There are just two reasons why the rest of us didn’t die laughing when we heard the Private Equity Data centre recently reported that Facebook appears to be worth $35 billion:
- Facebook is extremely popular. 400 million people use it each month, 200 million each day.
- Facebook “pages” are the best thing that’s happened for online advertising since Google search ads. While the pages are free, Facebook makes a lot of money selling ads that drive traffic to them.
Why are Facebook pages so great? We think its because once a Facebook users affiliates themselves with one, the owner of the page is free to spam the user out the wazoo. (Spam is hateful, yes, but very effective.)
Psychster Inc, a group of Seattle-based psychologists who decided there’s more money in social media consulting, have a different theory.
They say it has something to do with cognitive dissonance.”The classic phenomena of cognitive dissonance (Festinger, 1957) is likely to be at play. For decades psychologists have observed that people strongly avoid the tension associated with discrepancies between their actions and their behaviour. So not surprisingly, once people purchase products from a brand, they report liking the brand more. But the reverse is also true – when people declare publicly that they like a brand (by putting a logo on their profile for all of their friends to see) they are more likely to buy from it.”
Based on this theory, and a survey of ~1,100 Web users, Pychster says Facebook pages are the best ads are the best in social media.
Psychster studied seven different forms of social media advertising — two kinds of widgets, banners, two kinds of fan pages, sponsored content and newsletters.
Their bottom line: When you’re looking to enhance your brand, your smartest bet is building a fan page with logos and fans. People friend the fan page, add logos to their profile and spread the word.
Psychster looked at other social media ad units as well and offered theories on why each performs well (or doesn’t).
Almost everyone knows what a banner ad is at this point, which is why people in the survey were the least inclined to click on banner ads.
Despite this, the survey says 'they were among the best at triggering purchase intent and viral recommendations.'
In the experiment, the sponsored content was a special St. Patrick's Day page with a mix of editorial and user generated content. People knew it was sponsored content.
This created the highest interaction rate, but lowest purchase intent and viral recommendations. As a result this sort of advertisement appears to be good for raising brand awareness. That's something to keep in mind when choosing between sponsored content or a banner.
This advertisement was on a website and the narrator clicked an ad then signed up to get a newsletter. Nobody was particularly moved by newsletters in this survey.
However, like banners the survey reported 'they were among the best at triggering purchase intent and viral recommendations. So again, traditional advertising may be the best choices depending on the goals of a campaign.'
This is a profile page with fans with corporate logos, notes on a message board. And when you become a fan of the brand you get the logo on your page.
These seem to be the most effective. They trigger purchase intent, which is most important. Sure, they get people engaged, but the real revelation of this study is that they have a serious commercial impact. (And it's strongly seen as an ad, but people don't care.)
If you make one of these, be sure to include the logos and option to have in on the page, otherwise it's not as effective.
Why is it so effective? Here's Psychster's explanation:
'The classic phenomena of cognitive dissonance (Festinger, 1957) is likely to be at play. For decades psychologists have observed that people strongly avoid the tension associated with discrepancies between their actions and their behaviour. So not surprisingly, once people purchase products from a brand, they report liking the brand more. But the reverse is also true -- when people declare publicly that they like a brand (by putting a logo on their profile for all of their friends to see) they are more likely to buy from it.'
Widgets costs much more to produce, but the investment is justified because people engage with them much more. According to the study, widgets 'are good all-around strategies for increasing viral spread, purchase intent, and positive brand attitudes'
Here's how they describe a get widget:
This ad type consisted of a widget application where the narrator created a digital product and saved it for him or herself. For the car brand, the digital product was a car with customised interior and exterior colours. For the soup brand, the digital product was a collection of recipes based on an ingredient search.
A give widget is the same expect you send it to a friend.
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