March 2014 GETTING CREATIVE: THE SECRET TO FACEBOOK ADVERTISING SUCCESS. Predictive Lifetime Value for Performance Marketing at Scale

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1 March 2014 GETTING CREATIVE: THE SECRET TO FACEBOOK ADVERTISING SUCCESS Predictive Lifetime Value for Performance Marketing at Scale

2 Marketers have spent billions of dollars on Facebook advertising. They are even spending more on Facebook for display advertising than they are on Google. Mostly that s because Facebook ads work, allowing brands to successfully scale their ad spend on desktop and mobile. So why do Facebook ads work? There are three reasons: In this ebook we explore strategies and approaches for effective ad creative on Facebook and how it impacts performance. WHAT S INSIDE Overview of the creative process for understanding a brand s identity and identifying interesting creative opportunities Creative Targeting Optimization Facebook s extensive targeting options (demographics, affinities, psychographics and behaviors) coupled with optimization strategies based on customer lifetime value ensure that you can deliver your ads to the most relevant audience possible that will deliver the best returns. But focusing on these tactics alone will fail to bring the success that marketers are looking for. The single, most important element of a successful advertising campaign that ad tech historically forgets is great creative. Creative best practices for direct response advertising campaigns on Facebook Multivariate creative testing and iteration strategies and approaches for identifying the best creative combinations The significance of creative iteration as it relates to performance and scaling campaigns Nanigans Predictive Lifetime Value 2

3 WHAT CAN ADVERTISERS DO? Facebook ads are proven winners when it comes to engagement and results, but too many times marketers are buying a lot of media, running ads and endlessly repeating their message. This outdated model of marketing fails to drive consumer actions and drive conversions. Worse yet, it is out of step with Facebook s infinite number of targeting and optimization options that ensure you can deliver your ads to the most relevant audience possible. So how are marketers achieving success with ad creative on Facebook? As with any successful ad campaign, it all starts with eye-catching creative that makes people stop in their tracks and entices them to click. 1 DISCOVERY The success of a Facebook ad campaign originates with the creative strategy. The first step, one of the most crucial steps of any creative strategy, is to understand your target audience. Equally important is a clear understanding of the product or service you are marketing. KNOW YOUR TARGET AUDIENCE By asking the right questions and leveraging personas, you can gain a better understanding of your target audiences including interests, lifestyles and wants. Who is your target audience? What are their interests, lifestyles, frustrations? What does this group of customers want/need? What will motivate them to click on the ad? Nanigans Predictive Lifetime Value 3

4 LEVERAGE PERSONAS TO DRIVE YOUR AD CREATIVE When you are targeting a wide range of people with diverse interests, it s important to switch up your ad creative based on each persona s key interests and pain points. You can use personas such as the ones outlined below to build personalized ads designed to meet your targeted segments needs. Below are some personas created for a foreign language learning software company. KRISTEN Age: 21 College student, Boston University Boston, MA Single Proficiency: Third year French in college; not fluent Key Attributes: Likes French; interested in French culture, movies Likes trying to read French literature Not naturally strong in language Has visited Paris; would like to do study abroad program in France ALEK Age: 41 Corporate Sales for Nokia Espoo, Finland Married, with a son and daughter Proficiency: Native Finnish, German, English; decent Italian; nearly fluent in French Key Attributes: Travels all over Europe selling Nokia equipment to businesses Has built up a strong ability to acquire and learn language Likes to polish his fluency in the languages he uses for business (Italian, French, English) JOHN Age: 26 IT Professional San Francisco, CA Single, lives in apartment Proficiency: Native English; can get along in Spanish Key Attributes: Loves to travel Enjoys language and culture Watches foreign films Not a master of any second language Likes to attempt conversation in various languages Likes to travel with people or meet up with people when traveling Nanigans Predictive Lifetime Value 4

5 KNOW THE BRAND Understanding the brand s positioning, identity and market niche can have a big impact on how distinctly you can make an impression in the consumer s mind. Key questions to ask include: Can you describe your brand? Is there a branding guidelines document? What should be avoided in the creative and copy? KNOW THE PRODUCT The product refers to all of the features, advantages and benefits customers can enjoy by buying your goods or services. When developing ad creative, you should think about the key features and benefits consumers want or need. By using the client s products and asking appropriate questions, you can get to know their products. What is your product s unique selling point? Why do people use your product and which of its benefits has the largest impact on your customers? Who are your competitors? How do you position your brand differently? Nanigans Predictive Lifetime Value 5

6 2 DEVELOP COMPELLING CREATIVE So how are advertisers achieving success with ad creative on Facebook? By focusing on the four stages of any successful consumer marketing campaign: 1. AESTHETICS: THE INTEREST STAGE When scrolling through your desktop or mobile News Feed, aesthetics and images are the first things people notice. It s essential to focus on bold, beautiful imagery that will engage your audience and cause them to click. Rather than repurposing imagery that has run on TV, paid search, display, print or Twitter, invest in developing high quality creative that s unique to Facebook. Nanigans Predictive Lifetime Value 6

7 2. LANGUAGE: THE CONSIDERATION STAGE Now that a user has paused to look at your ad, this is your chance to hook them. Choose words that highlight your product s value and convey urgency; this will get consumers to seriously consider your offer. If your ad copy doesn t compel the user to stop what they are doing and pay attention to you right now, then you might as well take your ad down because it s not helping your purpose. CREATE INTENT (URGENCY) Free shipping Value (coupons) Limited time (expiration) Sales Free gift card or gift with purchase Exclusive Loyalty or membership points Save when you spend Nanigans Predictive Lifetime Value 7

8 INCLUDE A COMPELLING CTA A call-to-action (CTA) is very important, because it is your best chance at interaction. Effective CTAs give users a sense of what your product or service is all about and should also resonate with the people who you are targeting. Promotions and incentives, such as a discount off the purchase price, are effective for driving intent to purchase. Be sure to include your CTA in the first 90 characters to ensure people know how to engage with your content. Nanigans Predictive Lifetime Value 8

9 3. RELEVANCY: THE DECISION STAGE Once someone has been enticed by your engaging imagery and inspired by your language, the next step to consider is what will make them click. This is where targeting comes in. You can have the best creative in the world, but if your ad is shown to the wrong people it won t matter. This stage is made easier if you efficiently leverage Facebook s endless targeting options based on demographics, interests and behaviors. Relevancy also carries over to the post-click experience. Specific landing pages tailored to different products and promotional offers are essential for providing a quality experience for consumers and driving conversions with a personalized targeted message. The goal is to make it as easy as possible to convert. 4. FREQUENCY Aesthetics, language and relevancy are the three elements of a successful ad campaign, but frequency is more important on Facebook than any other digital ad channel. Are you updating your creative every week? If not, you are likely missing out. It may seem obvious but it s monumentally important that you stay on top of the latest trends so you can strike while the iron is hot. Fresh creative, iteration and constant testing will help keep your brand current and top of mind. Nanigans Predictive Lifetime Value 9

10 BEST PRACTICES: ECOMMERCE 1. FOCUS ON THE PRODUCT When thinking about your ad creative, make sure your products dominate the footprint of your ads. Busy lifetime images with a lot of background noise are too easy to skip past. Closeup photos of products on white or neutral backgrounds are ideal. A Facebook study that compared product focused vs. lifestyle images showed a 37% CTR increase with product focused imagery. 37% increase in CTR with product focused imagery Lifestyle Focused Product Focused Nanigans Predictive Lifetime Value 10

11 2. SHOW A SMALLER NUMBER OF PRODUCTS VS. A COLLAGE OF PRODUCTS We ve found CTRs are higher when you show fewer products (such as a pair of shoes) instead of a large group of products (such as a closet full of shoes). Many Products Fewer Products 3. CALL OUT PROMOTIONS AND DISCOUNTS WITHIN THE CREATIVE For online retailers, we ve found that calls to action that feature shop now or shop a specific designer such as Shop Jimmy Choo are the most effective. A best practice is to call out discounts or sales as a button or stamp on the image itself. Our data has shown that this approach drives higher conversion rates for Page post Link ads. Nanigans Predictive Lifetime Value 11

12 BEST PRACTICES: GAMING 1. INCLUDE MOBILE DEVICES When advertising mobile applications, it s important to include mobile devices so people immediately recognize it is a mobile product. This helps to drive a higher response from quality viewers who will not only just click on the ad, but download the app. 2. DEMONSTRATE YOUR VALUE WITH NUMBERS Communicating your value by referencing key data points, such as number of songs or apps downloaded or time-savings, can help to increase your CTR. Nanigans Predictive Lifetime Value 12

13 3. SHOW WHAT YOUR APP DOES In-app images help people understand what your app does. In this ad creative, users can preview the exciting moments in the game. 4. USE VIDEOS MADE FOR FACEBOOK You have a better chance of achieving your ROI goals with videos that show gameplay and describe game features instead of TV-style video advertising. Nanigans Predictive Lifetime Value 13

14 3 CREATIVE TESTING Once you have decided which creative you want to test, the next step is to outline your creative testing strategy based on your goals as well as determine when to iterate on your creative. 1. DETERMINE THE GOAL OF YOUR CREATIVE TESTING The first step of any creative test is to define your goal. Advertisers are often testing ad creative to improve performance or to learn about what types of concepts or themes resonate with their targeted audience. 2. HOW MUCH CAN YOU AFFORD TO TEST? How much you test depends largely on your budget. You can choose to spend a certain percentage of your overall ad budget or set aside a specific budget for ongoing ad testing. The more variables you want to test (location, age, interests, device, call-to-action), the more budget is needed. A best practice is to test thematically to top performing audience segments and then iterate on specific ad creative with winning themes. The table below provides a recommendation on how many concepts (themes) and variations of those concepts to test for different budgets. Budget Number of Concepts Images per Concept Total Number of Images per Week Over $100, Under $100, Nanigans Predictive Lifetime Value 14

15 3. HOW TO CONDUCT AN AD CREATIVE TEST There is an assortment of factors to consider when constructing an ad creative test and it can vary by industry vertical. Following are some considerations when designing your ad testing plan by industry: Ecommerce Product Category shoes, purses, dresses, jewelry Price point Seasonality CTA Games Game Category strategy, trivia, adventure Seasonality Location CTA Travel Product Category hotel, flight, vacation package Price point Destination Seasonality CTA We recommend working with concepts these are thematic ideas that group a number of different images. In this example, a gaming company is testing two different versions of ad creative. Option 1 features an illustrative approach while Option 2 features photographic imagery. Option 2 showed better performance. A next step is to follow up with a more specific creative test that leverages multiple variations on a theme. Option 1 Option 2 Nanigans Predictive Lifetime Value 15

16 VARIATIONS ON A THEME Once you ve determined which theme has superior performance, you can vary the CTA and image to see how each affects performance. RINSE AND REPEAT You can continue optimizing their ad creative testing by introducing new variables based on the results of the earlier tests. In this example, the next phase of creative testing varied the image and the placement of the CTA. Nanigans Predictive Lifetime Value 16

17 HOW TO SET UP AD TESTING The Nanigans ad testing algorithm can help you cycle through creative while keeping performance in mind. While creative testing sounds great, managing a test with hundreds or thousands of creative units would undoubtedly increase the stress level of any marketer. Nanigans automated tools can easily test multiple combinations of ad creative and save you countless hours of sifting through ad data to determine the best performing ads. To set up ad testing with Ad Engine, select your Strategy Group in the left hand navigation area. Then select Edit Goals and Rules. The Ad Testing & Stop Loss tab will allow you to enable creative testing. You can select: Which goals to test on such as click-through-rate (CTR), cost-per-action (CPA), cost-per-click (CPC), value-per-click (VPC) The number of ads to test The number of ads allowed Nanigans Predictive Lifetime Value 17

18 HOW AD TESTING WORKS 1. Brand new ads, or those that have 0 to 20 clicks (where 20 is the Minimum Clicks for Phase 1) will be pushed into the marketplace and begin running against each other. For example if you have four ads, they will run until one (or any) of them reaches 20 clicks. Ads that reach 20 clicks are considered to be in Phase 1 after hitting the click threshold. 2. The ads that do reach the Phase 1 Click Threshold will now be paused or remain active, depending on how the ads have performed given your selected Testing Metric. Thus, if all four ads have reached 20 clicks, only the top three will remain active, based on those ads performance (in that particular Testing Metric) as compared to the others within that phase. 3. This means that in Phase 1, Ad Engine compares the four versions of the ad and pauses those that underperform. In Phase 2, the top three ads are tested and compared and any underperformers are paused. In Phase 3, the remaining two ads are compared and Ad Engine pauses the underperforming ad. PHASE 1 PHASE 2 PHASE 3 Nanigans Predictive Lifetime Value 18

19 AD TESTING: TIPS AND TRICKS More ads per segment can lead to higher frequency on the RHS. CTR is not a helpful metric for mobile so you should track a downstream event such as a registration or a purchase. It can be difficult to gain traction with new ads if you have too many running at the same time for a specific audience segment. Ads with a history have a tendency to be favored in the News Feed. If you already have six ads that are showing good volume and performance, we recommend launching new creative without removing existing creative. Higher CTRs don t always equal higher conversion rates. Lower CPA doesn t always equal a higher ROI (return on ad spend investment). It s essential to continuously monitor your test results. Testing new (unknown) variables in your ads can increase overall costs. Mitigate your losses by frequently pushing small creative tests. Test new creative in your best performing segments and test new segments with your best creative. CREATIVE ITERATION So how often should you iterate your ad creative? By monitoring your metrics daily, more specifically, CTRs and action rates by ad type and delivery location, you can determine whether you are in need of a creative refresh. This will also depend on: Volume: The higher your daily spend, the quicker ads will saturate your target audiences. Segments: The more audience segments you have, the more tests you can run. Campaign Type: This will impact your frequency of iteration. For example, a flash sales retailer would typically have a larger number of ad creative changes than a mobile gaming app. Nanigans Predictive Lifetime Value 19

20 CREATIVE REFRESH SCHEDULES The following chart indicates the number of images and the frequency of each cycle based on the budget available. Budget Frequency Concepts and Iterations Over $100,000 Under $100,000 Weekly Weekly (preferred) 4 iterations of best performing image concepts + 2 fresh concepts 4 iterations of best performing image concepts + 2 fresh concepts Images per Concept Total Number of Images per Week Campaigns that see latency on primary conversions should review the frequency of refresh with a view to running a longer cycle. Campaigns with low conversion rates should take into account the number of conversions needed to get sufficient data across all images, and reduce image numbers where necessary. Below is Nanigans benchmark data for Facebook Domain ads, Page post ads and Mobile App Install ads. If you are trending below these, it s time to update your creative. Ad Type Range CTR (%) CPM ($) High 0.05% 0.30 Domain Ads (Right Hand Side) Medium 0.04% 0.25 Low 0.03% 0.15 High 2.00% 7.00 Page Post Ads Medium 1.50% 5.00 Low 0.50% 2.50 High 2.00% 6.00 Mobile App Installs Medium 1.00% 4.50 Low 0.50% 3.00 Nanigans Predictive Lifetime Value 20

21 It s also important to track the cadence or frequency of iteration and how it impacts your KPIs. As seen in the example below: CTRs increased and CPAs decreased when creative was refreshed Leverage day over day data trends to determine when to push new ad creative Nanigans Predictive Lifetime Value 21

22 CONCLUSION Facebook marketers understand the power of targeting and optimization for achieving success on Facebook, but great creative is what truly engages people and connects them to the brand. By constantly testing new layouts and styles, you can get a sense of what works and resonates with different types of targeted audiences. The brands that will do the best over the long haul are those who are not only invested in honing their ad creative but those who stay informed about the latest nuances and best practices. Predictive Lifetime Value LEARN MORE Learn how Nanigans can empower you to find and invest in your most profitable customers on Facebook across social and mobile. Contact us at marketing@nanigans.com. Nanigans Predictive Lifetime Value 22

23 nanigans.com 60 State Street, 12th Floor Boston, MA Nanigans offers the only SaaS platform that optimizes to Predictive Lifetime Value. Our technology empowers over 250 performance marketers to find, acquire and retarget their most profitable customers at scale across social and mobile. With over $350 million running through our platform annualized, Nanigans provides in-house marketers a significant cost savings due a publisher-direct relationship model. Backed by Avalon Ventures with over 140 employees, Nanigans has offices in Boston, New York, San Francisco, London, Sydney, and Singapore.

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