1200% ROI with Facebook Ads?

Posted on December 3rd 2012

1200% ROI with Facebook Ads?

You may have heard of the Samsung Galaxy S3 smartphone.  Right now it’s outselling the iPhone, selling about 200,000 units per day.  And according to Facebook Global Marketing Solutions VP Carolyn Everson, Facebook ads returned nearly 1200% ROI for Samsung’s three month campaign.  Everson revealed at the Business Insider IGNITION conference that Samsung spent $10 million dollars and achieved $129 million in sales directly attributable to their Facebook campaign.

1200% return on their investment?  As it turns out Samsung has sold over 30 million of the S3 phones, so 1.3 million units attributable to Facebook isn’t implausible.    But I find that calculation highly suspect and here’s why:

Did 8% of Samsung’s Facebook fans buy an S3?

Samsung has 15,680,000 fans on their Facebook page.  Assuming the cost of the S3 to be $100 (their most recent cost), Samsung would have to sell about 1.3 million units to their Facebook fans to have $129 million in sales, which amounts to about 8% of their Facebook fans.  That would be a fairly unprecedented rate of conversion, especially difficult to attribute primarily to Facebook.  Because the sales figures are such a large percentage of total Facebook fans, we have to assume that they are attributing a larger sales amount per unit to calculate sales.

Of course the vast majority of those fans own a Samsung phone.  By a rudimentary calculation 2 million phone owners would be eligible for a phone upgrade (if a cell company allows one every two years).  So converting 60% of eligible cell customers makes Facebook’s claim even more unlikely.

There’s also the issue of the campaign itself, which was at one point hijacked by Apple fans.  In fact, that particular post (what electronic item would you take with you on a desert island?) continues to be commented on primarily by Apple fans.  So there’s a question as to the effectiveness of the advertising content Samsung placed on Facebook as well.

Everything I know about the Samsung Galaxy S3 I learned from 72andSunny

There are a couple other aspects to the story which merit consideration:

First, a Google India study from last week concluding that 70% of electronics customers participate in ROPO (research online purchase offline) behavior.  It’s reasonable to assume that people are going to do research before making a phone purchase that is going to tie them to a device and a phone contract for two years.  Facebook really doesn’t have a great deal of information to offer customers looking for earnest reviews and technical details.  Facebook can increase awareness for a product like the Samsung Galaxy S3, but Facebook ads and pages are ill-equipped to convert a sale for a smartphone for ROPO consumers.

Secondly, you may not know advertising agency 72andSunny but you probably know their work.  They created two of the best campaigns of recent memory, not-so-coincidentally for the Samsung Galaxy S3 (both embedded below).  In their first campaign, they lampoon Apple users for waiting in line for an iPhone culminating in the reveal that Samsung users are holding a place in the Apple line for their parents.   In the second campaign, a husband is leaving for a trip and as his family says goodbye his wife shares two videos: one from the kids to watch on the airplane and one from her that is not suitable for the airplane (prompting one of my favorite headlines from c|net’s Chris Matyszczyk, “New Samsung Galaxy S3 ad: It’s good for sharing sex tapes!“).  The point being that there was incredibly effective creative product that did a phenomenal job differentiating the features of the phone from its competition in a memorable way.

Back to the numbers though: if Samsung sold 30 million units and 1 million (generously) is attributable to Facebook maybe there’s another way to look at this?  AdAge estimated Samsung’s ad spend for the Galaxy S3 phone would be a little over $280 million.   So even if you take Facebook at their word, their ads are still underperforming compared to Samsung’s other advertising.

…but they’re not telling the truth

Facebook has value.  Samsung wouldn’t have invested 3.5% of their ad spend with Facebook.  But anyone expecting to get $12 for every $1 spent on Facebook advertising is going to be awfully disappointed.  The Galaxy S3 just happens to be a hot item, primarily because effectiveness of the 96.5% of their ad spend that didn’t go to Facebook (and in large part due to some extraordinary creative by 72andSunny).  The fact that Facebook can’t discuss a campaign like this with pragmatism, choosing instead to take credit for far more than they could possible have accomplished is probably a good indication of the current state of Facebook advertising today.

What do you think?  Did Facebook hit this campaign out of the park or are they taking credit for too much?  And what does it say about Facebook that an executive makes these sort of claims?

 

 

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Author information

Jim Dougherty
Writer and chief of miscellany at leaderswest.com
I see social media as a huge differentiator for small businesses and try to tailor my insights to support that view. I am the 12th most influential social media blogger according to Kred, and the single most influential person on the topic of David Hasselhoff according to Klout. Neither of those is probably true. Representing Cincinnati, Ohio and my hometown of Seattle, Washington.

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Comments

Javier Espinoza Rodriguez
Posted on December 3rd 2012 at 11:56AM

We've done a great deal of Facebook advertising for our SMB clients and their campaigns have been phenomenal. We can't complain. However, for the much larger brands, there have been mixed results. It could be the receptiveness to the brand, wrong demographics, too little advertising, who knows? When it comes to measuring the success of a campagin, one must first be clear of the goals of said campaigns. Has Samsung denied the numbers that Facebook directly attributed to their campaign? If campaigns are done correctly, these numbers can be easily found and compared for a true and credible claim to be made. Maybe we need more information, than just Facebook's assertion that their campaign was responsible for all these sales.