Early Results from Facebook Exchange Show 10-20x ROI for TellApart Clients

As one of the earliest companies on the Facebook Exchange (FBX), we’ve been serving ads through FBX for three months and have learned an immense amount about how to maximize performance from this new platform. We can say without reservation that it delivers strong ROI for our clients.

Facebook ads work. Hugely so, as every one of our clients on the exchange has seen a 10-20x return on investment. eBags, one of our earliest marketers to go live on FBX, sees an unwavering 15x return on ad spend. And when we say the Facebook Exchange works, understand that this is based on solid direct response data.

TellApart has the unique business model of only making money when our clients do. We get paid (a share of the sale) only when a shopper first clicks on one of our ads and then converts on our retail client’s site. There may be differences in opinion as to the worthiness of the click as the end-all metric, but there is no debating the direct response value of a shopper who clicks and purchases. Indeed, Google has built $40B of annual revenue around this core behavior.

What makes FBX a game changer for the display ads industry?

1) Huge, Consistent Audience & Environment
First, it’s important that Facebook has a lot of users who come back often and spend a lot of time there. According to ComScore, Facebook serves over 25% of all US display ad impressions, and we’ve seen that proven to be accurate. But unlike other exchanges, FBX offers a stable audience and consistent context. To know that the ads we purchase are going to appear in a clean, well-lit environment with high visibility (i.e. rarely below the fold or not in view) — is invaluable when doing the type of modeling that we do to determine predicted click through and conversion rates.

2) BYOD & Import Intent — Per User
With FBX, Facebook has enabled marketers to import their own customer & intent data, while still protecting user privacy. Facebook doesn’t share any new data with us as a result of these ads, but we’re able to remarket to people the products they’ve seen elsewhere. As with other ad exchanges, Facebook allows each marketer to “Bring Your Own Data.”. If a shopper has shown strong interest in a particular pair of Jimmy Choos on Nordstrom, we can show precisely that user exactly that pair of shoes. Both ad creative and bid pricing decisions are made at the level of the individual user, in real time.

3) Highly Engaged Users
Users shown ads on Facebook via FBX click through at similar — or better — rates as all other ad exchanges. TellApart FBX ads for OnlineShoes.com yield a consistent user click through rate of over 15%. That 15 out of 100 users to whom we served ads on Facebook would choose to click through is an amazing fact. Our all customer average user CTR is 6.6% on both the Facebook Exchange and Doubleclick Ad Exchange.

4) High Return on Investment
As great as clicks are, TellApart’s efforts are worthless until the shopper actually makes a purchase. And those from FBX do. The shoppers who come from the Facebook Exchange clicks are of high quality, with order values that are equally as high as our merchants’ average.

5) Fully Complementary
As a buyer across all of the major real time biddable ad exchanges, even we have seen that FBX increases our unique reach by 30%. The significance of this number should not be understated. With FBX, Facebook has introduced a new form of advertising media that is complementary to both the other Facebook programs and non-Facebook focused programs that retailers may be running. Because FBX uses marketers’ audience data, not Facebook data & targeting, any overlap is likely to be small.

FBX is a new opportunity that all marketers should seriously consider. It’s not accurately described by either ‘earned media’ or ‘paid media,’ and so we’ve taken to calling it, ‘invested media.’ You’ve worked hard to build your ecommerce site and brand. You’ve spent huge sums on keywords and queries. You’ve invested in creating the audience on your site who is interested in what you have to offer. Now you can take that data asset and leverage it into the world’s newest, game-changing ad marketplace: the Facebook Exchange.

Online shoppers are more distracted than ever. As the count of e-commerce and comparison shopping sites on the Internet expands daily, an e-retailer’s job of attracting and retaining customers becomes even more difficult. This fierce competition has left online retailers grappling with how to convince shoppers to buy at their site over their competitors’. Fortunately, there are strategies online retailers can use to reach their most valuable customers — and it all starts with using a resource all retailers have, but few understand: their own customer data.

For most retailers, the prospect of figuring out how to tap the stream of anonymous, but valuable, data shoppers leave behind is overwhelming. Most have difficulty making sense of the data, and most analytics teams are already overwhelmed with staying on top of site analytics alone…

To read the full editorial by TellApart CEO, Josh McFarland, please visit MediaPost 

We are honored to have been selected as a FASTech 50 company – a DowJones VentureWire list of top venture-backed start-ups sourced from thousands of nominations from Twitter and hundreds of start-ups in the Dow Jones VentureSource database. The Top 50 finalists were selected for “paving a unique path technologically.” And that’s exactly what we’re doing at TellApart by helping online retailers think about retargeting and their own customer data in a new, massively profitable way.

We were judged against the following criteria:

“Not only must [the companies] be U.S. based, privately owned with at least one venture capital firm as an investor, but they also must have a product or service on the market that launched no earlier than three years ago. Most importantly, the start-up’s innovation should break from conventional methods, introduce novel technology or markedly advance an existing product or service. “

As a result of our inclusion on the list, TellApart CEO Josh McFarland has been invited to speak at the VentureWire FASTech conference in November. We are in good company: Yammer, FlipBoard and a slew of other disruptive startups rounded out the list.   Congrats to the other winners!

Please get in touch if you’re a retailer that’d like to find out how TellApart can help your company pave a unique technological path and revive your display efforts with data-driven retargeting.

John Ebbert of AdExchanger gave his thoughts on why retargeting is so hot after reading what our CEO,  Josh McFarland, had to say about the importance of customer data in an article he wrote for E-commerce Times and CRM Buyer.  Josh maintains that all online retailers have the opportunity to run efficient, profitable display retargeting programs at scale thanks largely to data-focused technology companies (like TellApart) that can handle the ‘heavy lifting’.  This enables online retailers to run better display campaigns and ultimately allows them to focus on their businesses.  John agreed, adding that effective retargeting tactics are just starting to bud thanks to the new audience-driven marketplaces that allow e-commerce marketers to cherry pick ad impressions efficiently and reach only their most valuable prospects online.

In related news, it looks like e-commerce growth is on fire — and retargeting is fueling the fire.  According to comScore, e-commerce spending grew in Q2 of 2011 at its highest rate (14%) since Q4 of 2007.  Coincidence that retargeting is hot and e-commerce sales are growing at the highest rate in years?  Doubtful.

Our announcement last week of closing a $13M round of funding highlighted a current theme in online advertising: Display is thriving and data is the reason. We had great conversations with top tech and advertising journalists about our funding news, our technology, our unique business model and the rapid growth in the industry in general. What’s exciting for us is the chord our news struck with many of the reporters, especially around the idea of how data’s pumping new life into display advertising. It’s what we’ve been saying all along — customer data is a retailer’s most important (and likely underutilized) asset.

GigaOm published an article that highlights how display advertising is performing better than it ever has, highlighting our performance stats, and points to a recent eMarketer report that shows how some of the tech world’s biggest and brightest stars (Facebook, Microsoft, Google, others), are expected to grow their display ad businesses in 2011.

TechCrunch wrote about how TellApart’s technology is enabling new advertising alternatives for retailers and offering them low risk/high return business terms in the process.

Why the big change? Display advertising is no longer the misdirected spam of years past – it is now a precision marketing channel that can be directed at very specific targets. As an example of recent innovations in display, the article mentions how TellApart’s sophisticated technology allows retailers to collect and organize all of their customer data – and then make that data do the heavy lifting in their marketing efforts.   Data, specifically a retailer’s own customer data, is the fuel that is helping display advertising to perform at levels that seemed unthinkable just 2 years ago.

For more on the revitalization trends in display advertising, and TellApart’s key role in leading the way, read these articles from The New York Times and AllThingsD.

Clearly, as far as the future of display advertising goes, it’s all about the data. At TellApart, we’re helping retailers to use their own customer data and turn display advertising from a channel of diminishing returns into a significant profit driver of incremental revenues.

If you’re a retailer that’d like to catch up with the competition by harnessing the power of your own customer data, please drop us a line. We’d love to boost your incremental revenues by helping you “tell apart” your best prospects and customers from the rest.

It’s a big news day for us at TellApart:  this morning, we announced a $13 million round of financing led by Bain Capital Ventures with participation from Greylock Partners. The last time Bain and Greylock teamed up on an early stage investment? It was for a little company called DoubleClick, almost fourteen years ago to the day.

In addition to the funding, we’re also excited that Ajay Agarwal, managing director at Bain Capital Ventures, will join our Board of Directors. Ajay’s expertise and deep relationships in e-commerce will be a huge asset to our company.

Our latest round of funding will allow us to continue helping the world’s largest, most renowned retailers harness the power of their customer data to drive their online marketing efforts. Diapers.com, Hayneedle, drugstore.com, eBags, and dozens of others have all selected TellApart to manage their display ad retargeting.

Whether you are learning about us for the first time or have been following us since our launch, please reach out to see how we can help your company “tell apart” your best customers and prospects – and transform your online marketing capabilities in the process.

This financing also means we’re going to ramp our hiring even faster. If you are excited by e-commerce data and marketing, take a look at our Jobs page to learn more about our open positions – we’re hiring for almost every function!

Our full press release can be found here.

Yesterday, the Wall Street Journal mentioned us in an article featuring LUMA Partners’ diagram of the mind boggling number of companies that make up the display advertising market, or LUMAscape, as it’s been coined:

And while it’s nice to be noticed in this technicolor yawn of logos, we’d like to propose a diagram of our own:

We literally handle everything for our clients — data collection and refinement, ad creation and optimization, real-time bidding, impression buying, ad serving, reporting, analytics, you name it — all with no risk at a guaranteed ROI (new revenue) thanks to our unique pricing model.  

We only make money when they make money;  we get a share of the revenue generated when we can get a prospective buyer to click on a client’s display ad and then return to convert into an actual customer.  If you’re running an e-commerce business and that sounds interesting, contact us below!

Last week at the paidContent 2011 conference, TellApart CEO Josh McFarland, spoke to a packed audience at The TimesCenter in New York alongside industry leaders Randall Rothenberg (Chairman, IAB), Mike Walrath (Founder, RightMedia), and Vivek Shah (CEO, Ziff Davis).

Josh’s comments begin at the 20:00 mark, with an explanation of how online display advertising has entered its third phase change, from placement to content and now to a primary focus on the user (or audience).  The entire discussion is quite engaging, with a recurring theme addressing how publishers need to adopt the same techniques as advertisers to manage and fully utilize their data.  Video below:

Earlier this week, industry guru John Battelle wrote a compelling piece on how remarketing needs to be a component of the conversation that occurs between a merchant and their prospective customer during the timeframe in which a purchase is being considered.  He suggested a simple feature to facilitate the two-way nature of the conversation:  an [X] icon in the corner of every ad that would allow a user to pause the messaging from that merchant.

Our team took that good idea and ran with it, implementing the feature for one of our largest customers – Diapers.com – in less than 24 hours.  Now each of their TellApart ads incorporates this functionality:

As discussed in our previous post, we believe that display ads can be highly effective while also maintaining utmost respect for the consumer.  Allowing the user to effectively “mute” the ads for products they no longer want is key to supporting this respect.  We intend to build even richer functionality into this flow and discuss more of our thoughts with John here:  That Was Fast: TellApart Implements A Searchblog Suggestion.

The New York Times article published this morning, “Retargeting Ads Follow Surfers to Other Sites“, does a good job of laying out a number of issues that our industry must address.  At TellApart, we believe that we can make ads that are actually useful and that this sort of displeasure can be mitigated by commitment to one idea:  respect for the consumer.

If you read Ms. Matlin’s first quote in the article or the sentiments of the many commenters, a common theme emerges:  they are highly annoyed by the number of Zappos ads they’ve seen and the fact that they continue to see them well after their purchase decisions have been made.

Indeed, it doesn’t matter how well crafted the message is… hounding a consumer will only lead to frustration and contempt.  We firmly believe this would have been a non-issue if Zappos’ vendor would have shown restraint in the number of ads they chose to show per user.

Aside from the obvious & staid options mentioned by the Times’ commenters (opt-out, clear cookies, use Adblock), how do advertisers show respect for their consumers in this new world of display advertising?  TellApart recommends and commits to the following:

1) Don’t hound.
Use frequency management judiciously.  At TellApart, our clients’ users see an average of just two ads per day during the handful of days they are in market for a given product or service.  This is far fewer than the dozens of Zappos ads per day (for weeks on end) with which these users are so annoyed.

2) Focus on truly engaged shoppers.
There are many data points that must be combined to know if a consumer is truly interested in a given product or is just browsing:  number of pageviews, time spent on site, average conversion rate per product considered, whether the user is a new or repeat visitor, etc.  Together, a strong, computer-modeled analysis of this data will help get ads in front of users who care and prevent the irritation of those who don’t.

3) Drive clicks that convert.
Instead of trying to push maximum impressions or even maximum clicks from these ads, advertisers should demand the highest number of conversions for the lowest number of impressions possible.  Only post-click conversions should be counted, and the experience should be optimized to drive one converting click per user.  This keeps a majority of users engaged and happy while minimizing the “noise” that truly disinterested users must endure.

4) Reward the user.
Some of our largest clients have decided to use coupons in their TellApart ads even when they have refrained from offering them elsewhere.  Why?  Because the curated users that we bring back to our merchant sites are of such high quality that the retailer wants to give the user a reason to click.  In doing so, a huge lift in incremental sales can be gained from consumers who would have otherwise not converted.

5) Watch the numbers.
So much of the idea of respect for the consumer comes down to doing the right thing by watching the right metrics.  For example, TellApart drives user click through rates of over 3% for our clients.  Yes — you read that correctly:  three out of every 100 users click and go on to convert at a far better than average rate for our clients.  In total this amounts to hundreds of thousands of satisfied consumers every month… the silent majority who vote with their mouse clicks & pocketbooks.

TellApart is committed to driving a better advertising experience for users across the web.  And we’ll continue to improve by keeping our focus on this one idea:  respect for the consumer.

Josh McFarland
CEO, TellApart