ONLINE MARKETING

Facebook Sponsored Posts: Do They Work?

Can Facebook's sponsored stories help your marketing efforts? Maybe, but it's complicated.
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Facebook is working for advertisers, according to an Advertising Age survey.

Out of 701 marketers and media execs polled, 85 percent said that they use Facebook as a marketing tactic. Just under 30 percent had tried using sponsored stories. Of them, 15 percent were very satisfied with the results, 65 percent somewhat satisfied, 15 percent, somewhat dissatisfied, and 6 percent, very dissatisfied.

Many businesses are trying to understand if, and how, sponsored posts can work for them on Facebook. Instead of focusing on "marketers and media execs," which could mean many agencies, I put a PR query out to thousands of companies and heard from dozens. This isn't a statistical study, but it did result in anecdotal evidence that helps explain how entrepreneurs are using sponsored stories and the results they're getting: good, bad, and indifferent.

Racking Up the Likes

A number of companies said that their sponsored stories were extremely successful. The PR firm for Reverb.com, a site for buying and selling used guitars, said that the company had used the format to quickly gain more than 30,000 likes on its Facebook page with only a "very modest investment." Other companies had similar stories of heavily increasing the number of Facebook likes, post shares, or other forms of engagement.

The problem is that few of these companies had a concrete way of determining the value of these likes. How did they ultimately translate into sales, improved conversion rates, or some other metric that would indicate a tangible benefit to the business? Without such a correlation, a company is left with what is called in rhetoric "begging the question" in which you assume a premise and then use conclusions to try and prove the premise. In this case, the premise is that using Facebook can improve marketing. The conclusion is that sponsored stories improve marketing because they get more attention in Facebook.

Some, like Jayme Pretzloff, online marketing director for Wixon Jewelers in Minneapolis, see benefits outside of direct sales, "including awareness, share of voice and many other indirect benefits including SEO ranking and reputation management." All of these are good points, though again, difficult to quantify, which makes it hard to know whether the amount you spend on a Facebook sponsored story campaign is worthwhile.

How Valuable Are Likes?

Green River Fishing Adventures near Vancouver, British Columbia, Canada, has seen an "increase in Web contact forms citing social media or Facebook as the lead source," according to Matthew Clive of the company's sales department. These individuals often converted to sales. In fact, there has been an increase in prospects coming to the company initially coming from Facebook.

But other companies and marketing firms have had a different experience. As Meagan Feeser, director of PR and communications at York, Pennsylvania-based Gavin Advertising says:

We've seen a lot of success with Facebook ads and sponsored stories when the desired outcome is specifically to grow likes on a brand's Facebook page. If the desired action takes place off of Facebook... not so much.

Digital marketing agency Koozai in London compared click-through rates for Facebook ads and for sponsored stories. The former was 0.017 percent and the latter, 0.169 percent, a big relative change.

Some companies find no benefit at all. Los Angeles-based Daily Threads, which makes premium cotton clothing for kids, "tried every single ad unit Facebook offers," according to consultant Erika Penzer Kerekes:

I have tried Sponsored Stories a dozen times and they have never converted for us. I always include them, and then I always end up pausing them after a few days because they're getting zero results. I'm puzzled by this as I know lots of other businesses have used them very successfully.

Chuck Cohn, founder and CEO of Varsity Tutors, a private academic tutoring and test prep provider, found that the demographics his marketing team chose would significantly change the cost per lead and, ultimately, ROI:

We've found that when we target U.S. only or--more specifically--target people living in a city like NYC, the outcome is incredibly few Likes/Comments/Shares per dollar. The cost per interaction is extremely high, but each interaction is quite valuable. If you don't target a country, then Facebook chooses to display your ads to people in Bangladesh or similarly impoverished countries.

In short, it is impossible to know in advance if Facebook sponsored stories will work for your business or not. And now, of course, results may change with Facebook's redesigned News Feed. You will need to develop metrics to understand the value of what you get beyond simply obtaining likes for your Facebook page, and you'll need to pay close attention to the demographics of any campaign to be sure you're getting through to people who can actually matter to your business. 

IMAGE: AFP/Getty Images
Last updated: Mar 8, 2013

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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