As advertising becomes increasingly digital, publishers are demanding statistics to help them determine the success of their ads. Fortunately for advertisers, Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB) are battling to offer their ad clients the most useful measurement solutions, improving available metrics and tools while they're at it.
Increasingly complex and interrelated paths to measure
Google's latest addition to the fray was its Full Value of Mobile Calculator. The calculator has an ambitious goal. Its purpose is to help users understand return on investment, or the "full value of mobile for your business," across five different paths:
- Cross-device: Users often use multiple devices when making a purchase (e.g., they find the item on a mobile product and purchase it later on their desktop).
- Mobile site: An effective site that is optimized for mobile can drive significant sales.
- In-store: Many customers use devices to lead them to a store location and make in-store purchases.
- Apps: Customers can download and use apps to make purchases.
- Calls: Smartphones facilitate phone calls.
Notably, the fact that there are five different paths available to customers highlights the complexity of the digital advertising market. And it doesn't yet take the value of social connections from platforms like Facebook, Twitter, or Google Plus into consideration.
Show me the data
Google's Full Value of Mobile Calculator is fairly useful for Google clients, since the inputs are based on data that Google provides. But it's pretty much useless when it comes to measuring return on investment on social platforms. Consider a few of the calculator's inputs:
- The number of times someone clicked "Get Directions" from their mobile search ads
- The number of clicks from mobile search ads that led to phone calls
- The percentage of "Call" clicks from mobile search that converted into a sale (it's possible to track this by assigning a unique mobile number to mobile search ads)
- The number of visits to your site generated by clicks on mobile search ads
The Google Click Type Data report makes all these numbers clear as day for Google advertisers. But it's far more difficult to track the value of a comment, share, or connection with this tool.
While Facebook provides a handful of data to advertisers, much of it revolves around "reach" and connections. But what are the business implications of "reach" to an advertiser? What business outcomes does a connection produce?
Even Facebook's own James Dailey, from the company's measurement and ad effectiveness team, admits that a user's "contribution to actual business metrics like sales" is a key insight. He goes even further to say that "focusing on business outcomes rather than only media metrics like clicks is ... critical."
Show me the money
Ultimately, clients' choices will come down to return on investment, or ROI. Advertisers ask: Did the return on my advertising expense exceed the cost?
According to Brad Smallwood, head of measurements and insights at Facebook, a joint effort with Datalogix revealed that 22 recent Facebook campaigns, reaching a total of 70 million customers, produced a 22% lift in ROI.
Aggregate Knowledge, a company that created a platform to help brands measure their Facebook campaign performance relative to other campaigns, claims that it has found a way to measure Facebook data that will help the customer maximize ROI.
The platform unifies "users across all digital marketing channels such as display, search, social, rich media, website, email, CRM, and others," explains the company's website.
"Simply put, the AK Platform shows advertisers what works," said Aggregate Knowledge CEO David Jakubowski. And on that note, Facebook seems to be working wonders for AK clients:
"On average, marketers have seen that Facebook generates 20 to 25 percent of all their sales and that consumers driven by Facebook are more valuable, with a 35 percent better CPA [or cost per action]," said Jakubowski. "In addition, using more advanced analysis, such as AK's multitouch attribution analysis, we have seen that Facebook fares even better in the eyes of the marketer, demonstrating a 50 to 55 percent lift in conversion rate."
The battle is just beginning
Businesses can easily track ROI using both Google AdWords and Google Adsense; simply divide return over investment. But as Facebook grows increasingly indispensable to its users, the companies will need to duke it out for clients' ad budgets.
Investors should keep an eye on ROI trends for both Facebook and Google. Though overlap between the two channels will surely exist, advertisers will devote the majority of their ad budgets to the channel with the highest ROI.
Who do you think will earn advertisers the highest ROI in 2013? Facebook or Google?
Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.