Lately, it has become popular to claim that Facebook ads don't work.
First came the news in May that General Motors was yanking its $10 million annual advertising spend from the site. Then came the Reuters poll showing that four out of five Facebook users have never bought something because of a Facebook ad. Now, The Wall Street Journal has the story of Carolyn Everson, Facebook's vice president of marketing, and her audacious plan to clean up what many consider to be a botched opportunity for Facebook to sell ads.
But Will Dean, for one, doesn't see it that way. The founder and CEO of Tough Mudder, a Brooklyn, New York--based company that hosts obstacle-course events or "mud runs"--and expects to bring in $60 million this year--says his company has had so much success with the model, he spends as much money on Facebook ads as General Motors did, and then some. In fact, he goes so far as to credit Facebook ads for his company's early success.
"People often ask how we do our advertising," Dean says. "The answer is word of mouth, but first, you have to build momentum, and we got that momentum through Facebook."
Dean developed the idea for Tough Mudder while getting his M.B.A. at Harvard Business School. When he graduated three years ago, he and his high school friend Guy Livingstone officially launched the company with just $10,000. They spent $1,800 building a website and securing a venue and the remaining $8,200 on marketing, primarily through Facebook. According to Dean, he and Livingstone expected to lure 500 attendees to their first event in Macungie, Pennsylvania. Instead, nearly 5,000 showed up.
It would seem easy to attribute that initial response to luck. Tough Mudder is an inherently social business, after all. Not only do participants compete with groups of peers and often friends, but the imagery used in Tough Mudder's ads--people jumping over fire, covered in mud--inspires conversation. But Tough Mudder has been able to scientifically replicate that early reaction, whether or not Facebook makes it easy to do so.
Dean's first rule of advertising on Facebook successfully: Try anything once. "The great thing about digital media is you can experiment with small amounts of money," Dean says. As a result, the company has tested every type of advertising Facebook has to offer. It has run "sponsored stories," which appear on users' Facebook "news feeds" when their friends "Like" Tough Mudder; display ads, small boxes on the right-hand side of users' homepages; and even so-called partner-sponsored stories, which allow Tough Mudder's corporate sponsors to promote them. "We find that people are far more likely to click an ad if it turns up on their wall," Dean says, adding that sponsored stories are the most effective.
Dean closely measures what Tough Mudder gets in return for advertising on Facebook. "Any fool can spend money on Facebook," he says. "But we try to be as sophisticated as we can be about it."
He staffed Tough Mudder's social-media buying team with data junkies who spend their days comparing the metrics Facebook does give them, including click-through rates and cost per "engagement," with the data they collect on their own, much of which comes from surveys. At several points in the registration and preevent process, Tough Mudder asks participants to indicate how they found Tough Mudder. The multiple-choice options include answers such as "Facebook" or "advertising." Those who select "Facebook" are then prompted to check off whether they found the company through a Facebook friend or an ad, while those who choose "advertising" are prompted to check off where the ad appeared (with Facebook as one option). Both answers help the team measure the impact of the Facebook advertising.
Tough Mudder also has the luxury of knowing exactly where its target customers are located, because they typically attend events near where they live. In other words, says Peter Wylie, Tough Mudder's media director, "To determine whether dollars spent in Miami worked, we know we're looking at Miami sales."
By combining geographic data with all the other metrics, Wylie's team has determined that for every dollar spent on Facebook ads, the return is $5 to $10. That's a figure sometimes echoed by larger advertisers, too. The Wall Street Journal explained that by using geographic data to track Unilever's ad spend on Suave beauty products, Unilever got an $8.41 return on every dollar, according to Facebook.
In addition to the metrics, Tough Mudder's marketing department works hard at crafting the right messaging and imagery to get Facebook users to take notice. According to Wylie, the messaging that works best is tongue in cheek. For instance, to accompany a photo of team members helping one another over a wall, the message will read, "9 am Team Meeting."
"I always say, 'We're a marketing company that puts on events,'" Dean says. "We're always asking, 'Is this really something people will share in a social way?'"
If it still seems that Tough Mudder's success promoting its business on Facebook is owed, in large part, to intrinsically shareable stories and images of wild obstacle-course competitions, you're not off track. Cliché as it may sound, Wylie says Facebook ads truly don't work for everyone, and determining whether a business lends itself to Facebook should be half the strategy.
Some businesses, for instance, are far more likely to be found through a Google search, and, if that's the case, Google is where those businesses should be. Dean and Wylie agree that Facebook ads serve a different purpose, which is to get people talking about a brand. An ad just serves as a reminder. "When people do Tough Mudder, they talk about it to their friends," Wylie says. "They don't sit around and talk about what shampoo they use. And if a brand wouldn't come up in a normal conversation, then Facebook's probably not a good fit."