
Pizza Delicious Bought An Ad On Facebook. How'd They Do? - iProject
http://www.npr.org/blogs/money/2012/05/16/152736597/pizza-delicious-bought-an-ad-on-facebook-howd-they-do
======
ankeshk
So there are quite a few things that Pizza Delicious didn't do right with
their Facebook ads.

1\. They target people who like Italian food. They don't target people who
like Pizza. 15,440 people in New Orleans have liked Pizza on Facebook.

2\. They don't target people who like other Pizza Outlets. Or other local
restaurants. If a resident likes one local outlet, he is more prone to like
other local establishments too.

3\. They disregard targeting friends of people who already like Pizza
Delicious. And by doing so - they don't use the most powerful feature Facebook
has to offer: social proof.

4\. That they do any kind of targeting beyond geographic targeting at all is
probably erroneous for their type of business. Seriously - if they were
running ads offline, would they run an ad in a magazine about Italy? Or would
they run it in their daily local newspaper? Pizza is something that has a wide
interest. There is no need to restrict based on any kinds of interest.

5\. There is no benefit in Liking Pizza Delicious on Facebook. No special
Facebook offers. Or discount coupons. And yet they were expecting people to
like their page and come visit their place right away. Their call to action is
weak. You can't expect facebook likes to convert into orders straight away -
when you don't even ask for an order.

6\. Their measurement method is very inaccurate. Asking people where they
found out about you has been proven to be very very inaccurate. Instead, give
them a coupon and track based on that.

7\. There was a total mismatch with their online and offline metrics. Do you
ever like a page on facebook without knowing about that brand from before?
Yet, they are tracking the number of Likes online. But asking people how they
found out about them offline.

~~~
damoncali
You may be right, but the problem is that the number of businesses that can
take advantage of "the proper way" to use Facebook for advertising is but a
small percentage of those who are actually using Facebook for advertising
(based on what I see, at least).

My friends that work at the big CPG companies and ad agencies tell me one
story consistently about their interactions with Facebook (the company) - if
it's not working, Facebook universally points their finger at the customer and
says "You're doing it wrong". That can't end well. (Or maybe it can. Print ads
are pretty awful as well.)

Can an ad platform that requires so much specialized marketing skill work at
that scale? I tend to think "no". Facebook will wind up selling ads that don't
work to people who don't know or care, just like the newspapers do. Look for
Facebook's analytics to suck in the future once they come to grips with this.

~~~
ankeshk
Thanks. To tell you the truth, Google Adwords is a lot more complicated than
Facebook ads. With Google, you need to:

1\. Work on keyword research. Long tail keywords. Negative keywords. If you
only rely on keywords Google recommends, you're missing out on quite a bit.

2\. Creating ad groups. You can't create an ad group with a 100 keywords in
it. They have to be narrowly focused and shouldn't have more than a handful of
keywords in each of them.

3\. Focus on landing page quality. Create headlines dynamically based on the
keywords.

4\. Track ROI. And pause the ad groups and ads that result in negative ROI.

And this is only for the search network. Not the display network.

Compared to this, Facebook is pretty simple. But yes - Facebook needs to do a
better job educating folks how to best use their ad platform.

Yellow page ad strategies work for Google because people already have buying
intent when they run a search. Radio ad strategies work for Facebook. Its more
suitable for brand building. If you are selling cars, and an average person
buys a new car every 7 years - you won't see a lot of sales in the first 3-6
months. Facebook needs to educate on this.

~~~
damoncali
The mechanics for AdWords are more complex for sure. But the concepts are much
simpler.

AdWords: When people search for something, we'll show them your ad, which
they'll click, and then buy something.

Facebook: At various times, we'll show people your ad. People will click on
it, but the vast, vast majority won't buy. But you've just _engaged_ with
them. So you need a fan page and the right kind of content to put on it. If
you do this _right_ , you'll build brand loyalty and increase sales in the
long run. Did we mention you can use Facebook ads to drive fans to your
Facebook page?

Conceptually, Facebook is way more complicated, and less easily outsourced.
You can hire an AdWords guy, throw money at him, and get results. With
Facebook? Not so much. You can try to outsource it, but it's expensive, and
everyone will tell you "you're doing it wrong" (because you are), which is
becoming a very common theme with Facebook ads.

If everyone is "doing it wrong", does "it" really work?

When selling AdWords, the most common objection I get is "nobody clicks those
links". That is, of course, extremely easy to overcome.

When talking about Facebook, the first question is, "what's a fan page, and
where are these ads? Can you just do it all for me?" They usually haven't got
a clue where to start, and their first instinct is to pass it off to someone
else so they don't have to think about it. There's a market opportunity there,
but it looks a lot more like traditional media advertisements (low
effectiveness, opaque results) than online ads.

~~~
km3k
This sounds like a problem of the people buying the ads understanding how
search works, but not understanding how Facebook works. I think this will work
itself out in time. Was this a problem with search advertising when most
people didn't understand search?

Facebook needs to educate these people if it wants to be more effective, but
it seems odd that they should have to. Does this happen in other forms of
media? I can't imagine a TV network holding an advertiser's hand as much as
some people want Facebook to. Maybe I'm expecting too much of these
advertisers, like knowing the medium they plan to advertise on.

~~~
damoncali
_Maybe I'm expecting too much of these advertisers, like knowing the medium
they plan to advertise on._

In my experience, you are. Most just want to pay money and have customers walk
though the door. They don't care about marketing, media, or the intricacies of
intent, social proof or anything else.

AdWords _almost_ works this way. Facebook very much doesn't.

The bottom line is that the advertisers don't know or care how it all works.
I've witnessed this at tiny mom and pops all the way to Fortune 500 companies.
Frankly, I'm shocked that GM noticed that they weren't making money off
Facebook ads - that puts them ahead of their peers in a substantial way. You'd
be shocked by how much money is wasted - straight up thrown away - by big
companies on Facebook.

------
tokenadult
John Wanamaker (1838 to 1922), an early operator of department stores and a
pioneer of some of today's principles of advertising, is credited with the
saying, "Half the money I spend on advertising is wasted. The trouble is, I
don't know which half." There is a huge business opportunity in further
refinements in measuring the success or failure of advertising efforts.

<http://www.economist.com/node/7138905>

Part of the difficulty in measuring success or failure of advertising efforts,
of course, is that different businesses gain different forms of utility from
successful advertising, with some businesses structured to gain from almost
any increase in reputation, and others depending on prompting direct contacts
with salespersons, and others desiring to increase direct, in-store customer
visits. Each business client of an advertising campaign in a free enterprise
economy should be allowed to define "success" in a way that is meaningful to
that business, and each thoughtfully managed business will shop around for the
advertising provider that best delivers success meaningful to the client.

And of course providers of advertising compete with one another by offering
reasonable targeting solutions at reasonable cost. From the submitted article:
"Their first idea was to target the friends of people who already liked Pizza
Delicious on Facebook. But that wound up targeting 74 percent of people in New
Orleans on Facebook — 224,000 people. They needed something narrower." The
clear implication here is that the restaurant could have reached the same huge
number of people living in New Orleans through some other channel for less
money.

------
andreyf
Had they randomly spent $240 on media elsewhere, would they have gotten a
better return? For a pizza shop that's open two nights a week, I wouldn't
expect so. Based on this data alone, the authors' conclusion is a bit
grandiose and FUD inducing:

 _...social advertising is so new that nobody knows for sure [if it improves
sales]. It's still unproven, untested and largely unstudied._

This simply does not follow from the anecdote of one tiny campaign, so it's
coming from somewhere else.

I don't want to ascribe malicious intent to the authors, so let's rebute their
conclusion directly: "social advertising" isn't wholly unlike other forms of
advertising, with the principal difference being that you now have access to a
lot more data when deciding who sees your ads, such as people's declared
preferences and their social network.

It's up to businesses to figure out a media strategy making use of those data.
Sure, this might take time/experimentation, but also seems quite obviously a
better deal than placing ads in the Yellow Pages or broadcasting them (nearly)
indiscriminately on TV or radio.

~~~
antr
flyers distributed in the zip code where the Pizza Shop is located is a
fraction of the price, and targets the residents. For some niche, local
businesses, flyers still work

~~~
achompas
Really? They only spent $240. Would flyers for the neighborhood cost less than
that?

~~~
droithomme
They spent $240 and got no new customers. The $240 itself is irrelevant, the
return on investment is what matters.

Perhaps they will next spend $250 on photocopied flyers and get 500 new
customers. Perhaps they will then spend $1000 on a quarter page color ad in a
local paper and get 10 new customers. None of these raw amounts have any
bearing on whether Facebook costs $240 for getting no customers. What matters
is whether there is a return in the investment for the ad campaign.

The implication that it is better to spend $240 on an ineffective campaign
than spending more than $240 on a better campaign is not a reasonable
comparison.

Of course the campaign was not completely ineffective. It cost them $240 to
find out that Facebook campaigns did not provide a good return in their
specific case. This may or may not be applicable to other businesses.
Apparently GM has reached the same conclusion with $10 million in ad money.
The Pizza place is smart, they were able to come to GM's conclusions for their
own case, but it cost them a lot less to learn this information than it costed
GM.

~~~
SpiderX
"new customers" is not a valid metric for a restaurant or a pizza place. You
want new customers, sure - if you are a small place just starting up. What's
important though is repeat customers. Perhaps if they marketed to people who
'like' them on facebook, those customer would more frequently visit that
restaurant, thus increasing revenue. Just because they got no new customers
doesn't necessarily make the campaign a flop.

------
patio11
Advertising for local businesses is _huge_ business (the yellow pages -- a
list of phone numbers on dead tree passed out for free -- are worth billions
of dollars a year, to say nothing of newspapers, radio, and their online
would-be replacements like Groupon). The vast majority of it is unmetered and
ineffectual.

Anyone who successfully solves this problem will end up with a business which
is, roughly, Google-scale. (As they always say about contents: many will
enter, few will win. Many _have_ entered, like every broken husk of a group-
buying company before Groupon.)

~~~
rmATinnovafy
This is indeed my target market.

Edit: added next comment afyer being downvoted for now obvious reasons.

Could not copy and paste due to phone not having such feature.

~~~
rmATinnovafy
I apologize for not expanding a bit.

I meant to say that this is my target market even though it is one of the
oldest problems in business. It is not fancy or the latest fad. But it impacts
everything directly. Marketing powers the economy. Jobs. Startups. Software.

My choice was to design a solution with software that would allow businesses
to attack this problem effectively and efficiently.

The size of the pie available allows for others to join in. Innovation is
greatly needed in this area. I encourage fellow engineers to take a deep look
at the problem.

------
rmATinnovafy
Pizza Delicious made the same basic mistake we all do.

They chose to advertise to people who don't know them, instead of marketing to
people that do.

This is so simple, yet 99% of us don't get it.

To convince someone new to buy from you takes times and money. Lots of it. But
what do we do after those customers are made?

We ignore them.

So we spend all that money to win over new people and then ignore them.

If Pizza Delicious had instead focused on getting their current customers to
buy again, then their investment would have paid out. In fact, the response
ratio would have been higher due to the fact that more people would have
responded.

But sadly, big media like facebook promotes their advertising like some sort
of fix all. When in fact, it works like advetising on the newspaper. As
expensive. As innefective. For most businesses, that is just a waste of
resources.

If Pizza Delicious is reading, send me an email. I will build you a marketing
system that will not only be cost effective, but will work.

PS. Before using facebook, or adwords ads consider direct marketing. If you
don't have an idea, then drop me a line. I'll help you get your business off
the ground.

~~~
mikeryan
I disagree with your premise that marketing for new customers is a mistake.
Its entirely dependent on your strategy. But also its much harder to increase
margins on existing customers then it is to gain margin by getting new
customers.

Take a Pizza place - say an average customer gets 12 pizza's a year. Pizza D
can focus on trying to get more business out of them but how many more pizza's
do they sell? Can they maybe sell 3-4 more pizzas per customer per year?
Compare that to an entirely new customer each which brings an average load of
12 more pizzas a year. Even if it costs twice as much marketing to convert new
customer its still worth it.

Ultimately it comes down to your business and your campaign and which type is
more valuable.

~~~
rmATinnovafy
Sorry, double post.

------
securingsincity
Advertising is all about the number of touches sometimes. Just because they
didn't say they were coming from facebook ads it may have been a combination
of advertising that included facebook that would move a customer in your
direction. We have seen a lot of success with facebook and linkedin
advertising when trying to get a small group of doctors to attend live events.
It may not make up the bulk of our registrations but when trying to reach a
small niche audience we've found every registration counts and facebook lets
us do that in a cost effective way.

------
uptown
Anybody else wonder whether the email from the random customer mentioning the
advertising campaign platform was actually from someone working in Facebook's
ad sales department?

~~~
liamondrop
If you had ever banged your head against FB's ad approval process, you would
have a better sense of how little they give a shit about what their
advertisers think. They most certainly don't have people posing as customers
and sending warm fuzzy emails.

~~~
tocomment
But maybe things are a bit different if the advertiser is part of an NPR story
...

------
nikcub
A platform where you just run ads and then see success simply doesn't exist.
It is the quality of advertisement, the targetting, follow-up marketing,
landing pages, and a lot of other elements that also impact success and ROI.

The equiv of this story on Google would be that they ran ads, got a few
hundred click-through to their website but nobody signed up. What would you
pinpoint as the problem in that situation?

~~~
bad_user
On Google most hits would be from people searching for "pizza delivery" or
something similar. Clicks on Google's ads are driven by intent, while clicks
on Facebook's ads are driven by impulse.

Facebook ads can work, but I don't think they work well for local businesses,
but rather for big brands that want to build an image, more akin to TV
commercials.

------
twodayslate
> Those ads went viral.

People use the word "viral" way to much

~~~
TomGullen
Agreed! They mention 700,000 impressions, it's not really viral if you're just
paying for it to get out there 700,000 times.

------
chadyj
This is a myopic article. I challenge any marketing channel to drive instant
real world sales for a brick and mortar retail store. It just doesn't happen
like the article expects with its naive assumptions.

It is too early to measure the success of the ads in a real world scenario.
These pizza ads are very much about exposure (and not BUY NOW) but the article
presumes that the only metric of success is people running out the door,
getting in their car and buying pizza immediately after seeing the ad. This
behavior isn't reflected in other media, such as TV, magazine ads, billboards,
PR, etc, so why hold Facebook to a higher mystical immediate marketing
standard? Online ads can indeed drive immediate sales but that is for online
businesses where there is buying intent, and this pizza store clearly isn't in
that category.

Another aspect overlooked is that unlike a google ad or magazine ad where you
pay per exposure/view/instance, these Facebook ads serve a lead acquisition
strategy that can be used multiple times. Pay once to acquire the customer,
then market as much as you like for free. Once you have the customer as a
"fan" you can market to them every week or even every day making the original
investment much more valuable. Marketing is about repetition and exposure so
it may take X Facebook posts before the consumer receives sufficient exposure.

------
rickdangerous1
What kind of pizza place is only open two nights a week? I know a way they
could more than triple revenues in a flash....open 7 nights!

~~~
1123581321
My friends in the pizza shop business tell me those two nights would be about
half the week's revenue and the majority of profit if the other five days are
used for intensive prep work and administration.

~~~
mistercow
That's probably true; opening 6 or 7 nights a week would certainly not triple
their business. It would, however, give them a lot more open-time to
accumulate repeat customers. Whether or not that works out in their favor in
the end depends on how leanly they can run on those slow nights.

~~~
Gormo
Assuming that the two nights they currently open are on the weekend, perhaps
opening for the remainder of the week wouldn't triple their business, but
there's probably relatively predictable demand for pizza on weeknights, and
I'd assume they could do/have done the research to determine whether, given
that demand, they'd make a positive ROI by opening seven days a week.

------
liamondrop
>> But social advertising is so new that nobody knows for sure. It's still
unproven, untested and largely unstudied.

FB ads have been around for several years and there are plenty of businesses
dropping $10Ks a day and making a very healthy return. It's been proven,
tested, and studied ad nauseum.

What is the agenda of these articles, exactly?

------
mistercow
It's amazing how many businesses seem to completely not understand the concept
of advertising. It doesn't matter where your clients say they heard about you.
It doesn't matter how many people actually _clicked_ on your ad. Advertising
is about _name recognition_.

And it works. It's just not very easy to directly measure its effects on a
small scale.

It's one thing for a couple of guys running a pizza place not to grasp this
concept, but for a large corporation like GM, it's simply preposterous.

~~~
JamisonM
I do not know why you would say that GM does not grasp this, can you explain?
GM does lots of impression-based ads all over the Internet which is all about
name recognition so they seem to understand what that is about. Do you know
something more about why they are saying Facebook is ineffective that I have
not read in the media? If any companies in the world should know how to
evaluate advertising effectiveness I would expect it to be the auto
manufacturers (and car insurance companies who also advertise their faces
off).

------
Androsynth
The best advertising I have seen yet on FB was from a burger company in West
Covina, SoCal called Islands. They made really good burgers but they didnt
have many customers, so they gave out free hamburgers on some random Saturday.
You just had to print out a picture from their fb page (or just show it on
your smart phone).

I went with my gf and the burgers were great. We went back the next week and
paid full price. I'm sure we will go back again.

~~~
carguy1983
Islands is actually a fairly large chain in southern california (where all
that is good and bad in hamburgers come from) and they make pretty damn
delicious burgers and Mexican-American food, especially for a "theme" chain
restaurant.

For some reason it's not as popular as it used to be, which is a shame :( I
think it's tough for them to compete against the heavily saturated advertising
of Chili's, TGIF, Outback that sort of thing. They're kind of in a weird spot
with tough competitors, even though they're _way better_ in terms of the
actual food they make.

They're probably resisting the pressure to serve food out of microwaves and
bags, and paying the price :(

------
quinndupont
There's about a million things wrong with this story. First, advertising
rarely works that quick, so making those kinds of leaps of logic need to wait
weeks or months, when hard data has been crunched. Second, most advertising
(basically, the effective kind) attempts to work on your subconscious, so you
end up buying Pizza Delicious, but may not ever report remembering why. This
is just basic Marketing 101, but this article got it all wrong.

------
tocomment
This thread has piqued my interest, does anyone know of further reading I
could to learn more about advertising strategies for local, small businesses?

------
look_lookatme
There's not really much difference in evaluating the measure of success of
online advertising and other mediums (minus coupons), but that hasn't stopped
the buying industry/consultancies from holding on for dear life to action
metrics and selling a bill of goods to people like Pizza Delicious.

------
lwhi
People need information about a pizza shop at the time they want to order a
pizza. If you're advertising prior to the event, your customer will need an
incentive to remember to order from your shop.

Advertising only works as part of a larger joined up campaign or strategy.

~~~
tocomment
Would offerrign some sort of coupon have helped give them an incentive to
rememeber? Can you do coupons on Facebook?

Maybe Facebook should move into doing some kind of deals thing like Groupon?

~~~
AznHisoka
Groupon already advertises in Facebook.

------
waterlesscloud
My brother owns a restaurant in Flagstaff, which is the base town for the
Grand Canyon. So massive numbers of tourists pass through the town every
month. He's listed in all the guidebooks and so on, etc etc.

What would be great would be if he had a way to target people who were on
their way to the Grand Canyon or who had just visited that day. Obviously this
is something Facebook could easily provide great insight into. But as far as I
know, they don't.

He's got a facebook page for his place, and it does well with the locals. And
he gets his share of tourists via the traditional routes, but it seems like
there's a wasted opportunity here with Facebook...

------
shuzchen
Am I the only one that feels buying ads on facebook isn't meant to bring in
direct dollars, but rather to get people to like your brand. The benefit comes
later, because you now have a group of people that liked you, and you can run
countless campaigns targeting them (without having to pay facebook a penny)
for the rest of eternity (or until they remove your updates from their feed).

In this sense facebook is the new newsletter, and this company just got 240
new subscribers that are local and perhaps interested in their food. If they
just stopped at the targeted ads, they just gave up on a wealth of potential
sales.

------
ianferrel
The thing that surprised me so much about this story is how many people
"liked" them in response to the ad. I'm left wondering how many of those likes
were from:

1\. People who were already customers of PD and became more aware of their
Facebook presence due to the ad. 2\. People who were unaware of PD, but liked
them in response to the ad.

If most of their likes are people in category 1, that would explain why the
increase in likes does not at all translate to an increase in sales. I'm
curious how many people there are in category 2, who will just like random
things advertised to them.

~~~
KaoruAoiShiho
Right on, and #1 is actually an excellent result had the advertisers parleyed
that into social proof for newcomers.

------
localhost3000
they should advertise on yelp where people are, you know, looking to buy
pizza.

~~~
chrisrogers
Appears they are doing quite well on yelp: <http://www.yelp.com/biz/pizza-
delicious-new-orleans>

------
guelo
Yelp is probably a much better ad platform for local businesses. Even though
Facebook's overall revenue is 30 times bigger than Yelp's I wouldn't be
surprised if local business revenue is in the same ballpark.

------
RBerenguel
1$ per fan. Seriously? I usually get around 5 fans/$, the worst I've got is 3
fans/$. And I've done more than 1 or 2 campaigns

------
jsavimbi
> Rob Leathern, a social media ad guru.

There's your problem right there.

