5 Ways Savvy e-Commerce Companies Are Leveraging Facebook Ads

This article was originally published here on Inside Facebook.

Following social gaming, e-commerce companies have been early adopters of Facebook advertising. We have had the opportunity to work with innovators in the industry over the last 2 years, including Fab.com, Gilt Groupe and Nordstrom’s HauteLook, helping them hone their Facebook advertising strategies to acquire new customers and deliver positive ROI. In fact, their needs and goals have helped refine our product roadmap.

Savvy e-commerce companies are increasingly realizing they can leverage Facebook Ads to meet specific business goals — those that live both on and off Facebook, and that go far beyond the Like. In the online advertising world, using paid media to drive business results beyond awareness is known as “performance advertising,” and it’s something our software was built from the ground up to introduce to the world of Facebook. Our Ad Engine measures the user engagement that happens after someone clicks on a Facebook Ad, and uses that information in real-time to inform bidding and optimization of creative and audience targeting.

With this experience in mind, below are 5 business goals e-commerce companies are driving to and optimizing for as part of their Facebook advertising campaigns:

1. Goal: Acquire Fans

As Facebook recently highlighted at their fMC event, Pages are “mission control” for e-commerce companies on Facebook. By acquiring fans, e-commerce companies have the opportunity to message them at will in the future. Companies are using advanced targeting and multivariate testing in our software to quickly acquire not only a large number of fans, but quality fans – all within their budgets.

Since friends tend to share common interests, e-commerce companies are using Sponsored Stories to reach their fans’ friends and further grow their fan bases. Sponsored Stories take engagement, such as a Page post about a sale, and convert it into ad unit. These units can be served to existing fans and their friends, and include social endorsement – such as the number of people who have commented or Liked that Page post.

While growing the collective number of fans is important to e-commerce companies, since only 12% of Page posts are viewed by fans, Sponsored Stories and Marketplace Ads are core to further ensuring their messages reach current and potential customers.

2. Goal: Acquire Members

Many curated flash sale boutiques and daily deal sites require registration in order to access products and discounts. Acquiring registered members is extraordinarily important to these companies’ bottom lines, and the e-commerce companies we work with rely on Facebook, and it’s 845Mactive users, as one of their core user acquisition channels.

With new products offered regularly, e-commerce companies are using fresh creative and targeting methods to reach specific audiences most likely to register and be interested in particular products. For example, if a site is offering a pet curated sale, they might target people on Facebook interested in “dogs” or “cats.” One of our partners acquired hundreds of thousands of new members in sixty days this way – a number that represented over 25% of their member base at that time.

3. Goal: Find Purchasing Customers

While clicking an ad and registering for a site is an important first step, those clickers don’t always convert and ultimately purchase. E-commerce companies are using our software’s downstream measurement and optimization capabilities to not only find users who click an ad or register, but who actually add items to their cart and make purchases.

Take the example below with a leading online men’s retailer. We measured clickthrough rates (CTRs) and purchase rates across four different audiences. Those audiences we targeted with the highest CTRs were not actually the audiences with the greatest purchase affinity.

By measuring beyond the ad clickthrough to purchase events (which can happen days or even a week or more later), we learned that an audience with one of the lowest clickthrough rates actually had a four times higher purchase rate. Had we only optimized on the clickthrough rate metric, we would have continued to target a low ROI audience and not recognized the opportunity to generate thousands of dollars of incremental revenue.

4. Goal: Hone Member Activation

After a member is acquired using Facebook Ads, e-commerce companies move to activate them to visit the site regularly or become purchasing users. Most rely on email communication to do this, thanking and reminding new members of their membership as well as offering incentives like special deals.

By implementing Nanigans conversion tracking on these emails, e-commerce companies are learning how to best activate Facebook users. And just like the above clickthrough vs. purchase rate example, new members who register from Facebook Ads may possess different characteristics than those who become activated members. These consumer engagement learnings are funneled back into our Ad Engine, helping further hone their future ad targeting on Facebook.

5. Goal: Drive Word-of-Mouth Referrals

After acquiring new customers through Facebook Ads, they engage with your brand – often sharing the discovery of a new curated sale or an individual product to their social networks. These social consumers are incredibly valuable to e-commerce companies. By sharing deals or products, these influencers create free, word-of-mouth advertising.

By implementing conversion tracking on sharable URLs to Twitter, Facebook, over email and other channels, e-commerce companies are using our software to identify who these social consumers are. Beyond that, they are taking advantage of our Ad Engine’s attribution capabilities to map activity generated from these word-of-mouth referrals back to their original Facebook Ad spend – like new registrations and revenue (see diagram below).

Take this example: Joe is served a Facebook Ad for a new outdoorsman flash sale site. He registers for the site, and shares that activity to his social networks. 5 of Joe’s followers click on the link to learn more, 2 register for the flash sale site, and one ends up making a purchase within the next week. The outdoorsman site can attribute those 5 clicks, 2 registrations and downstream purchase revenue back to the original ad that Joe clicked on Facebook.

Viral attribution allows e-commerce companies to not only understand the characteristics of people generating word-of-mouth referrals, but to understand the true residual value generated from their Facebook Ad spend.

How is your e-commerce company leveraging Facebook ads? Let us know in the comments!