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Does it still make sense to purchase likes? Absolutely.

But how many you buy depends on lifetime value.


The decline of organic Facebook reach, a result of growing News Feed competition, raises
questions for brand marketers. Among the most burning are questions about fans. In the early
days of Facebook advertising, marketers sought to acquire as many fans as possible, assuming
they were building an owned audience for messaging at scale.
Now that marketers can only reach a small percentage of their fans organically, questions linger
around whether fans still have value and whether investing in fan acquisition is still a smart strategy.
by
Addie Conner
Chief Innovation Offcer
Ben Weiss
Marketing Content Strategist
Does It
Pay to
Buy Likes?
Does It Pay to Buy Likes? 2
Let the data speak
Fans are still valuable even as organic reach declines for a number of reasons.
1. Less expensive reach costs
Though marketers need to pay to reach many of their fans, the fact that fans opted in to receive brand
messages means they respond positively at higher rates. They also react negatively less often (hiding
posts, marking posts as spam). These engagements signal high quality to Facebooks ad serving
algorithm and can reduce reach costs (CPMs) signifcantly.
2. Greater ad impact through social context
When target consumers get product or service recommendations from a trusted person, that interaction
is invaluable to marketers. Facebook imitates this concept when fans engage with brand content by
serving ads with social context. This means when fans engage with an ad, their friends are served ads
with the context that someone in their network liked, commented or shared. Kind of like an unoffcial
recommendation. And since fans engage with brand content at higher rates than other audiences, they
produce more stories with social context. This is a huge beneft.
For example, a Nielsen study found that users seeing ads with social context had greater ad recall,
awareness and purchase intent compared to those who saw ads without social context. More
specifcally, a blog post written by Facebooks VP of Ads Product Marketing Brian Boland describes
how ads with social context drive, on average, 35 percent higher online sales lift.
Our data corroborate this idea. A rollup of fve early 2014 campaigns run for one of SocialCodes highest
spending clients shows ads with social context drove, on average, 11 percent greater offine sales lift
than ads served without social context.
Note: We are only assessing the validity of campaigns that measure success strictly through likes.
Brands putting out quality content thats true to brand standards and personality will always pick up new
fans and gain a degree of added performance from that audience. Its the decision to pursue fan-specifc
KPIs that requires consideration.
Ads with social context drive,
on average, 35 percent
higher online sales lift.
Does It Pay to Buy Likes? 3
Are likes valuable enough to buy?
The question remains, are fans so valuable that marketers should advertise to acquire them?
The answer is two fold.
1. From one perspective, brands want enough fans that their target audiences see ads with
social context, which as explained above, achieves high impact.
2. The other important consideration is lifetime value a prediction of how much actual revenue
marketers can secure from a person, in this case a fan, over time.
With all that in mind, heres how to determine how many fans to purchase.
Compare fans against non-fans
In some cases, fans have a lifetime value so much higher than
non-fans that an always-on campaign to purchase as many fans
as possible is justifed by high returns. When this is not the case,
advertisers are better off acquiring just enough fans to achieve
social context goals, using remaining budget against valuable,
non-fan segments. This is why we urge comparing fan versus
non-fan value before building an acquisition strategy.
Here are examples of two different fan approaches surfaced through
fan versus non-fan comparisons. Both examples are based on real
campaigns run for SocialCode clients in 2014.
Example 1: When Fan Lifetime Value is Low
Epiq Pictures is a fctional flm studio thats harnessing Facebook to
sell tickets to its new comedy The Hot Knife. The studio fnds fans
do indeed convert on purchase offers at less cost than non-fans.
Nonetheless, through the lens of lifetime value, launching a limitless
fan acquisition campaign for The Hot Knife Page doesnt make
sense. Even if fans convert more effciently, revenues are confned to low-cost purchases like tickets
and digital downloads. Further, movie tickets and personal copies are generally one-off purchases,
meaning that added effciency wont continue to accrue over time.
Even still, Epiq Pictures wants to make sure the The Hot Knife Page has enough fans to serve its target
audience ads with social context.
Since Epiq Pictures provides a low-cost product that is
not bought consistently, lifetime value for fans is low.
Does It Pay to Buy Likes? 4
The studio concludes it wants to serve 500,000 impressions with social context. We know from a
random sample of 2014 SocialCode client campaigns that every time fans engage (like, comment or
share) with a piece of content, they generate, on average, eight viral impressions with social context.
Assuming a 5 percent engagement rate for fans, we would therefore recommend Epiq Pictures acquire
roughly 1.25 million fans to achieve its social context goal (see diagram for more details).
Example 2: When Fan Lifetime Value is High
Great Stay is a fctional travel brand that wants to harness Facebook to
sell premium packages for its luxury resort Sapphire. The brand surfaces
that fans convert on these packages at 5x lower cost than non-fans.
In this case though, scaling a fan acquisition campaign aggressively is
a smart decision. Why? Because travel is a much different industry than
flm. Consumers take vacations multiple times each year and purchase
packages worth thousands of dollars. So when fans are determined to
convert at markedly lower cost than non-fans, advertisers can capture
that effciency through both immediate and long term gains.
Acquiring Enough fans To Achieve Social Context Goals
How To Approach Fan Acquisition When fans Do Not Yield More Revenue Than Non-fans
Establish the Social Context Goal
Steps to Acquire Enough fans Examples
Establish an Engagement Rate
Benchmark for fans
Determine How Many Social
Context Impressions A Fan
Engagement Generates
Assuming 5% of Your fans Will Engage,
Identify How Many fans Are Needed To
Achieve 62,500 Engagements
Identify How Many Fan Engagements
Will Achieve the Goal
Launch a Campaign To Acquire 1.25M fans
Epiq Studios wants to serve 500K
impressions with social context
The studio knows one fan engagement
(a like, comment or share) leads to 8
viral impressions with social context
1
4
2
5
6
3
X 8 = 500,000
X = 62,500 Engagements
X 5% = 62,500
X = 1.25M fans
Historical data illustrates fans of
Pages managed by Epiq Pictures
have a 5% engagement rate
Does It Pay to Buy Likes? 5
For example, Great Stay scales a fan acquisition campaign with a $1.00 cost per fan (CPF). The brand
continues to acquire as many qualifed fans as possible, watching closely for a point of diminishing
returns. Once the brand acquires 5 million fans, its team recognizes fans no longer convert higher
than non-fans. Great Stay turns off the fan campaign to focus on other initiatives.
Identify How Much More Valuabl
e
Fans Are Than Non-Fans
Great Stay identifies fans
convert 5x more efficiently
than non-fans


1
Acquire As Many
Qualified Fans As Possible
Cost Per Fan (CPF) = $1.0
0
2
Watch Performance
Closely as Fans Scale
After 3 months of aggressive
fan buys, Great Stay finds fans
added conversion value stops.
The Page now has 5 million fans
3
Turn Off Page Like Ads
Once Added Conversion
Value Ends
Great Stay turns off Page like ads
and focuses on other campaigns
4
Like
Acquiring fans at Scale
How To Approach Fan Acquisition When fans Yield More Revenue Than Non-fans
Steps to Acquire fans Examples
Does It Pay to Buy Likes? 6
Advertiser Mandates
1. Business goals frst. Always.
Never acquire fans for the sake of acquiring fans. Only launch campaigns with fan-specifc objectives
when it is clear they will achieve ROI or create social context for target audiences.
2. Beware diminishing return.
Even when it makes sense to acquire fans aggressively, its important to constantly refresh the fan
versus non-fan analysis. It is likely that fans will eventually grow to a point where they no longer justify
acquisition costs. When that happens, its key to pivot strategy quickly.
3. Look for learnings.
When running a fan versus non-fan analysis, advertisers will likely surface additional learnings beyond
Yes, I should buy more fans or No, I should not buy more fans. For example, fans might be better
for awareness versus direct response initiatives. Whatever the case, explore the data deeply to
extract insights.
4. Get enough fans to serve target audiences ads with social context.
Social context is one of the most powerful tools in a Facebook advertisers arsenal. Make sure
a Page has enough likes to achieve the huge beneft that accrues when target audiences see that their
friends have engaged with a piece of brand content.
5. Never forget other targeting options.
Facebook is a huge platform. There will rarely be a case when targeting people who dont like your
Page (think Custom Audiences, Partner Categories, interests) wouldnt be a no-brainer.
6. Focus on quality in Page like ads
Facebook announced that motivating users to like a brand Page through like-baiting (incentives
that exist for fans only) is banned. So even when using the Page like ad unit, ensure your content is as
inherently likeable as any other post being published.
About SocialCode: SocialCode is a Strategic Preferred Marketing Developer (sPMD) and
Twitter Marketing Platform Partner that builds marketing technology and solutions making
the worlds most valuable brands successful using social platforms. Over 30 Fortune 100
frms and over 100 leaders in every major category, including their agencies, rely on
SocialCode to lead their social advertising, improve messaging and media strategy,
and become better marketers.
Get more resources on www.socialcode.com