Facebook to Demonstrate Ad Efficiency via comScore Report
"Much of the recent discussion on Facebook effectiveness has gotten the story wrong," comScore claims.
The digital marketing intelligence agency is scheduled to release a report next week entitled The Power of Like 2: How Social Marketing Works. This week, comScore (NASDAQ: SCOR) is hyping that report with a lengthy blog post on the subject.
In short, comScore said that through its research (which examines the "impact on consumer behavior as a result of media exposure," such as seeing a brand message), the marketing agency is "gaining critical new insights that show Facebook earned media is having a statistically significant positive lift on people's purchasing of a brand."
This is quite different from other reports that are out there. It's so different, in fact, that comScore felt the need to cite a report from Reuters that claimed that four out of five Facebook (NASDAQ: FB) users have never purchased a product or paid for a service based on ads or comments published on the site.
"About 44 percent of respondents said the market debut, seen by investors as troubled, has made them less favorable toward Facebook, according to the survey," Reuters wrote. "In the May 31-June 4 poll of 1,032 Americans, 21 percent said they had no Facebook account."
Reuters quoted an analyst, Debra Williamson, from the research firm eMarketer, which conducted its own study in February. "It shows that Facebook has work to do in terms of making its advertising more effective and more relevant to people," said Williamson.
Indeed, Facebook is troubled. The company, which was priced at $38 at its IPO, has steadily declined in the following days and weeks. Facebook hit a new low on June 5, closing at $25.87. The stock rebounded slightly the following day, rising to $26.81. But on June 7, Facebook endured another decline, this time closing at $26.31.
Can Facebook make a comeback? That remains to be seen. But if nothing else, comScore is attempting to prove the critics wrong by measuring the effectiveness of ads published on the social network.
"Our research uses a test vs. control methodology to compare the behavior, such as brand site engagement and purchase, of similar groups of individuals with their primary difference being whether or not they were exposed to a media impression," comScore wrote. "For brand advertisers, this methodology has been commonly used over the years to measure branding effects of advertising due to the realization that clicks are a weak indicator of true campaign performance because they ignore the importance of simply viewing an advertising message (otherwise known as the ‘view-through' impact of exposure). The lifts in behavior as a result of exposure may be immediate or latent, often occurring weeks or even months following exposure."
With regard to the Reuters story, comScore said that while surveys "can be useful in assessing ad effectiveness lifts across attitudinal dimensions such as brand awareness, favorability and purchase intent, people tend not to provide very accurate assessments of their own behavior." comScore also said that the accuracy with which people can recall their own behavior over an extended period of time can be "especially unreliable."
"People might be able to accurately tell you how many times they have eaten at a restaurant in the past week, but they would probably do a poor job estimating that number over the past three months," comScore wrote, adding that this memory gap seems to be evident in another survey. "The Power of Like 2 will present some new ways for thinking about effectiveness research in the social channel."
Will comScore provide us with the final word on Facebook's success in advertising? Maybe -- maybe not. AllThingsD warns that Facebook is a comScore client. Inevitably, this will provide critics with an easy way to tarnish the results of the forthcoming study.
Follow me @LouisBedigianBZ
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.