Can Facebook Persuade Advertisers to Forget About Clicks?

In addition to rolling out new features like the Timeline view of your profile and social apps that allow "frictionless sharing," Facebook has also been working on improving its offerings for advertisers, as it tries to generate enough revenue to justify its alleged $60 billion market value. In a nutshell, the giant social network is trying to convince advertisers to pay more attention to the engagement that their users and customers have with their brands when they are on the site, rather than simply counting click-throughs from ads and links. It’s a message that suits Facebook’s interests, but will advertisers bite?

One of the newest moves in this direction is an addition to the Page Insights dashboard, which Facebook provides for brands as a way of seeing all the analytics related to what used to be called their “fan” pages. Along with being able to see the usual “likes” and sharing associated with a page, as well as the demographic and gender breakdown of those who have interacted with it, Facebook now shows something it calls "People Talking About This." This is a measurement of the number of people who have created what the site calls a “story about your page” in the past seven days—and according to Facebook’s guide to Page Insights (PDF link), this includes anyone who has:

  • Liked your page
  • Liked, commented on, or shared your page post
  • Answered a question you’ve asked
  • Responded to your event
  • Mentioned your page
  • Tagged your page in a photo
  • Checked in or recommended your place

In other words, the “People Talking About This” metric pulls together all the ways in which a user of Facebook could interact with a brand or a fan page’s content—from a simple “like” to a comment, a mention, a photo tag, and so on. And while the graphs and related analytics involving the new measurement (shown in the screenshot below) are only available to page administrators, Facebook says it’s going to show the total number from the "People Talking About This" category on public pages as well, right underneath where it shows how many fans a page has.

A Focus on Engagement, Not Clicks

The focus of this new feature is pretty obvious: Facebook wants to de-emphasize click-throughs as a way of measuring the effectiveness of using the social network for advertising or marketing purposes, and put more focus on "engagement" and what the industry likes to call "earned media," or customer responses (as opposed to “paid media,” which covers everything from standard banner ads to press releases). It’s no coincidence that the new feature was announced during Advertising Week, since Facebook has been making a major play to become a destination for both large and small advertisers.

There’s no question that advertisers are becoming more interested in the benefits of social advertising via networks like Facebook and Twitter. According to a recent Reuters report, its growth as an ad platform helped Facebook double its revenue in the first half of this year to $1.6 billion, and in June, the social network accounted for almost one-third of all display ads in the U.S., according to ComScore. Twitter is also said to be growing strongly, thanks to its advertising-related offerings: EMarketer says the company will have $140 million in ad revenue this year, up 210 percent from last year.

As we’ve pointed out before, this move toward social networks and socially driven engagement as a form of advertising is a threat to a number of existing players, including traditional Web-media outfits like Yahoo! and AOL. But it also poses what could be a significant threat to Google, since the Web giant relies heavily on both banner advertising (through its ownership of DoubleClick) and search-keyword ads. To the extent that social ads become more popular—and are seen as being more effective—than existing forms of advertising, Google could find that its dominance in the online ad market begins to shrink.

Facebook’s Click-Through Rates Are Low

Facebook has another reason to stress engagement and other metrics over click-through rates. According to some recent estimates, the rate at which users of the social network click on ads is extremely low, even compared with standard click-through rates on Web ads, which tend to be well below 1 percent. To prove that advertising on Facebook makes sense for brands, the company has to show there’s something else to be gained than just prompting users to click on a banner ad.

But will advertisers buy the argument that engagement and “People Talking About This” is worth as much or more than traditional advertising? Facebook isn’t the only one who wants to see this happen; Twitter is also betting the farm on a similar transformation in the way advertising works online through offerings like Promoted Trends (although Twitter’s click-through rate is said to be much higher than Facebook’s). The problem is that many advertisers haven’t yet made the leap to seeing “likes” and mentions of a brand as being worth as much or more (PDF link) than a click-through.

One reason for this is simply that click-throughs are an easy thing to measure; it’s a hard number that represents people driven to a website or campaign, and that looks good when an ad manager is making a report to the CEO. Showing graphs of how many people are “liking” things or talking about them is a much more amorphous target, and while it may represent something more valuable than a simple click, Facebook likely still has some selling to do before that feeling becomes widespread.

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