Facebook’s Ted Zagat: ‘Clicks Don’t Matter’ | Street Fight

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Facebook’s Ted Zagat: ‘Clicks Don’t Matter’

8 Comments 03 June 2014 by

unnamed (1)“Clicks don’t matter. There is zero correlation between online clicks and offline ROI.” That’s Facebook‘s Ted Zagat during a keynote at Street Fight’s Summit West on Tuesday. The long-time president of the reviews company admitted that the social networking giant could do a better job of emphasizing the relationship between digital engagement and reach to its local merchant advertisers.

“Facebook is not always the easiest service to use, and our ad products are no exception,” Zagat said. “The challenge is that small local advertisers don’t have the same measurement capabilities.”

Now more than ever before, Zagat believes SMBs have the opportunity to adopt the best practices of Facebook’s largest advertisers—primarily, relying on mobile for personalized targeting, consumer messaging, and location-based marketing. By changing the conversation from engagement to reach, and keeping things as simple as possible for customers, he believes Facebook can transform the way local merchants market services online.

Zagat said small local businesses are often left wondering what scales and what targeting means for them in a visceral way. Using the example of a fashion-forward women’s snowmobiling brand, Zagat explained how marketers are able to reach consumers who are interested in the intersection of their interests and demographics.

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Facebook’s Ted Zagat speaking at Street Fight Summit West Tuesday

“We always think first and foremost about people when we’re designing marketing experiences,” he said.

From a people perspective, mobile marketing involves a high level of relevance. Over time, as more data goes into Facebook’s system and more ads are included in the auction, the company will continue to improve the content it serves to its users.

Changes in the mobile marketplace have been rapid. Just two years ago, Zagat said Facebook was allotting zero dollars of revenue from mobile. Now, Facebook and Instagram represent 22% of mobile time spent in the United States. The company has passed 25 million active business pages, with new figures expected to be released later in the day.

“Pretty much everything we do is mobile first, and sometimes we don’t even develop a certain feature for desktop,” Zagat said. “Now the mobile engineers are integrated into every product team, so we can think consistently across platform.”

Zagat went on to outline best practices for small local retailers, focusing on issues such as reputation, mobile messaging, and location-based marketing.

“Location-based marketing is here, and if we handle it correctly, we have a great opportunity to help local businesses reach customers better than ever before,” Zagat said.

Forty-three percent of small local advertising dollars are now geared toward local awareness, a figure that Zagat sees growing in the coming years as tools for generating customer reviews, testimonials, and endorsements become ubiquitous.

“Reputation is really brand awareness for a small store,” Zagat said. “We think that testimonials and endorsements, along the lines of what Stik is doing, are pretty interesting.”

Stephanie Miles is a senior editor at Street Fight.

  • Robert

    Sounds like maybe they could use Spring Rewards…

  • Michael Bauer

    Was at the conference and saw that slide “Clicks don’t Matter”. Sorry, but am pretty sure they do. Unless I’m missing something it looks like running a simple regression would show a pretty clear correlation in that scatter plot.

    • Ted Zagat

      Hi Michael, here’s the original Nielsen whitepaper. I think you will find it consistent with my
      comments.

      http://www.brandchannel.com/images/papers/531_nielse_wp_brand_building_beyond_clicks_1011.pdf

      • Michael Bauer

        I guess it’s really a bit nuanced. The article is stating that CTRs aren’t a predictor of Sales Lift and that makes sense. But the statement that there is zero correlation between CTRs and offline ROI didn’t seem to be what they were saying. I’m not really sure but I asked a professor in mathematics and he seemed to think there was correlation. It’s not really a big issue as I think the overall drift is true.

        • Anthony Ire

          Hi Michael, I agree I see an overall drift should show a weak correlation but with RIO, I plan for disappointing results.

  • Jim Bonner

    Wow, it’s just amazing to see Facebook admit this.

    Of course they are right. This is a huge gaping hole in mobile advertising world.
    Click ads are designed for online retail. For brick and mortar or local retail they are largely useless.

    – For an online retailer, the click takes the customer straight to a purchase opportunity.

    – For brick and mortar merchants, the click does not take the customer to a purchase opportunity. It may be days or weeks between the customer’s mobile click and their visit to the mall or store.

    Brick and mortar merchants get maybe 1/10th the ROI compared to an equivalent online merchant, yet they are charged the same price.

    That’s why mobile is still largely ignored by brick and mortar stores.

    But, if Zagat realizes this, why is Facebook having a multi-city roadshow to persuade small customers to use Facebook click ads?

    • Ted Zagat

      Hi Jim. To clarify, for online ads
      with an in-store sales objective, online clicks do not correlate to ROI. That does *not* mean that online advertising
      is not effective, though.

      We also shared yesterday that Facebook’s Large-Local
      advertisers are measuring 8x ROAS (median) when they combine rich photo page
      posts with Custom Audience and measure via Offline Conversion Lift. In addition to In-Store Sales, FB advertising
      drives brand and consideration metrics.

      Small-Local advertisers do not have the same
      measurement capabilities as Large-Local advertisers. However, Small-Local advertisers should emulate
      Large-Local best practices. And the best
      ROI proxy is Reach. Shifting optimization
      from Engagement to Reach should yield at least a 70% increase in ROI (per
      Datalogix).

      • Jim Bonner

        Hi Ted,

        Ok I see where you are going with the point. The conversion to local mobile is certainly interesting to watch.

        Thanks for responding to my comment!

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