Are Facebook Leads Less Valuable Than Google Leads?

At Hanapin, we encourage our clients to test out many different advertising platforms to see which work best for their business. From my experience, one of the hardest platforms to get clients to buy in to is Facebook. Even though Facebook continues to enhance and improve their advertising program, announcing even more changes this week, there’s the perception that Facebook is just a bunch of kids who are going to click on your ad and waste money. I’ve found this especially true in working with clients selling high-priced products. This post will walk you through one of those experience and just what we learned about the value of Facebook leads.

Client Background: This client sells professional services to individuals. The pricing of the service packages ranges from $999 to $7,999. A lead for this account was the submission of an individual’s contact information which was then submitted to the Sales team for follow up.

The Google PPC account was started in May 2010 and Facebook in August 2010. Below is a snapshot of how the accounts were performing through August 2011:

Facebook vs. Google PPC PerformanceBecause the client was lead focused, we were really happy with these results. Conversion rate between the two platforms were almost identical. The lower cost per click on Facebook though brought the cost per lead to around $11.00 compared to Google’s $21.00.

Our plan based on this information was to expand on Facebook, but the client wanted us to pull back budgets. Ex-squeeze me? Baking powder?

The client’s thought was that these leads, even at the lower cost, we probably not as valuable as the leads generated from Google. At this time we didn’t have a way to track the sales back to the PPC source, but the feeling was that people on Facebook were either less likely to buy a package or less likely to buy the higher priced packages than people on Google.

So for the next few months, we reduced our Facebook budget from $2,000 per month to $600. Then in November we got the answer to our prayers, closing lead reports. The client’s tracking system had been set up so we could now trace back all of the sales made from PPC in 2011. We would finally know the true value of our Facebook leads.

Here’s the breakdown for 2011:

Facebook and Google PPCJust looking at Google vs. Facebook, Google had much better performance. Breaking it down into Search and Display gives a much more accurate performance comparison. Facebook is most similar to the Google Display network, since people are not actively search for your brand.

Comparing Facebook to Google Display, the closing rate was almost a full percent higher but the return on ad spend was almost identical. Of course, Google Search blew both out of the water, but this showed us and the client that the perception that the Facebook leads were some how of lower quality was not true.

Obviously, you are the only one who will know how valuable different search engine leads are for your company but I hope this shows you not to discount Facebook as a viable advertising network even for expensive products.