Will This Move Boost Facebook Shares and Revenue?
With its advertising potential still in question, Facebook (NASDAQ:FB) unveils yet another theory to counter its critics: clicks, the current metric used to determine advertising success, are not important.
By the end of the third quarter, Facebook’s stock has dropped 43 percent from its IPO price; and, as the stock’s value has declined, the effectiveness of its advertising remains a concern for investors and analysts. To compensate, the company has launched an array of new advertising services in recent months, including its first ads designed to be viewed on smartphones.
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But clicks will no longer be Facebook’s metric of choice. According to a study conducted through its partnership with Datalogix, a data analysis firm, fewer than one percent of in-store sales linked to brand advertising campaigns on Facebook came from customers who clicked on a digital advertisement.
Brad Smallwood, Facebook’s head of measurement and insights, will present Facebook’s findings at one of the advertising industry’s biggest conferences in New York on Monday.
“We ended up in this world where the click is king,” Brad Smallwood said to Reuters.
Facebook now argues that it can give more useful feedback than clicks. Thanks to its partnership with Datalogix, the social network says it can give brand marketers data on the actual in-store sales. Clicks originally became the preferred metric because Google (NASDAQ:GOOG) used the designation to determine the efficiency of its display advertisements. But in Smallwood’s opinion, clicks are no longer relevant to brand marketers.
Yet Facebook’s new advertising theory has some privacy advocates concerned. By not obtaining the consent from users to share personal data, Facebook’s partnership with Datalogix may violate the terms of a privacy settlement with the U.S. Federal Trade Commission.
So far, Facebook has denied that it receives any personal data from Datalogix.