The number comes from a study conducted by Kenshoo on behalf of Facebook. What I find odd is that they only include results from a single advertiser – Experian. While the results make for an interesting case study, they can hardly be considered conclusive.
Here’s what they came up with;
There was a 19% average increase in total conversions among the people who saw Facebook advertising compared with those who saw just paid search advertising (no Facebook ads)
Among people who saw the Facebook ads in addition to the paid search ads, there was a 10% average decrease in cost per acquisition due to the increase in conversions
Conversions increased as spending on Facebook ads rose, but there was a “sweet spot,” or minimum and maximum spend level on Facebook, to get the strongest performance at the least cost
This “sweet spot” concept is intriguing. You’d think, because Facebook paid for the study, that they’d say ‘the more you spend on Facebook ads, the better your results’. But they didn’t. The study actually says that there’s a point of diminishing returns.
They discovered that there was a minimum spend required before you started to see any results. Kenshoo compares this to a local restaurant passing out flyers in the neighborhood. Simply handing them out to homes on a single block isn’t going to significantly impact the number of people who dine that week. Handing them out to an entire neighborhood – that’s a different story.
But if handing out 100 flyers a day works. Why not go back tomorrow and give those same people another flyer? Not going to help and its probably going to hurt because of the added cost of printing and delivering the additional flyers.
Kenshoo says this same thing happens online. A mid-range FB spend gave them the optimal conversion volume and conversion rate. With a higher spend, the volume continued to grow but not enough to make up for the difference in spend – thus the decrease in conversion rate.
The takeaway: twice the money spend doesn’t equal twice the return. Unfortunately, only you can determine your personal sweet spot through a series of trial and error tests.
The point Facebook wants to make with this study is that if you’re into paid search advertising, then adding Facebook ads to the mix will help. I don’t disagree, but I want to take it a step further. Multi-channel advertising of any kind should help increase your return on your paid search investment simply because you’re upping the odds of reaching the right customer on the right channel at the right time.