CPGs. They have huge advertising budgets — Procter & Gamble is the largest advertiser on the planet — but there's nothing particularly digital or social about soap and toilet paper.
Two years ago, Facebook made moves to get more advice from big advertisers, and created a "client council" to advise vp/global marketing solutions Carolyn Everson and her staff about what they wanted from Facebook. The council is "dominated" by CPGs, Roza says, and they were saying, "you need to prove to us these products work," says Roza. "CPGs have always been uneasy about lack of measurability."
Worse, "clicks have virtually no signal about who is going to buy," Roza says, referring to a truism in marketing that it takes several different interactions with a brand before a consumer gets all the way through the marketing "funnel" and actually buys something. "People who click on car ads are actually less likely to buy cars — that's my favorite stat of all time."
But the Datalogix partnership has borne fruit, Riza says. "A 3X return on adspend, or greater, is pretty typical [on Facebook]" Roza says. "It compares very favorably" to the traditional media buys, like TV, that grocery brands are comfortable with.
Disclosure: The author owns Facebook stock.
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