Facebook’s ‘Conversion Tracking’ Tool Measures Ad Effectiveness
Facebook Announces Mixed 1Q15 Earnings (Part 3 of 5)
Facebook’s introduces the “Conversion Tracking” tool
In the last part of this series, we discussed how tools like “Custom Audiences” are helping Facebook (FB) provide relevant ads to its users. However, advertisers are still asking Facebook questions about the effectiveness of its ads. Facebook answered this question last quarter by introducing the “Conversion Tracking” tool. This tool measures the impact that online ads have on in-store purchases, specifically for retailers.
For example, this tool will enable a retailer, like Walmart (WMT), to know where its customers saw an ad online before making a purchase in the store.
During the conference call to announce earnings, Facebook’s management gave an example of Cellbes—a women’s fashion retailer in Europe (EFA). The retailer used the “Conversion Tracking” tool to understand how mobile ads drove sales through phone calls to its sales representatives.
Google is enhancing its ad measurement tools
Google (GOOG) (GOOGL) is also focusing on enhancing its ad measurement tools. A few months ago, it added the “estimated store visits” metric to its ad measurement tool to help advertisers understand the effectiveness of their ads. Google mentioned that retailers likes ULTA Beauty, PetSmart (PETM), and Famous Footwear could all understand the effectiveness of their search ads on Google.
Today, in-store retail sales account for the majority of overall retail market sales—despite the rapid growth that e-commerce and mobile commerce are experiencing. According to a report from eMarketer, and as the above chart shows, the US e-commerce and mobile commerce markets are still a fraction of the overall retail market—this will continue in the future.
As a result, it’s important for retailers to understand how their online ads are driving their in-store sales. This is where Facebook and Google are looking to help them with enhanced ad measurement tools.
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