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Facebook Stock Rises after ComScore Finds Ads Work

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Facebook Stock Rises after ComScore Finds Ads Work
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Yesterday, ComScore released details of their latest study on Facebook advertising and the news is pretty good. Despite many claims and self-report surveys declaring the ads simply don’t work, research suggests repeated exposure to branded messages, does in fact, impact subsequent purchasing decisions.

In what could be a strange coincidence, Facebook shares are on the rise again today. Currently stocks are trading $27.28 up from $26.55 this morning. It’s not a monumental increase, and it’s still a far cry from the $38 they were asking on the IPO launch day, but it’s something.

The results of the ComScore study will be revealed at the upcoming ARF Audience Measurement 7.0 conference in New York next week. Essentially what they found is that prolonged and repeated exposure to brand messages does influence consumer’s attitudes and opinions when it comes time to actually purchase. In other words, exposure to paid Facebook ads does lead users to select one brand over another.

Along with the study, ComScore will also publish a new white paper entitled, The Power of Like 2: How Social Marketing Works, which features critical new insights on the impact of media exposure. Their press release regarding their latest findings criticizes previous surveys that report on Facebook’s effectiveness, and claim there’s an inherent problem with their methods.

ComScore comments in their release:

In this particular case, it appears that the research method used was a survey, which asked users about whether or not they had ever been influenced to purchase as a result of exposure on Facebook. 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. And their accuracy in recalling 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.

This inability to accurately recall past behavior also seems to be evident in another survey response where a higher percentage of Facebook users say they are spending less time on the site today vs. six months ago. comScore’s behavioral measurement of engagement, where time spent on sites is electronically and passively observed, indicates the opposite – that time spent per user is actually up a few percent in that period. In the case of the internet, people spend time doing dozens if not hundreds of things online each day. It is highly unlikely that their recall of the exact sites they visited, the amount of time they spent there or their specific exposure to brand messages will be closely aligned with what actually happened.

More importantly, people generally don’t like to believe that advertising actually has an effect on their behavior, even though time and time again various forms of advertising research have shown that it does. So, how people respond to a question asking whether or not Facebook advertising (or any other advertising for that matter) has affected their purchase behavior may end up having little correlation with their actual behavior.

It’s a bit of good news for Facebook and possibly for investors, after all, revenues are pretty much hinged on advertising growth. Is it the reason for their shares increasing in price? I don’t know if we can claim that, but it may factor in. We’ll know a little more next week after ComScore publishes their findings and presents at the conference. We’ll keep you posted.

Facebook Stock Rises after ComScore Finds Ads Work
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  • http://this1that1whatever.com David

    So, ads work but will they make sufficient earnings profits.