Nielsen: Facebook's Ads Work Pretty Well

When Social Ads Collide With Stated Interests, Awareness Goes Up

It pays to have fans on Facebook if you want your ads to work there too, according to the first public study to come out of the collaboration of Nielsen Co. and Facebook.

Ads that included mentions of friends who were brand fans saw an increase in recall of 16%, and 30% when the ads coincided with a similar mention in users' news feeds.

The study of more than 800,000 Facebook users and ads from 14 brands in a variety of categories shows a marked increase in ad recall, awareness and purchase intent when home-page ads on the social network mention friends of users who've become fans of the brand in the ad.

The impact on awareness and recall is even more pronounced when a home-page ad coincides with what Facebook and Nielsen term "organic" social advocacy, i.e. an item in a user's news feed indicating a friend has become a fan of a brand.

In short, so-called earned media generated when people mention or advocate brands makes the paid media considerably more effective, according to the study. Nielsen and Facebook plan to discuss results of the study in a session at Ad:Tech in San Francisco on Tuesday.

Increased recall
Facebook-home-page ads on average generated a 10% increase in ad recall, a 4% increase in brand awareness and a 2% increase in purchase intent among users who saw them compared with a control group with similar demographics or characteristics who didn't.

But the increase in recall jumped to 16% when ads included mentions of friends who were brand fans, and 30% when the ads coincided with a similar mention in users' news feeds. Brand awareness saw similar bumps: up 2% from just a home-page ad, 8% with a "social ad" bearing mentions of friends who were brand fans and up 13% when a home-page ad appeared along with a mention of friends who were brand fans in the users' news feeds.

Purchase intent was 2% higher among viewers of home-page ads vs. nonviewers, but got a four-times-bigger bump, up 8% either from social ads or when ads appeared alongside organic mentions of the brand in the news feed.

Earned and paid media
One major takeaway from the research is that paid and earned media work together in ways that could have implications well beyond Facebook, said Jon Gibbs, VP-media analytics at Nielsen. "The market has been talking very much about how to buy paid media and earn earned media, but there's been very little attention to the types of hybrid impressions and hybrid experience that blends these two," Mr. Gibbs said.

While Facebook's social ads present a fairly unique way of blending the paid and earned impressions, Mr. Gibbs noted that it's not a totally isolated example. He cited rich-media vendors that allow for Twitter feeds, social commentary or other kinds of consumer input within their ads. But he said having specific friends linked to a brand, as Facebook does, appears to have more impact than just incorporating social commentary broadly.

The recall levels for home-page ads on Facebook appear "slightly higher than standard norms we've done on other projects," Mr. Gibbs said. "What we've seen in both social ads and organic [mentions] are much higher than we've seen in other campaigns along these lines."

Results 'unremarkable'
Rex Briggs, CEO of the analytics firm Marketing Evolution, which has conducted numerous online advertising effectiveness studies, called results for Facebook's regular home-page ads "unremarkable and in line with banner ads [generally]," but he added that the results for social ads and the impact of organic mentions make for "a really interesting story."

Nielsen appeared to employ a good methodology used since the first online ad effectiveness studies in the mid 1990s, Mr. Briggs said.

"It does what Facebook wanted to do, which is legitimize the advertising and business model of Facebook," he said. "What it doesn't do is give the cross-media understanding of how does this piece fit into overall marketing plans."

What Facebook also hasn't done, he said, is open its doors and data to a variety of research companies as others, such as Microsoft, Yahoo or AOL have done. That its internal data remain largely under wraps, and its template for creating fan pages remains relatively limited compared to what marketers can do with their own sites or other networks may also be limiting revenue for Facebook, he said.

Paid media cheaper
In all, Nielsen projects around 18 million Facebook users saw ads measured as part of the study, of which around a million also saw organic mentions of their friends in social ads. Roughly another million saw organic mentions of the brands featured in the study without seeing the ads.

Based on those numbers, it's still a lot easier -- if not necessarily cheaper -- to buy scale on Facebook than earn it by winning fans. It's also an indication to Mr. Gibbs that marketers need to focus on winning Facebook fans over the long haul if they want to improve their odds of success when advertising there.

Of the 18 million users exposed to the ads, only around 130,000, or less than 1%, "engaged" with them by clicking on them. But around 40,000, or around 4%, of users who saw organic mentions of their friends become brand fans clicked on those news items. The higher click-through on organic impressions is another indication of the power of earned media on Facebook, Mr. Gibbs said.

"I do think it requires a level of ongoing investment in social media," Mr. Gibbs said, as opposed to a series of short-term projects. He also said marketers who have large e-mail databases should probably be encouraging consumers in e-mail programs to join their Facebook pages.

Mr. Gibbs said he doesn't believe Facebook's plans to move from "become a fan" to the more click-prone "like" as a means of joining brand pages would have much impact on the numbers in the study. And he believes, though it wasn't part of the survey, that users by now have been exposed to enough of Facebook's social ads to realize that when they become fans of a brand, they may also become endorsers in that brand's Facebook ads.

The Nielsen BrandLift polls used to survey Facebook users was a "lightweight" poll, generally with only two questions, aimed at maximizing response rates.

Nielsen didn't incorporate actual purchases, as opposed to purchase intent, "because this is the first generation of this research," Mr. Gibbs said. "We wanted to stick to branding because it's language the market is very comfortable with. In next generations, I would assume we will start incorporating offline purchase and other transactional data as part of the analysis."

P&G Pushes Design in Brand-Building Strategy

Greater Emphasis on Creative-Packaging Initiatives Follows Growing Importance of in-Store Marketing

As in-store marketing grows in importance and marketers focus more at winning over consumers at the shelf, one discipline is seeing its star rise: design.

No less a giant than Procter & Gamble Co. has incorporated design into its comprehensive brand-building function under the group headed by Global Brand-Building Officer Marc Pritchard. After initially carving design shops out of its new "Brand Agency Leader" model for managing and paying marketing-services shops, P&G now increasingly includes them in the system, in which lead creative agencies essentially function as general contractors over other marketing services shops.

A FRESH APPROACH: P&G Global Design Officer Phil Duncan sees the Febreze Home Collection (above) and Pantene's new line of products as an example of the sorts of design-intensive initiatives that are growing business.

The growing importance of the store has been central to Mr. Pritchard's "store back" concept, in which all marketing ideas need to prove their mettle by whether they work at the shelf. And bringing design into the brand-building organization is a key part of implementing that strategy.

A study last year by Nielsen Co.'s Bases unit found in-store marketing clearly beats TV as the leading medium creating awareness of new package goods in the U.S. and five other key developed markets. About half of consumers in Bases' survey cited in-store as their source of awareness of new products, vs. only a third citing TV. Peel the onion further, and it turns out of that half of consumers who became aware of products for the first time in store, 71% became aware simply by seeing them on the shelf. And what drives that shelf awareness is the package.

"We now are brand-building from the eyes of the consumer toward us," P&G Global Design Officer Phil Duncan said in an interview at the company's Cincinnati offices. "We've always believed the consumer should be boss, but we had an organization that was a little function-specific. ... By coming together as a real multifunctional team, I think we're already seeing bigger and better ideas."

Early gains
It's been less than a year since P&G incorporated design into the global brand-building organization, so the initiatives it's started to develop under the new system haven't hit stores yet.

But Mr. Duncan sees the Febreze Home Collection as an example of the sorts of design-intensive initiatives, with product, packaging and marketing seamlessly aligned, that the new order can help bring. Designers spent time in consumers' homes and boutiques, segmenting consumers by home-decor preferences and developing fragrance and decorative ranges for each segment that include battery-powered flameless luminaries with changeable scented shades, along with reed diffusers, scented candles and room spays. The initiative has helped P&G add two share points in air fresheners since launching last year.

Bigger ideas are critical, because designers at P&G and other package-goods companies are staring at two huge dilemmas these days.

First, even as in-store marketing becomes more important, big retailers have been putting more restrictions on it as they adopt or toughen "clean store" policies that restrict use of displays and point-of-purchase advertising. That makes the role of the package that much more important, but the second dilemma is that under the banner of sustainability, retailers and consumers are also pressuring marketers to make their packages smaller.

"It's a constant challenge," Mr. Duncan said, "but one that makes design so critical."

Big ideas
His solution to the problems is far more easily said than done: Come up with better ideas. When retailers see big ideas, they tend to give them more space, he said, so the challenge is coming up with big ideas that work in the store. "We're really asking our communications agencies," he said, "to vet [their] idea first in store, because that often can be the most challenging environment for us to communicate that idea."

The clean-store movement is one Mr. Duncan supports, because he believes "the pendulum had swung too far to everyone trying to break through, which meant nothing breaks through." Less-cluttered stores also mean the payoff for a big design idea that gets a green light from retailers can be all that much bigger, because shoppers see fewer competing marketing programs in the store.

Having more design impact with less space, less cost and less environmental impact is a classic "design thinking" challenge, Mr. Duncan said.

For Pantene, whose last restage didn't go over so well with consumers, a "design thinking" session was the start of the solution, Mr. Duncan said. Design thinking, which includes heavy doses of consumer co-creation and prototyping concepts, helped lead to a lineup hitting stores in June in the U.S. and early 2011 in Europe that will include 25% fewer items, considerably less packaging material and cost, and more prominently color-coded packages that delineate product ranges for different hair needs.

"We're paying attention, finally, to the things that matter to consumers, and stripping out the things that don't, as well as thinking about footprints across the franchise," Mr. Duncan said.

Herbal Essences
Five years ago, P&G began applying a similar "design thinking" approach to another hair-care brand in trouble: Herbal Essences. P&G took a team to its offsite Clay Street facility in Cincinnati's impoverished but architecturally rich Over-the-Rhine neighborhood for what Mr. Duncan calls "design thinking on steroids."

Pantene's new line of products

The result was the launch in 2006 of a dramatically different look and product lineup that ultimately made Herbal Essences a survivor in the battle with L'Oréal's Garnier Fructis and Unilever's then-upstart, now largely vanquished brand Sunsilk.

But design thinking isn't just about turning around hair-care brands. P&G is also applying it to a broad range of business issues. The decision to reorganize P&G's beauty care and grooming marketers along women's and men's lines rather than product category lines, for example, also culminated from a design-thinking session, Mr. Duncan said.

For just about any problem, design thinking now can be a solution at P&G, he said. So Mr. Duncan spends a lot of time in meetings looking for problems, specifically ones he believes a design-thinking session could help solve.

Mr. Duncan is perhaps the highest-level outsider that traditionally promote-from-within P&G has recruited, though he wasn't entirely an outsider. He started his career with P&G with four years in brand management before becoming a design executive for 13 years, ultimately with P&G shop Landor Associates, including a stint heading the Cincinnati office and the P&G account.

For design, he sees a lot of potential both for improving efficiency and breaking new ground in marketing.

So he's in the process of helping P&G winnow a large palette of package colors built up from years of product launches by 30% to 40%. And he sees opportunities for electronic inks and other digital and packaging technologies to create breakthroughs in in-store marketing, like displays where each package becomes a component in a big-screen presentation not unlike an electronic billboard.

"You always have to be looking at frontiers of innovation for ideas," he said. "It's kind of like haute-couture fashion. It's eventually going to come in. You may not recognize it in the same form, but it's going to be there."

Five ways P&G is using design

The traditional way: Package design remains the key to winning consumers at the shelf, what P&G calls "the first moment of truth."

CREATING NEW FRANCHISES AMONG BRANDS: To leverage its scale in countries where both Crest and Oral-B are established brands, notably the U.S., P&G is using design to forge a franchise linking products from both brands for beauty-focused consumers with the 3-D White line of products in toothpaste, toothbrushes, mouthwash and whitening strips. It has a similar Pro-Health franchise linking toothpaste, mouthwash and brushes for more health-focused consumers.

TO EXPAND BRANDS AND BUSINESS MODELS: Besides expanding the brands into service and retail, Mr. Clean Car Washes and Tide Dry Cleaners are also a design exercise, adding another dimension of retail space and experience to the brands.

TO TURN AROUND BRANDS: Design-thinking exercises -- and design revamps -- have been key to saving Herbal Essences from the brink of extinction at the retail shelf and, P&G hopes, will reverse share losses in recent years for its hair-care category leader Pantene, a $3 billion global brand.

TO SOLVE BUSINESS PROBLEMS: P&G has used "design thinking" exercises, which include lots of co-creation with consumers or other affected parties, to try solving a number of other business problems, including how to organize its beauty and grooming marketers. The result: P&G moved to reorganize along men's and women's lines as opposed to traditional category lines.