Up until recently, Facebook Ads attribution to a business impact, was mainly a concern for online advertisers and online advertising agencies.
Since Facebook’s IPO, seems like it’s everybody’s business.
Facebook share prices reflects investors expectation for a steep revenues growth, all that while more and more advertisers are shifting budget away from Facebook to other acquisition channels. As serving ads is the biggest revenue stream for Facebook, it’s important to understand what’s going on.
First, we must grasp online marketers attribution system. A user clicks on an ad, a user gets a cookie and a user makes a transaction. This transaction will be attributed to the click, hence to the cost. If value of transactions is higher than the cost, this campaign has a positive ROI.
What happens if the user didn’t click on the ad?
A Facebook ad, or any other type of an ad, can bring a user to the advertiser’s website in 3 different funnels:
- Clicking on the ad.
- Searching the brand’s name, as seen on the ad.
- Placing the brands URL directly into the browser.
Out of these 3 funnels, the traditional tracking systems can only attribute the user who clicked on the ad. Necessarily, there is non-attributed value to this ad.
Is it only Facebook’s problem?
Of-course not. View through conversion, i.e conversion that were made after a user saw an ad, but never clicked on it, are a big challenge for all display advertising channels.
What is special about Facebook is that is has very, very low CTRs compared to any other display channel.
Facebook CTRs are known to average around 0.05%-0.04%. It means that for 10,000 impressions I will get 4 clicks. I will pay only for these 4 clicks and will attribute only the first funnel, the click-through conversions. But when I paid for these 4 clicks, I also got 9,996 impressions. These impressions have a value which has not been captured. What is this value? It’s difficult to say at that stage, but one thing is for sure. Facebook will sort it out. Simply because they have no choice.