Marketers now have the opportunity to use precision to target audiences as well as mass scale to reach larger ones with digital and mobile platforms, like Facebook and Instagram. But if they limit reach, are marketers losing out on the opportunity to drive impact at scale?
To better understand the importance of reach in a digital world, Facebook Marketing Science conducted research to determine how efficient reach is in driving impact to more people and real business results at scale for brand advertisers. Read on for topline findings from our research and download the white paper for an expanded discussion of our analysis and what it means for marketers.
Relating reach to impact
To illustrate a brand advertiser’s dilemma between achieving precision and scale, consider the following campaign scenarios:
1) Narrowing in on a small and potentially more precise audience
This approach may result in a higher level of lift on people’s behaviors because the product may be more relevant. The scale of the campaign, however, limits the size of the audience impacted.
2) Scaling reach to a broader audience
Doing this may yield a lower response rate to the advertising, but the total number of people impacted could be much greater. When measuring this campaign against total impact, reaching a broader audience is more successful.
In the digital space, advertisers often have the ability to define their target audience using a variety of different signals, such as demographics, interests or behaviors. While very precise targeting may lead to a higher response within a target audience, it’s important to understand the trade-offs. Is optimizing towards reach the most important lever brand advertisers can pull?
Translating online reach to offline outcomes2
For the first part of our analysis, we wanted to understand the impact Facebook and Instagram media can have on a brand’s in-store sales. Over the past three years, Facebook has been working closely with Consumer Packaged Goods (CPG) advertisers in the US to help them understand the impact their Facebook media is having on their brand’s in-store sales. Through a partnership with Oracle Data Cloud, advertisers can match anonymized groups of users who saw an ad on Facebook or Instagram to their subsequent in-store purchases at partner retailers.1
Through this analysis, we learned that the top reach quartile of campaigns drove 3X the number of total people impacted at 10% less cost per person impacted. This translated to more business for CPG advertisers with high reach campaigns.
Looking at these top and bottom quartiles, we observed that the median incremental sales of the top quartile was 139% higher than the bottom quartile. The lower reach quartile may have had a more precise audience, which has more response per person, but the top reach quartile drove more people to buy. This shows that, for marketers, focusing on reach drives more buyers and ultimately more incremental sales.
The efficiency of scale, in a world of precision
In the second part of our study, we wanted to understand how different online bidding strategies impact overall campaign reach, the types of people reached and the cost efficiency of driving results. To do this, we looked to Facebook’s auction-based media-buying environment, where advertisers have the ability to optimize campaigns using different metrics based on campaign objectives. Through a meta-analysis of 57 large US brand advertiser campaigns on Facebook, we focused on two bidding strategies:
Reach-optimized bidding: comprised of campaigns bidding for daily reach, cost per thousand impressions (CPM) and Reach and Frequency.
Action-optimized bidding: comprised of campaigns bidding for cost per click (CPC), including post engagement, website clicks and website conversions.
We found that optimizing towards action-based metrics results in reaching a larger percentage of more expensive users. In fact, action-optimized bidding resulted in an 80% higher average user CPM versus reach-optimized bidding.3 Through a meta-analysis of brand impact tests, however, we found that the overall impact in terms of Ad Recall and brand awareness is fairly similar for both bid strategies.4 When we consider the cost per person impacted, reach- and action-optimized bidding can produce significantly different results.
Consider a simulated eight-week campaign based on our findings that the average CPM for action-optimized bidding is higher than reach-optimized bidding, but the lift in awareness is similar across both. From this simulation, the brand advertiser would get a larger reach (5.2 million people) with reach-optimized bidding than with action-optimized bidding (2.9 million people). And given that both optimization scenarios have the same campaign budget, the same frequency and the same expected lift in brand awareness, reach-optimized bidding would drive more scale and therefore be more cost-effective in terms of generating brand awareness.
By optimizing towards reach rather than towards action-based objectives, advertisers can generate a much larger impact for their brand, more cost-efficiently.
What it means for marketers:
Reach has been—and will continue to be—an important driver of campaign effectiveness. For brand marketers, changing attitudes and behaviors at scale will ultimately lead to growing more business.
“Reach is of critical importance when planning campaigns that drive our business. By planning and optimizing campaigns towards reach on Facebook, we’ve been able to see continued success in driving in-store sales.”
Atin Kulkarni, Senior Director, Portfolio Analytics, Frito-Lay North America
Aim higher and scale your campaign impact. For brand marketers, using reach as a key objective to guide execution will drive business at scale. As our research has shown, using a scaled campaign approach online can drive significant impact for sales offline and brand awareness.
Realize the value in measuring for total impact. Traditional lift metrics alone aren’t factoring in an important campaign element: total impact. As we saw in various parts of our study, measuring campaigns in terms of total impact translates to number of people impacted (change in behavior or attitude) and cost per impacted person. By focusing on reach and scale, brand marketers can drive incremental sales and attitudinal impact more efficiently.
Reach still matters. For brand marketers, reaching more people can overall be a more efficient strategy. In an auction setting in particular, optimizing media buying and execution tactics towards reach—versus clicks or actions—will ensure the lowest cost per reach and cost per person impacted.