Dennis Yu on Ads Impact on Organic, Facebook Retargeting, and Local Business

We sat down with Dennis Yu to discuss a variety of topics surrounding ads, the news feed, and how local businesses take advantage of Facebook.

You mentioned that ads can impact organic, what are you seeing?
Ads don’t cause an immediate impact. They grow the fan base and grow overall engagement over time. As long as you’re running ads to drive fan growth and engagement, you’ll see a steady rise in organic, even if you stop advertising. People have talked about how organic and paid impact viral, but we don’t see viral being big enough to make a difference yet.

Of course, if your fan base goes from 1,000 to 100,000 via ads, and you stayed on message without gimmicks, then you’ll have a lot more organic power, in the same way you get more opens if you grow your email list.

Would you say this is ultimately impacting Affinity for the new users you’re reaching with paid media?
It depends. Some brands run ads so heavily, especially in the newsfeed that they overrun their fans– kind of like a brand you like who has a repeating TV commercial for every episode. At the other end we have brands that don’t even show up or runĀ irrelevantĀ ads in the right rail. Well-targeted ads at the right frequency absolutely increase affinity, which we have measured via fan lifetimes that increase from 25 days (Coca-Cola) to as high as 143 days (The Cosmopolitan casino).

But it all depends on whether brands are targeting messages by audience or indiscriminately spamming (broadcasting).

Let’s say you’re a fan of the local news station– maybe you like sports, but don’t care for weather, murders, or politics. With the data Facebook provides us, plus how EdgeRank works, don’t you think the brand should be able to get you more of the content you like and interact with?

What are your thoughts on Facebook retargeting? (FBX)
It’s like cheating. Consider that Facebook has the world’s largest bucket of display inventory that currently not well monetized. So when people abandon your shopping cart or left your site for whatever reason, you get to follow them around. The cost works out to less than 50 cent CPMs for US traffic. That’s way cheaper than Google remarketing or retargeting.com.

But it’s the early days, few people are on it, and it will soon get competitive. We don’t know how Facebook decides what inventory is earmarked for FBX vs native ads, but we’d imagine it’s tied to their effective CPM.

How do you see organic and paid media playing together in the news feed moving forward?
That depends on Wall Street’s pressures to drive ad revenues, which is what coerced Facebook into running ads at such high frequency in the newsfeed now. Ultimately one man decides how many ads show in the newsfeed– it’s not a committee decision. That said, nobody can argue that the newsfeed is getting more competitive organically and ads crowding your stuff out.

And though Facebook can say that reach hasn’t changed or that negative feedback will hurt on-going organic exposure, we understand this is their game. We see paid as a way to amplify organic to reach fans and non-fans– instead of 2-3% for big brands, more like 50-60%. Of course you have to pay. Question is how much for what type of ROI.

Grandparents.com has a PTAT (people talking about this) that’s 3 times their fan base– no ads. https://www.facebook.com/allnursesrock has a quarter million fans with a quarter million PTAT– no ads. Super social content and not selling anything. But if your content or industry is inherently not social, don’t think you can get the same results. You need to pay to play.

In short– ads are to amplify organic content.

With all that being said, what can local businesses do to take advantage of both?
Depends on the kind of local business. If you’re food or retail– deals and coupons work great. People want to see pictures of food. Even beauty businesses and car dealerships can get in on this.

If you’re a personal injury attorney, fertility clinic, or dentist, it’s harder. You not only need to run ads, but have KILLER content– video testimonials. In general, we advise local businesses to get their website and general content in order before trying to tackle social. Unless you’re a celebrity, you have to stick with the basics of driving traffic and conversions.

Local businesses are especially busy and don’t have dedicated tech staff like we do. So they can’t afford to waste time on the latest tool or big-brand technique. Simply posting simple content daily and running ads at $3 a day is probably more than enough in social.

Google Adwords first– that’s the short answer!

How does BlitzLocal play into that?
Small business owners want results, but don’t have time or money to invest in stuff that might not work. We’d love to service these businesses directly, but local marketing requires local people. At the same time, there are a lot of unemployed and underemployed people– college kids, housemoms, and people looking for some additional income.

So our solution is to train up these consultants (we call them analysts) via a game-like process so they can service people in their neighborhood. The training is free, as will be the tools. We just charge a percentage for advertising that flows through our system. The system will allocate between Google, Facebook, or whatever system based on what drives sales and calls. It also creates landing pages for the traffic with call-tracking built-in.

We’re still months away from launching to businesses that have only one or a couple locations. Meanwhile, we’ve been building such systems for large retailers, while simplifying it for the little guy.

Ultimately, our goal is to create jobs, not sell software.

If you have any questions, feel free to drop in the comments and we’ll respond or have Dennis respond!

2 Comments on “Dennis Yu on Ads Impact on Organic, Facebook Retargeting, and Local Business

  1. Dennis is right to say retargeting on Facebook via Facebook Exchange (FBX) is like cheating. CPMs are ridiculously low for early adopters, conversion rates are way, way higher than other exchanges, and most importantly, so many people spend so much time on Facebook that you can typically find upwards of 60% of a cookied audience within 1 hour of when they leave the advertiser’s website. In retargeting, recency is the most important factor, and FBX kicks a$$ in that regard.

    We’re managing FB retargeting campaigns for advertisers with over 500M in aggregate monthly visitors, and what we’re seeing is that being able to do dynamic creative makes *all the difference* in terms of performance. Check out this set of six slides with very near-term FBX data showing incremental ROI from dynamic creative, as well as the recency effect and relatively high conversion rates of FBX vs other exchanges.

    http://bit.ly/XBB1Pz

    With FBX, the direct response world’s changed in the blink of an eye.

  2. Chris– you guys rock!
    Awesome to see you on the cutting edge of each new wave– whether PPC, analytics, or Facebook ads.

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