Facebook’s new “product ads”: US directors of digital & strategy chiefs on benefits and problems

This week, Facebook appealed to advertisers with the announcement that they will begin offering product ads. The site says these ads will allow businesses to showcase more products with users being able to discover more relevant products.

Product ads allow advertisers to reach people who visited their website or app (via Custom Audiences) or reach people based on their locations and interests. With the success of Google Shopping, the search engine’s ads for products based on search results, Facebook is hoping to see similar results.

Facebook said businesses are already seeing results from product ads. Target used them and saw a 20 per cent uplift in conversion rates compared to Facebook’s other ads, while Shutterfly saw a more than 20 per cent uplift in click throughs from both current and new customers.

The Drum spoke with agencies including We Are Social, David&Goliath, Carrot Creative, and Likeable to find out their thoughts on what the best ways are to incorporate the ads for different clients, and how consumers may take to targeted ads on a platform that users don’t normally visit with an intent to purchase something.

Josh Crick, director of digital at David&Goliath

Facebook’s product ads are an exciting opportunity for brands, but we need to be realistic about their value and use cases. They are intriguing because Facebook has an incredibly deep data set and the targeting abilities will be top notch. Additionally, we are already seeing a shift in media buying from text-based to image-based shopper ads based on performance. Highly specific targeting plus image and video-driven creative yield a win/win for brands.

However, product ads are only successful if there is purchase intent and therein lies the difference between Facebook’s shopper ads and similar ads on Google. While less targeted, Google shopper ads see success, because they are capturing consumers that are actively seeking a brand, product, or service and the ad plays a role in their potential transaction. Facebook’s approach is much more targeted, but the ads are being shown to consumers based on association and keywords and not actual purchase intent. If Facebook can create a retail-driven experience that shifts the user’s mind-set from passive to active, they will have it nailed.

Asif Khan, director of strategy at Carrot Creative

If the client is a CPG or FMCG, and is more promotional/sales oriented, we might consider investing more on FB in the form of product ads. However, if the client is a lifestyle or luxury brand, then we'd probably take a different approach, one that is focused less on promotions/conversions/sales and more on building brand equity. Every client has different objectives, so it's important to take those into consideration when planning for social. In general, we recommend that our clients focus on creating engaging content for their social channels, including Facebook, that will build long term brand equity rather than boost short term sales.

I'm not sure it solves any problems. It's just another potential option for reaching (hopefully) interested buyers on a platform that is heavily used every single day. Product ads on a platform where people generally don't want to see product ads isn't exactly the silver bullet we've all been waiting for. It's pretty clear FB is looking to compete with Google on monetizing its platform and creating a more direct link to sales. However, that said, overall I think FB product ads are completely different from Google product ads. Yes, FB has great targeting. But it comes down to consumer intent. Consumers tend to go to Google searching for information and to do comparison shopping (zero moment of truth) - comparatively I'd guess fewer consumers are going to FB with a similar level of purchase intent. On FB, they are browsing, looking to be entertained, connecting with friends/family, and are not necessarily looking to make a purchase. In fact, with FB's move away from supporting organic content, especially promotional content, product ads may seem even more out of place.

FB in particular is increasingly 'pay to play', which means it operates more and more like a traditional broadcast channel. As a result, brands are mainly focused on reach/awareness, and that in turn of course can have a positive impact on sales, just like any other form of advertising. However, the fact that FB allows for extremely tailored targeting theoretically should help to ensure a brand's ads are highly relevant to the user. Again, though, it depends on context. As mentioned above, the majority of people using Facebook are probably not in purchase mode, so making a direct link to sales is going to be a bit harder to establish. If client budgets realigned to support social/digital advertising in the same way that money is being spent on traditional advertising, we might see an even greater impact on sales.

Tim Bosch, director of media planning & buying at Likeable Media

Facebook Product Ads represent a clear shift in Facebook's ad objective priority from softer brand metrics, like reach and engagement, which are still important, to ad products designed to achieve a clear ROAS (Return on Advertising Spending). Obviously Online Sales are an important metric to online retailers. Facebook's ad products have already improved drastically year over year. Deploying the most relevant products based on machine learning plus Facebook's unmatched targeting abilities makes product ads an exciting opportunity for anyone concerned with online sales.

This potentially disrupts FBX, which used to be the solution to promoting large ecommerce product offerings. If this product comes to Power Editor, Facebook Product Ads solve problems that could occur when dealing with a 3rd party ad exchange. Once the ability to upload an entire product line comes directly to the advertiser, more effort and money can be dedicated to planning and strategy. This network has tons of untapped potential. Advertisers just need the time needed to establish different creative sequences and audiences. This product should help to eliminate wasted time and it should also help to optimize your retargeting efforts.

I think website custom audiences and FBX have, in my experience, been effective in driving sales online. I have had some tests that resulted in incredible ROAS. I've seen some with negative ROAS as well. The point is finding your products unique sales funnel. Once that is clear, you will drive sales with Facebook ads. These products will basically make the decision to test Facebook ads even easier and more obvious to direct response advertisers.

Luke Carrell, strategy director at We Are Social

On the surface, Product Ads might seem like just another way to inundate users with a parade of buying options. In fact, this ad format is the latest manifestation of Facebook’s mission to become a key touchpoint at every point of the consumer journey. Having an ad format that can not only retarget users who have been browsing ecommerce property, but is directly linked to a merchant’s current offering and can surface additional suggestions based on user behavior is definitely a step up.

Facebook seems to be taking its dedication to building smarter ad products seriously. Alongside their recently announced shift from served impressions to viewed impressions, it looks like Facebook is striving to make their ad offering appealing to both consumers and advertisers. As paid continues to become the main focus for marketers using Facebook, the platform will have to continue to create more diverse and attractive offerings.