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Paid Ads Are Key to Making the Most Out of Facebook

Paid Ads Are Key to Making the Most Out of Facebook
Credit: Bloomicon/Shutterstock

Building up a massive following on social media may not bring the type of return on investment many businesses are hoping for, new research suggests.

A study that is online and pending publication in the Journal of Marketing Research found that Facebook likes alone don't translate into increased sales. To really turn social media followers into buying customers, organizations also need to target them with paid advertising.

Daniel Mochon, one of the study's authors and an assistant professor at the A.B. Freeman School of Business at Tulane University, said most companies view Facebook as a very social platform and think that simply interacting with followers will lead to more loyal and profitable customers.

"That’s not necessarily the case," Mochon said in a statement. "Customers rarely post on a brand’s page on their own and typically only see a fraction of a brand’s Facebook content unless they are targeted with paid advertising."

For the study, researchers looked at the Facebook page of an insurance company. The company used the Facebook page to promote its program where consumers earned points for exercising and engaging in other healthy behaviors. When the consumers earned enough points, they could trade them in for various rewards.  [See Related Story: Social Success? How to Measure Social Media Marketing ROI]

As part of the study, the researchers invited new customers to take a survey and asked them to like the Facebook page. Those who weren't specifically invited served as a control group.

The researchers studied the page for four months to determine if simply getting people to like the insurance company on Facebook would entice them to try to earn more points.

At the end of four months, the study's authors found no difference in reward points earned. The researchers said this suggests that liking the page and being involved in its social community aren't enough to change behavior.

To follow up, the insurance company bought paid advertising on Facebook. It paid for two posts per week for two months.

The study's authors found that those who were invited to like the page earned 8 percent more reward points than the control group after being subjected to the paid advertising.

The researchers believe the paid ads were effective because they were more likely to actually reach consumers. Since Facebook's algorithms filter content for each user's preferences, there is no guarantee that a company's regular social media posts will make it into all of their consumers' timelines.

"To our knowledge, this is the first causal demonstration of the effect of Facebook page liking on customer behavior — specifically behavior that takes place offline," said Janet Schwartz, one of the study's authors and an assistant professor at Tulane University. "The results suggest that Facebook pages are most effective when they are used as a form of traditional advertising rather than as a platform for social interactions."

The study was also co-authored by Dan Ariely, a professor at Duke University, and Karen Johnson, deputy general manager of Discovery Health.

Chad Brooks

Chad Brooks is a Chicago-based writer and editor with nearly 20 years in media. A 1998 journalism graduate of Indiana University, Chad began his career with Business News Daily in 2011 as a freelance writer. In 2014, he joined the staff full time as a senior writer. Before Business News Daily, Chad spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including local and state government, crime, the legal system and education. Chad has also worked on the other side of the media industry, promoting small businesses throughout the United States for two years in a public relations role. His first book, How to Start a Home-Based App Development Business, was published in 2014. He lives with his wife and daughter in the Chicago suburbs.