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Facebook did not get much attention last October when it officially launched "mobile app install ads," in part because the company unveiled about a dozen new ad products in 2012 and, from the users' point of view, many of them kinda looked the same.
Also, mobile app install ads appeared to be mainly for mobile game and app developers — and apps and games for Facebook are old news.
But several of Facebook's big advertising clients who have used the ads in Q4 indicated that the ads can be used to develop e-commerce on Facebook, turning the social network into a mobile shopping and sales device.
The ad units simply allow users to download the clients' app from Google Play or the App Store.
Lucy Jacobs, COO of Spruce Media, tells us "the performance is right in the strike zone to be ROI positive." E-commerce app downloads are much more valuable to advertisers than mere impressions because someone with an app is likely to use it repeatedly over time. Each app install therefore delivers a "lifetime" of revenue -- meaning an average period of monetized use until the user abandons it -- rather than a one-off sale.
Fab.com CEO Jason Goldberg, whose company tested the ad unit with Fab's shopping app, says it was "Five times more effective than any other mobile download channel that we've used." Fab is one of Facebook's biggest advertisers.
Nanigans, a company that licenses adtech software for Facebook clients, also tested the app for an unnamed e-commerce company. Mobile app install ads moved that client into the top 5 downloaded apps on Facebook within 10 days of the campaign starting, the company said. The campaign cost $325,000 and delivered 32.5 million ad impressions.
And Hotel Tonight, an app that drives last-minute hotel bookings, saw a 10 times higher click-to-install rate from the ads over regular Facebook ads. (That campaign was coupled with a Facebook Offer, another of Facebook's e-commerce plays.) “I feel like a kid in a candy store with all these choices. It performs better from a click-to-install perspective than anything except incentivized ads. From an efficiency standpoint, it’s on par with everybody else out there today,” Hotel Tonight's director of mobile marketing Adam Grenier has said (quoted in a Facebook case study).
The fact that Hotel Tonight used the ad unit along with a Facebook Offer is instructive — Facebook has launched a number of e-commerce plays (including Offers, Gifts and Deals) and not seen much traction with users.
Perhaps mobile app install ads are where Facebook's e-commerce sweet spot might be found — not actually doing transactions but driving traffic to those who do.
Disclosure: The author owns Facebook stock.
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