Masarykova univerzita Ekonomicko-správní fakulta Studijní obor: Podniková ekonomika a management

FACEBOOK MARKETING AND CAMPAIGNS OF A GIVEN COMPANY Marketing a kampaně dané společnosti

Bakalářská práce

Vedoucí bakalářské práce: Autor: Ing. Dušan MLADENOVIĆ Jan MACHEK

Brno, 2017

Name of the author: Jan Machek Name of the thesis: Facebook Marketing and Campaigns of a Given Company Český název práce: Facebook Marketing a kampaně dané společnosti Department: Corporate Economy Supervisor: Ing. Dušan Mladenović Year of defence: 2018

Abstract

The subject of this thesis is Facebook marketing and its application in the form of an advertising campaign. The work is split into two parts, theoretical and practical. The first theoretical part starts with a description of media evolution and then defines and compares online and offline marketing. The part that describes Facebook marketing starts with its history, followed by the creation of marketing strategy and ends with a description of performance measurement methods. The second practical part starts with a situation and SWOT analyses of a given company, followed by marketing campaign plan and best practices for e-commerce Facebook advertising. Rest of the thesis contains a description of the campaign launch, its evaluation, and suggestions for future research.

Anotace Předmětem této práce je Facebook marketing a jeho aplikace v podobě reklamní kampaně. Práce je rozdělena do dvou částí, teoretické a praktické. Teoretická část začíná popisem vývoje médií a poté definuje a porovnává online a offline marketing. Část týkající se Facebook marketingu nejdříve popisuje jeho historii, poté rozebírá tvorbu marketingové strategie a končí popisem metod měření výkonu. V praktické části je nejdříve provedena situační a SWOT analýza, poté následuje plán reklamní kampaně a výčet nejlepší taktik pro Facebook e- commerce propagaci. Zbytek práce obsahuje popis spuštění a vyhodnocení kampaně a navrhuje potenciální budoucí výzkum.

Keywords Facebook, Advertising, Marketing, Strategy, Social Networks, E-commerce

Klíčová slova Facebook, reklama, marketing, strategie, sociální sítě, e-commerce

Declaration

I declare that I wrote this bachelor’s thesis “Facebook Marketing and Campaigns of a Given Company” on my own, under the supervision of Ing. Dušan Mladenović, and that I cited all used literature and other scholarly sources in accordance with legislation, internal regulations of Masaryk University and internal acts of Masaryk University and Faculty of Economics and Administration.

In Brno on November 15, 2017 ______Author’s signature

Acknowledgement

I would like to thank my supervisor Ing. Dušan Mladenović for his guidance and advice on my thesis. Additionally, I give many thanks to my brother and parents for their patience and support.

Table of Contents Introduction ...... 11 1 The evolution of media ...... 13 1.1 The old media ...... 13 1.1.1 Newspapers ...... 13 1.1.2 Radio and TV ...... 13 1.2 The new media ...... 14 1.2.1 Web 1.0 ...... 14 1.2.2 Web 2.0 ...... 14 1.2.3 Web 3.0 ...... 15 1.3 Social Networking Sites ...... 15 2 Marketing principles ...... 19 2.1 Marketing Definition ...... 19 2.2 Online Marketing Definition ...... 19 2.3 Differences between Offline and Online Marketing ...... 20 2.4 Online Marketing Framework ...... 23 2.4.1 Content Strategy ...... 24 2.4.2 Communication Strategy ...... 25 2.4.3 Measurement strategy ...... 26 3 Facebook Marketing ...... 27 3.1 Introduction to Facebook ...... 27 3.1.1 ...... 27 3.1.2 Facebook’s approach to social networks ...... 28 3.1.3 Facebook success factors ...... 29 3.1.4 History of Facebook Ads ...... 29 3.2 Facebook Marketing Strategy ...... 30 3.2.1 Situation analysis ...... 30 3.2.2 SWOT Analysis ...... 33 3.3 Facebook advertising ...... 34 3.3.1 Facebook Page ...... 34 3.3.2 Business Manager ...... 35 3.4 Performance Measurement ...... 37 3.4.1 Analytics Metrics ...... 37 3.4.2 Facebook Ads Metrics ...... 38 4 Introduction of the Company ...... 39 4.1 PROTECT CZ s.r.o...... 39 4.2 Situation analysis ...... 39 4.2.1 Business ...... 39 4.2.2 Competitors ...... 40 4.2.3 Customers ...... 41 4.2.4 Goals ...... 43 4.2.5 Key Performance Indicators ...... 43 4.3 SWOT Analysis ...... 44 5 Facebook Advertising Plan ...... 44 5.1 Best practices for e-commerce Facebook advertising ...... 45 5.1.1 Facebook Pixel ...... 45 5.1.2 Product Feed ...... 46 5.1.3 Campaign Objectives ...... 47 5.1.4 Audiences ...... 48 5.1.5 Bidding and Optimization ...... 49 5.1.6 Ad Formats and Placements ...... 50 6 Campaign Launch and Evaluation ...... 51

6.1 Traffic Campaign ...... 52 6.2 Conversion Campaign ...... 54 6.3 Overall Evaluation ...... 55 7 Discussion ...... 56 Conclusion ...... 57

Introduction

Since its launch in 2004, Facebook has been steadily growing and became one of the biggest and most influential available platforms for online advertising. Despite the ever-increasing number of new advertisers and marketers, there is still remarkable number of businesses not using this platform as an advertising channel. Meaning, there is still opportunity for smaller companies to effectively communicate their competitive advantage and reach their target audience. Originally, advertising on Facebook was built especially for ecommerce websites that sell to end customers and should serve as a “discovery” for the user and ideally feel as a useful.

The objectives of the thesis

The final objective of this thesis is to plan, launch and evaluate a real-time Facebook advertising campaign for the e-shop of the company PROTECT CZ s.r.o. Additional goals are to analyze marketing situation of the company and align Facebook advertising campaign with business goals.

Generally, the work is being divided into two parts, theoretical and practical. The first part will be a theoretical one and it starts rather broadly and becomes more concrete in its continuation. It starts by describing the historical evolution and development of media, then it defines and compares online and offline marketing. The chapter that deals with Facebook marketing starts with history of this social network, followed by creation of marketing strategy and ends with description of performance measurement methods.

The second part consists of following: introduction to the company, its situation and SWOT analysis, advertising campaign plan and its launch, and evaluation of collected results.

Research goal of this thesis is to formulate both theoretical and practical approach to creation and evaluation of e-commerce Facebook advertising campaign.

The main research questions are:

1. What are the best Facebook marketing practices for an e-shop? 2. How paid Facebook campaigns influenced revenue and profits of the target e-shop?

Methodology

The first part of the thesis is supported mostly by secondary data from e-books, website articles, papers, and also from Facebook itself. However, the author had to use mostly website articles due to the fact that the latest published books about Facebook marketing were from 2015 and were already out-of-date.

The sources for the second, practical part of the thesis are of both secondary and primary origin. Data acquired for the situation and SWOT analyses is mostly from company’s internal systems, competition analysis, and third-party systems like Facebook Ads and Google Analytics. Primary data from the campaigns will be acquired by testing of different target audiences, ads and ad placements. The final performance analysis was performed on exported .csv files in excel and visualized in the form of graphs and tables.

11 The campaign itself consisted of two parts: traffic acquisition and conversion. It ran for two weeks and spent CZK 10,000. The traffic campaign was slightly profitable and the conversion campaign was a net loss. Overall, the campaign wasn’t profitable but provided important insights on what to improve and focus on in the future.

12 1 The evolution of media

This chapter is going to deal with the historical development of media. Types of media were changing relatively slowly in the past but in the last two decades a rapid development could have been witnessed. Different media require different strategies and it is necessary to distinguish between what worked in the past and what is needed today to reach target group. Before delving into the details of such specialized discipline like Facebook advertising undoubtedly is, it is necessary to see the bigger picture and look into the past and try to understand what lead to this point.

1.1 The old media

This subchapter will revisit the most important changes in the forms of media, i.e. the ways people tried to communicate, advertise and influence each other. The presented media will be the ones that most stood out in the 19th and 20th century i.e. newspapers, radio and television (Saltzman, 1999). The last one (TV) still being the most influential to this day.

1.1.1 Newspapers

The development of printing press in the 15th century is one of the most important milestones in the world of advertisement and communication. It allowed marketers to reach wider audiences than ever. The first newspaper advertisements appeared in England in the 17th century and spread across the country and then across the globe. This was the beginning of the era of mass communication and advertisement (Ryan and Jones, 2009).

At the turn of the 18th and 19th century, the mail-order advertising appeared along the classic newspaper ads. The first advertising company Volney Palmer was established in 1843 and gradually, as other competitors started sprouting, turned from selling newspaper space to a full- service creative agency (Ryan and Jones, 2009).

1.1.2 Radio and TV

Television and radio emerged in the 20th century and became the first widely used electronic media. As can be seen in the graph below, average daily hours spent watching TV have been steadily increasing since the 1950s. Figure 1: Average daily hours spent watching TV

Average daily hours spent watching TV (per household)

10 8 6

Hours 4 2 0 1950 1960 1970 1980 1990 2000 2010

Source: (The Nielsen Company, 2009)

13 The younger generations (Millennials and Generation Z) are surprisingly still watching TV, but the trend is downward and it appears that most of the demographic is watching online rather than via broadcast (Coughlan, 2016). Author has a first-hand experience of this trend as he and his friends do not watch TV at all. According to analysis from MEC agency the trend is similar in Central and Eastern Europe. Czech Republic has the highest decline (3%) in average daily television viewing out of the whole region (MediaGuru, 2017).

The radio listening experience has changed and is nowadays shifting into the online sphere as well. According to the Pew Research Center report from 2015, more than 50% of Americans that are 12 and older tuned in to online radio in the previous month. The percentage of people who listen to online radio has almost doubled from 27% to 53% in 2015 (Mitchell, 2015).

Advertising via online radio broadcast is effective especially in demographic group of 18 to 34- year-olds as they prefer ad-supported radio to models based on subscription. However, it is important to choose a relevant type of advert as three-quarters of listeners prefer to hear an advertisement about products and services they are interested in (Troha, 2015).

1.2 The new media

The term new media started being used after the expansion of computer technology. According to Manovich, the new media are “cultural objects which use digital computer technology for distribution and exhibition.” That includes internet websites, videogames, and other (Manovich, 2003). The underlying technological base and backbone for today’s social networks and online marketing is the internet. It is therefore important to distinguish the two phases of development the Web went through in its history.

1.2.1 Web 1.0

The first phase of the internet evolution took place during 90’s and early 00’s and is nowadays called the Web 1.0. Its main characteristic was a significant disproportion between content creators and passive content consumers. The former were massively outnumbered by the latter. Very common were personal static websites hosted on free web servers. Some features were similar to the Web 2.0 e.g. guestbooks instead of comment sections. This was mainly due to bandwidth limitations to prevent page slowing with long comment threads (Cormode and Krishnamurthy, 2008).

1.2.2 Web 2.0

On the other hand, the second phase of the internet development, the Web 2.0, allowed people to have personal profiles on websites such as Myspace and Facebook or to easily create their own blogs via services like Blogger or Tumblr. According to Terry Flew the main difference between Web 1.0 and 2.0 is the "move from personal websites to blogs and blog site aggregation, from publishing to participation, from web content as the outcome of large up- front investment to an ongoing and interactive process, and from content management systems to links based on "tagging" website content using keywords." (Flew, 2014, p. 19)

The definitions are numerous but the main difference between the two is a shift from static web pages created by the minority to massive amounts of user-generated content on social networks.

14 Additional features of Web 2.0, that were not present in Web 1.0 sites, include: - Prominence of profile pages that include information about age, sex and location - Ability to create connections with other users via “friendships” or “groups” - Ability to post content in many forms: photos, videos, blogs and comments - Presence of public Application Programming Interfaces (APIs) that allow third parties to modify and enhance accessed data (Cormode and Krishnamurthy, 2008)

1.2.3 Web 3.0

The term Web 3.0 was coined by John Markoff in 2006 and could be defined as a “third generation of Internet-based services that collectively comprise what might be called ‘the intelligent Web’ — such as those using semantic web, microformats, natural language search, data-mining, machine learning, recommendation agents, and artificial intelligence technologies” (Spivack, 2007). Web 3.0 is also referred to as semantic web, however, Tim Berners-Lee describes it as a component of Web 3.0. It is a web in higher resolution as every piece of link between data is defined, giving more information and meaning to the link. The final goal of semantic web is to have all human knowledge available in a machine-readable form (Shannon, 2006; Helmond, 2008).

In connection with online marketing, Web 3.0 is being implemented in the e-commerce industry by large corporations like and BestBuy. Amazon is already using users’ browsing history to recommend similar products and customize search results. The future might look like that every user will have personal uniquely customized website offering only products that are relevant (Tan, 2012).

1.3 Social Networking Sites

The backbone construct and the most important part of the, previously mentioned, Web 2.0 are social networks or social network services (SNS).

The social network is a structure that consists of a finite number of actors and interactions between them. According to Wassermann and Faust, the occurrence of relational information is the most important and defining feature in the realm of social networks (Wasserman and Faust, 1994).

The SNS are online platforms allowing people to create their own social networks and relations with people who share similar interests, backgrounds and friends (Obar and Wildman, 2015). Huge number of authors tends to define SNS in various ways. However, there are some common features that are shared across the whole spectrum of definitions:

1. They are applications based on the internet 2. Their content is predominantly user-generated 3. Users have to create specific profiles to use the service 4. The service allows people to connect to other individuals or groups (Kaplan and Haenlein, 2010)

15 Figure 2: Number of users from 2010 to 2017

Number of social media users worldwide from 2010 to 2017 (bn)

3 2,51 2,5 2,34 2,14 1,91 2 1,59 1,4 1,5 1,22 0,97 1 Users in billions

0,5

0 2010 2011 2012 2013 2014 2015 2016 2017

Source: (Statista, 2017)

As can be seen in Figure 2, the number of social media users has been steadily increasing and is expected to increase at a similar pace in the future. In 2016 68,3% of internet users were active on at least one social network. Social media is especially popular in the USA with a penetration rate of 59 %. Overall U.S. users spend more than 216 minutes per week on social media vie smartphone. Number of social media users in the Czech Republic is lower. Some 45% of adults are registered at least at one social network, 63% of the registered users use smartphone for communication on social media and 45% of social media users are registered on Facebook. This makes Facebook the first network by number of users (Fokus, 2016).

Figure 3: Number of active social media users as of January 2017

Number of active social media users as of January 2017

2000 1871 1800 1600 1400 1200 1000 1000 1000 800 600 550 600

Users in millions 317 300 400 150 106 200 90 0

Source: (Statista, 2017)

16 Figure 3 shows that the largest social network and the first one that surpassed one billion users is Facebook. It is somewhat interesting that in the second and third places are no longer social networking sites like and , but rather messaging apps like WhatsApp and . This trend has been developing for the last four years and is mainly attributed to the youngest generation, which started to move from classical social networks to aforementioned messaging apps (Olson, 2013).

The trends visible from the graphs show that social media and networks are becoming increasingly larger part of our daily settings. There are several opinions about this development and its consequential usefulness or risks. Ranging from one extreme by Manfred Spitzer (2012) who claims that digital media threatens our civilization and that we are “clicking away our sanity” to the fully opposite attitude of Kenneth Goldsmith (2016) who argues that internet allows us to express our creativity more than any other media in the past and therefore is the ultimate good.

Even though author likes Goldsmith’s cheerful acceptance of the Internet and social media, he is aware of the potential risks of mental illnesses that can be induced by the skewed view of reality that Facebook and other social media often present (Hurst, 2015).

17

18 2 Marketing principles

This chapter will define what the terms marketing and online marketing mean, compare those two and show current trends in this field. The last subchapter will deal with the marketing framework from Avinash Kaushik called See Think Do Care.

2.1 Marketing Definition

There are several definitions of marketing and their main difference lies in their breadth. The modern and broadly accepted definition approved by American Marketing Association in 2013 describes marketing as: “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” (American Marketing Association, 2013)

Other notable contribution from Chartered Institute of Marketing defines it as “the management process responsible for identifying, anticipating and satisfying customer requirements profitably.” (The Chartered Institute of Marketing, 2015)

According to well-known expert and author of marketing bible, Philip Kotler, marketing is “an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”(Kotler and Keller, 2012, p. 28)

2.2 Online Marketing Definition

In the beginning of this subchapter, it is necessary to differentiate between online and digital marketing. Digital marketing is a broader term as it describes channels beyond internet marketing. Among exclusively online channels like social media, display, search engines it includes other digital media like mobile phones, television, and radio. (Financial Times Lexicon, 2017) Alex Chris in his comparison of digital marketing and social media uses diagram that demonstrates the main differences between digital and internet marketing.

Figure 4: Difference between digital and internet marketing

Source: (Chris, 2015)

19 According to Kabani and Brogan (2012), the online marketing is a way of leveraging the Internet by conveying a message in order to move people to take action. Other definition by Beal (2017) claims that online marketing “refers to advertising and marketing efforts that use the Web and email to drive direct sales via electronic commerce, in addition to sales leads from websites or emails.”

The most widely used online marketing channels, according to Fishkin (2009), are as follows:

- Website itself - Social Media Marketing - E-mail marketing - Search Engine Marketing – including pay-per-click advertising (PPC) and search engine optimization (SEO) - Display Advertising - Online Public Relations - Affiliate Marketing - Conversion Rate Optimization - Social Media Marketing

2.3 Differences between Offline and Online Marketing

The increasingly faster internet connection in the last 20 years allowed an access to nearly unlimited amounts of information. This process changed the way users consume and companies produce ad content.

The traditional advertising channels mentioned in the first chapter are currently all in decline. That includes print, television, and radio. However, in the past those were the channels that were necessary to succeed in conveying the message effectively.

Kabani and Brogan (2012) state three main differentiating factors of new and old media:

1. The old media were one one-way channel. It was not possible to easily react to the advertisement and to express and share opinion. 2. Simpler targeting. The target audience was more homogenous, that includes people’s interests, purchasing habits and opinions. 3. Absence of information overload and distrust in media. People were less exposed to information stream than today and trusted mainstream media more.

The shift from conventional to digital media is significant and changes the focus of entire advertising industry. As can be seen in the graph below, there is a visible downward trend in consumer media consumption share of the old media (TV, Radio, Print).

20 Figure 5: US Consumer Media Consumption Share

US Consumer Media Consuption Share

60 46 49 50 42 41 40 42 39 38 37 36 39 40 32 30 17 15 14 13 20 12 11 9 Percentage 8 7 10 5 4 4 0 TV Digital Radio Print

2009 2010 2011 2012 2013 2014

Source: (eMarketer, 2014)

However, after breaking down the “digital” segment by device, the downward trend is visible in desktop as well. The only upwards trend is present in mobile, which has attained the second biggest audience.

Figure 6: US Consumer Media Consumption Share

US Consumer Media Consuption Share

50 45

40 37

30 25 23 18 20 17 11 9 7

Percentage Share 10 4 4 2 0 TV Desktop Radio Mobile Print Other

2009 2010 2011 2012 2013 2014

Source: (eMarketer, 2014)

The changes in the industry also put pressure on marketing professionals. According to 76% of marketers, the whole field has changed more in the past two years than in the past 50. The application of the traditional methodology of marketing does not always work and it is therefore necessary for classically trained marketers to adapt and broaden their portfolio of skills to include digital as well (Adobe, 2013).

Hand in hand with this trend go changes in company marketing spending allocation. The trend of increasing spending in internet advertising is visible while spending in other channels is either diminishing or stagnant (Print, Radio, Outdoor). The only exception are investments in TV advertising, which have been rising in the last four years.

21 Figure 7: Distribution of advertising spending in the Czech Republic

Distribution of advertising spending in the Czech Republic

100 5,9 5,4 5,9 6,3 6,5 6,5 6,2 5,6 2,2 1,8 1,7 90 6,5 8,4 8,1 8 7,5 80 31,3 27,6 20,4 36,3 24 22,4 70 29,8 25,9 60 50 45,4 47 41,8 44,5 40 46,8 40 47,2 43,1 30 20

10 17,4 19,2 19,6 18,9 21,1 10,6 13 14,2 0 2009 2010 2011 2012 2013 2014 2015 2016

Internet TV Print Radio Outdoor

Source: (SPIR, 2017)

According to a Gartner survey, in 2016 marketing leaders spent more on websites, digital commerce, and digital advertising than on other categories in 2016. Even though ad blocking is one of the main concerns of online advertising, 65% of leading companies are planning to increase their digital advertising budget in 2017 (Pemberton, 2016).

Following three are the main factors of the budget increases: - Shift from offline to digital advertising - Decline of organic social media reach in favor of paid - Higher cost of video advertising, which is gaining importance and is effective (Pemberton, 2016)

As previously mentioned, one of the problems of online advertising is the use of ad blockers. About 11% of the Czech internet population uses ad blocking tools, however, this phenomenon is more present among tech-savvy users e.g., male college students (Krupka, 2015). This means that author's campaigns might be less influenced as the target group consists mostly of middle- aged, blue-collar workers.

Even though the priorities and focus are switching from traditional to digital marketing, it is crucial to balance the marketing mix appropriately and make sure that digital advertising conforms to the same measurement standards as other marketing investments.

22 2.4 Online Marketing Framework

Well known online marketing framework called See, Think, Do, Care (STDC) was presented by Avinash Kaushik in 2013. Kaushik built this framework because he considered the traditional AIDA (Attention, Interest, Desire, Action) marketing model insufficient for capturing the complexities and measurements of online marketing. His goal was to create customer-centric framework with holistic evaluation of online marketing activities. As the acronym suggests, the model consists of four parts: See, Think, Do, and Care. Additionally, the framework is split into two dimensions: Consideration Stage and Audience (Kaushik, 2013).

Figure 8: STDC Framework

Source: (Kaushik, 2015)

Kaushik’s framework is similar to the concept of a conversion or sales funnel. According to Jansen, the funnel is “a staged process that consumer takes in order to purchase a product or sevice.” The funnel can be divided into three parts: top, middle and bottom of the funnel (TOFU, MOFU, BOFU) (Jansen and Schuster, 2011, p. 2). The consideration stage describes in which part of the conversion funnel is the member of the audience. To demonstrate the framework an example of an e-shop that sells clothes is given.

SEE DO In the See stage, the target audience is the DO stage consists of people who are largest addressable qualified audience. In relevant to the business and manifest a large case of clothing e-shop that is everyone who purchase intent. E.g. people who wear wears clothes. clothes, think that might need some new and are actively looking to buy them.

THINK CARE The Think stage includes only people from Care stage contains people who bought See audience that have some intent to from the business more than twice. They are purchase. That means the people who wear the people who are brand ambassadors and clothes and think that might need some new spread word of mouth. This audience ones. should have its own STDC strategy.

23 The approach of this framework provides a perspective to all online activities and helps to solve following three problems:

1. Identify gaps in web marketing strategy 2. Reflect whether are advertising activities broad and optimized enough for each consideration stage 3. Measure effectiveness of each stage according to its position in the funnel

The workings of STDC Framework could be divided into three strategies:

1. Content Strategy 2. Communication Strategy 3. Measurement Strategy

All three strategies are going to be used in the second part of the thesis on real-time Facebook campaigns. Content strategy will influence the type of content presented to customer in advertisements. Communication strategy will help to decide how will advertising claims change according to campaign (branding, traffic acquisition, remarketing). Finally, the measurement strategy approach will determine which metrics to focus on when evaluating the mentioned types of campaigns.

2.4.1 Content Strategy

Content strategy is the part of marketing plan that deals with any type of media that is created for advertising purposes (either written or visual) (McGill, 2017). Content created for the campaign in this thesis will consist solely of ads. In addition to product images (which are predetermined), the ad will contain promotional text (copy).

One of the important factors in copywriting is understanding the difference between features and benefits. Feature is some inherent quality of a product whereas benefit is what can customer accomplish with the product (Shewan, 2017).

Carter (2012) claims that it is always better to talk about benefits than features and to talk about dreams than benefits. He demonstrates the main differences it in the figure below:

Figure 9: Features, Benefits, and Dreams

Source: (Carter, 2012)

To find out what customer dreams about it is useful to think of all the features and benefits the product offers.

24 2.4.2 Communication Strategy

According to Nordquist (2017), communication is “the process of sending and receiving messages through verbal or nonverbal means including speech or oral communication, writing or written communication, signs, signals, and behavior.” Marketing communication strategy defines the company’s plan how to distribute information and develop brand awareness. Components of online marketing communication strategy might include individual advertising channels including display, SEO, PPC and Social (Greene, 2011).

When buying advertising space, it is necessary to determine which audience in which stage is being targeted. The creative of the ad has to shift from broad to narrow as the focus shifts from SEE through THINK to DO stage (Kaushik, 2013).

The initial marketing focus distribution across all consideration stages might look as follows: Figure 10: STD Marketing Focus

Source: (Kaushik, 2013) However, when thinking about the distribution of channels across all stages more deeply, it starts to appear that some of the channels can be used almost in every step of the customer’s consideration stage. Eventually, the layout of marketing channels could look like this: Figure 11: STD Complex Marketing Focus

Source: (Kaushik, 2013) 25 It should definitely be adjusted according to the industry and the type of sector (B2C or B2B), but the general process of its creation is same across all businesses. The main difference between B2C and B2B communication is that in former, marketer communicates to an individual whereas in the latter, there are multiple addressees of the marketing message (Donaldson, 2008).

2.4.3 Measurement strategy

The problem of utilization of only DO stage and omitting using channels in previous two stages is according to Kaushik mainly caused by an excess focus on the bottom of the funnel (BOFU) metrics like conversion rate and profitability. When judging SEE and THINK stages by these metrics, it turns out that they do not work (do not bring in any money).

The pitfall of this thinking lies in the fact that members of audiences in the first two stages are not ready to convert yet, so it does not make sense to measure the effectiveness of SEE an THINK stage with DO stage key metrics.

The solution to this problem is relatively simple. In order to properly measure the performance of each stage, it is necessary to choose metrics that match the goals of each stage. As can be seen in the following image, for SEE stage it could be metrics like percentage of new visits or number of interactions. In the THINK stage the metrics get more concrete, like click-through rate and page depth. Eventually, the last DO stage contains metrics that most marketers already focus enough on: conversion rate, profit and ROI. However, the author thinks that if SEE or THINK phases bring in results (conversions), it is appropriate to apply DO stage metrics to them as well. Figure 12: STD Stage Metrics

Source: (Kaushik, 2013)

By combining all three strategies of the STDC framework, the marketing efforts should target each customer with appropriate ads and according to respective consideration stage. It should properly measure performance thanks to relevant metrics and evaluate the effectiveness of the whole strategy and campaign. 26 3 Facebook Marketing

This chapter will start with history of Facebook and Facebook advertising, and then will describe the process of strategy creation. The second half will deal with technical prerequisites for advertising on this platform and also with measurement of acquired results.

There are three main reasons why Facebook is going to be utilized for advertising of the company in the second part of the thesis 1. Its large user base 2. Advanced targeting possibilities 3. Small number of company’s competitors using Facebook as an advertising channel.

3.1 Introduction to Facebook

As demonstrated in Figure 3 in the first chapter, Facebook is the largest social network by the number of . This subchapter will explore the history of Facebook and reasons that led to its extreme success.

3.1.1 History of Facebook

The basic concept of Facebook was quite simple. Its main goal was to help users keep in touch with their relatives, friends, and acquaintances and allow them to share information, photos and video with them. Everything as quickly and easily as possible. Additional features were gradually included but the fundamental idea remained the same.

Mark Elliot Zuckerberg launched Facebook (formerly called “thefacebook”) in February 4 2004, when he was 19 years old and was attending . The initial idea was to connect Harvard students with each other. The Facebook quickly spread to other universities and Zuckerberg partnered up with three other students. The growth was so fast that Mark decided to drop out of Harvard and focus fully on development (Landsverk, 2015).

In September 2004 Facebook had more than two hundred thousand users and by the end of the year, the number exceeded one million. 2006 was the year in which Facebook became open for everyone older than 13 years. In 2008 the number of monthly active users broke the 100 million mark and from that point growth became faster than ever. Figure 13: Number of monthly Facebook active users

Number of monthly Facebook active users

2000

1500

1000

500 Users in millions

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: (Statista, 2017)

27 3.1.2 Facebook’s approach to social networks

As mentioned in the first chapter, Facebook’s main goal, like of every other social network, is to create and sustain connections between its users.

To start using Facebook it is necessary Figure 14: Facebook Signup Page to register first. This means filling out a name, surname, email address or phone number, password, birthday and gender. After signup, it is possible to quickly connect with friends and acquaintances via import of contacts or email list.

The user’s profile page is built around the information provided in signup and additional data that can be filled out later. This most prominent information includes user’s profile picture, cover photo, hometown, hobbies and numerous other like religious or political beliefs. Source: Facebook.com

The user’s name and profile picture is the most important component because it is used for search and identification. Privacy settings are available for almost all of the user provided information except for the name, profile picture and cover photo, which are always public.

The first important Facebook feature called “” was announced in 2006 and it allowed users to see on their homepage all the new information and changes their friends, pages or groups they followed. In 2011 Facebook revealed at the f8 developer conference a new feature called Timeline. It replaced the previous “wall” and offered a chronological feed of content generated by users such as statuses, photos, events and mobile apps interactions (Schulman, 2011).

The most iconic feature of Facebook, the “like” button was first enabled in early 2009 (Kincaid, 2009). It allowed users to quickly interact with statuses, comments, photos, links, and ads. The feature was extended to comments in 2010. In 2016 the Facebook launched “Reactions” feature that let people express their opinion via five predefined emotions "Love", "Haha", "Wow", "Sad", or "Angry" (Stinson, 2016).

Besides commenting a liking one of the most prominent features of Facebook is its Messenger (originally Facebook Chat). The Messenger was initially part of the mobile application but was later in 2011 launched as a standalone app for iOS and Android (Kincaid, 2011). In 2015 the website version of Messenger was released available at messenger.com (Welch, 2015).

28 3.1.3 Facebook success factors

As it could have been seen in Figure 13 the Facebook’s growth since 2008 has been rock-steady. It outran every other social network platform including Myspace, Twitter and Google+.

The first reason is definitely the approachable user interface and its accent on usability in general. It is purposely designed that even 14 year olds quickly grasp how to use the application. Besides providing a communication platform to connect with other users, Facebook also serves as quick source of information and eventually bypasses the typical style of news consumption. Regarding media consumption, a wide offer of entertainment on including games, videos and funny pictures that keep people hooked (Rao, 2015).

There are two important success factors according to Haydon. The first one is the media coverage that Facebook receives on a daily basis ranging from security scandals to emotional stories about reunion of lost siblings. The second one is Facebook’s clever utilization of its existing user base to acquire additional users. It has been done by motivating users to invite their friends and acquaintances via email contacts import (Haydon, 2015).

Besides serving as a tool for making connections and media consumption, important factors of Facebook’s success were absence of similar competition, absence of adult content and emphasis on high level of security (Rao, 2015).

3.1.4 History of Facebook Ads

One of the important success factors for Facebook was introduction of advertising platform in 2007. It allowed users to create Facebook Page to advertise on its behalf. Advertisement targeting possibilities were further expanded in 2009 when Facebook introduced geographical and language based targeting.

Introduction of Power Editor in 2011 and Facebook Exchange (FBX) transformed Facebook into powerful platform similar to Google AdWords (Des, 2017). Power Editor is a tool that allows bulk edits, filtering and performance tracking. FBX was a first version of Facebook retargeting and was shut down in 2016 and replaced by Facebook Audience Network that allowed to advertise on website outside of Facebook (Meola, 2016).

Launch of Lookalike Audiences in 2013 allowed marketers to create larger similar audience out of a smaller source audience in chosen country. Conversion Pixel and Website Custom Audience pixel released in 2013 were merged into one Facebook Pixel in 2015 that combined features of both previous solutions (conversion tracking and visitor tracking) (Vahl, 2015).

Carousel Ads format introduced in 2014 showcased multiple products in one ad. Carousel evolved into Dynamic Product Ads in 2015, that allowed retargeting and showing multiple products that user visited on advertiser’s website. The most important releases of 2016 Facebook Ads for Messenger (Des, 2017).

29 3.2 Facebook Marketing Strategy

To effectively launch a marketing campaign, it is necessary to have a strategy. This is what will be discussed in this chapter including situation analysis, goal setting and eventually the ins and outs of Facebook marketing and advertising.

3.2.1 Situation analysis

The perfect recipe for crafting marketing strategy does not exist. It is because each business is unique and it means that each marketing strategy has to be uniquely crafted as well. Each business has to sell different product(s), operates in different markets and fulfils different customer needs with different competitors influencing their moves. The most qualified people to create the strategy are the ones who see the company holistically and are able to synthesize knowledge from multiple sources.

Five foundational pillars of knowledge have to be established to create a solid marketing strategy. According to Ryan and Jones (2009) those are following:

1. Knowledge of business 2. Knowledge of competitors 3. Knowledge of customers 4. Knowledge of goals 5. Knowledge of Key Performance Indicators

Knowledge of business

The first factor is to know whether business is ready and able to utilize online marketing. The two main questions to ask in this matter are whether is the target audience online and whether are offered products or services suitable for online promotion (Ryan and Jones, 2009).

The second factor is financial and human resources. The allocated resources will differ according to a size of the company and the needed amount of human resources to launch and run campaign. Main resources are budget, staff and technological infrastructure (Carter, 2012).

The third factor is understanding of how will online marketing be integrated into existing business processes. Determine how will these processes need to adapt, and ensure that business and its staff is ready to embrace new changes (Ryan and Jones, 2009).

Knowledge of competitors

When entering the realms of online marketing the scope of competition increases significantly. The same online technologies that allow one business to reach people in the whole country or even around the world are available to its competitors as well. Knowledge of competitors allows to understand their strategies, reveal weak spots and turn them into own advantage.

To start it is important to ask following questions: - Who are the competitors in the online marketplace? - How do they differ from current offline competitors? - What are their current activities in the online advertising space? (Ryan and Jones, 2009)

30 Knowledge of customers

For a company that has been in business for some time it should not be difficult to determine its typical customer. It is now easier than ever with the help of Facebook’s feature audience insight that allows to analyze demographics of current customers or website visitors. In case the company is new, no matter whether it is a local business or aspiring global start-up, it is necessary to acquire knowledge about potential customers.

There are several questions to ask while trying to understand customers:

- Is the target group the same both online and offline? - How are the customers using digital technology? - What are interests of the target group? - What is their level of education? - Are they married, dating or single? - In what age group are they and what is their gender? (Ryan and Jones, 2009; Carter, 2012)

It is often not possible to answer all the questions, but in the beginning, it is enough to create a prototype of persona and subsequently refine the idea according to the data about the acquired customers.

To define an “ideal customer” or persona, Brian Tracy recommends clarifying following: - Benefits customer is looking for in a product - Location of the customer - Time when the customer buys - Customer’s buying strategy (Tracy, 2005)

Knowledge of goals

After understanding business and getting to know customers and competitors, it is crucial to define what the expected gains of the advertising activities. That means setting clear, measurable and achievable goals. Businesses can choose from several goals, ranging from lead generation, increasing awareness or engagement, and generating online sales. All goals have eventually the same end goal: to increase the company’s profit.

Facebook differentiates its advertising objectives (goals) into three categories according to the purchasing stage of customer: Awareness, Consideration, and Conversion. Figure 15: Facebook marketing objectives

Source: Facebook

31 Awareness This group of objective aim to generate interest in offered product or service. It contains goals “Brand awareness” and “Reach”

Consideration Objectives in this category are meant to make people thinking about business and start researching. The objectives range from driving traffic, lead generation to acquiring page likes.

Conversions The last class of objectives contains actions in the bottom of the funnel that means conversions e.g., leads, registrations, and purchases. (Facebook, 2017)

When setting goals, it is useful to use SMART method. SMART is an acronym consisting of five criteria that should objective meet:

- Specific – targeting a specific area for improvement - Measurable – quantifying or suggesting indicator of progress - Assignable – specifying who will carry it out - Realistic – stating whether results can be realistically achieved - Time-related– defining a point of time when goals should be reached (Doran, 1981)

Knowledge of Key Performance Indicators

According to Reh (2017), Key Performance Indicators (KPIs) are metrics that evaluate the rate of success of a specific activity that company engages in. One of the main factors that differentiates online marketing from offline is measurability (Visser, 2017). In online campaigns virtually everything that happens can be tracked. That includes how people react to ad, how it performs and eventually whether it fulfils its end goal. The KPIs should answer following questions:

- How is the campaign progressing? - Which channels are performing better than others and why? - What are the campaign’s conversion rates? - What percentage of acquired traffic resulted in valuable actions? (Ryan and Jones, 2009)

More specific metrics and measurements available on Facebook and Google Analytics are going to be discussed in the subchapter 3.4.

32 3.2.2 SWOT Analysis

Analysis of company’s strengths, weaknesses, opportunities, and threats (SWOT) is often used method in situation analysis. Two main marketing environments are monitored: external and internal. Those are located on the Y axis and contain strengths and weaknesses (internal) and opportunities and threats (external). X axis segments the diagram into two parts according to influence of the environment: either helpful (S, O) or harmful (W, T). To carry out the analysis, it is necessary to fill out each quadrant with respective business insights (Kotler and Keller, 2012). Figure 16: SWOT Diagram

Source: (Teknoswitch, 2017)

After performing the analysis, goals and strategies can be formulated. Goals should ideally meet the previously mentioned SMART criteria. Michael Porter proposed three generic strategies that provide good starting point for strategic thinking:

Overall cost leadership Business tries to achieve lowest production and distribution costs.

Differentiation Business concentrates on important customer benefit.

Focus Business focuses on one narrow marketing segment. (Porter, 1988)

Another way of using SWOT analysis output is called Matching and Converting. It is a method of finding competitive advantages via matching Strengths with Opportunities and converting Weaknesses or Threats into Strengths or Opportunities. In case conversion is not possible, the goal is to minimize or avoid the negative impact of threats/weaknesses (Grimes, 2012).

33 3.3 Facebook advertising

When a comprehensive and clear strategy is formed it is necessary to develop more profound details and specifics considering Facebook environment. This subchapter is going to describe the essentials for advertising on Facebook namely Facebook page and Business manager. Without these prerequisites, it is not possible to start any advertising or communication campaign. Furthermore, features like Facebook Pixel and XML feed that enhance the possibilities of advertising on this platform will be mentioned in the practical part of the thesis.

3.3.1 Facebook Page

The first prerequisite for advertising on Facebook is Facebook Page, which is “a public profile specifically created for businesses, brands, celebrities, causes, and other organizations.” (TechTarget, 2012). The process of its creation is relatively straightforward and most people will have no problem with it. To create the page it is necessary to have a Facebook profile.

There are two options for creating the page: either from Facebook homepage before logging (right below the “Create Account“ button) or from the footer of News Feed in both right and left columns (Landsverk, 2015).

There are six types of pages that can be chosen from according to type of business or organization:

- Local Business or Place - Company, Organization or Institution - Brand or Product - Artist, Band or Public Figure - Entertainment - Cause or Community

Figure 17: Facebook Page Creation

Source: Facebook

34 After clicking respective option a small form appears. In case of the first type, basic information about business location required. When selecting other page types, only the name of the page and category is required.

When the Page is created it is advisable to take 5 following steps to optimize it:

- Fill out the About section - Add profile picture (must be at least 170x170 px) - Add cover photo (must be at least 400x150 px) (Facebook, 2017) - Create page username (and subsequently custom Vanity URL) - Add CTA button that will link to a desired goal (Landsverk, 2015)

3.3.2 Business Manager

Creation of Page is only the first step to effective Facebook advertising. The next step is the creation of Business Manager (BM) which is a tool from Facebook launched in 2014. It was designed for companies and smaller advertisers and allows better administration of managed pages and advertising accounts (Constine, 2014).

The main advantages of BM are following:

- Easier management of Pages and Advertising accounts - Better management of access for multiple people - No need to create fake profiles to manage ads - Possibility to create dynamic product ads (via use of XML feed) (Facebook, 2017)

BM creation process can be accessed via business.facebook.com. In case other BM is already in place, following page has to be visited: business.facebook.com/overview. After clicking the “Create Account” button and entering name, the name of business, and email a redirect follows to the BM interface. Three-step guide shows three options that guides BM components setup: Figure 18: Business Manager Setup

Source: Facebook

35 1) Add Page 2) Add Advertising Account 3) Add People

The first two options allow to either request access to already existing Page or Ad Account or create a new one. The third option stands for adding new people to the newly created BM. Roles can be assigned either as Employee with limited rights or as Admin with full access. The invite to collaborate in the BM is sent via email.

Advertising account is part of the BM and is necessary as it is used for payments and billing. To set it up it is needed to select name, time zone, currency, and payment method.

Caution is advised when selecting time zone and currency because it is permanent and can be changed only by creating a new ad account.

In case the payment method is not set up it is necessary to select it after the creation of Ad Account. Two options are available: Credit/Debit Card or PayPal. Figure 19: Ad Account Creation

Source: Facebook

There are two more components needed for e-commerce advertising on Facebook:

- Facebook pixel - XML Feed/Product catalog

These and other details of Facebook advertising are going to be described in the practical part of the thesis because they are of a more technical nature.

36 3.4 Performance Measurement

As mentioned in the section 3.2.1 one of the pillars of business knowledge is the knowledge of KPIs. They provide information whether the set goals are being achieved and allow detection of room for improvement. This chapter will explore both general metrics available in Google Analytics and specific metrics provided by Facebook in Ads Manager.

3.4.1 Google Analytics Metrics

Metrics available in Facebook Ads interface are not sufficient for complex evaluation of performance as they do not provide information about how user interacts with the target site. Avinash Kaushik in his book Web Analytics 2.0 describes the most important metrics that should be tracked by every website. He uses metrics available in Google Analytics as an example, because it is the most widespread an affordable tool on the internet.

- Sessions - Unique users - Average Session Duration - Bounce Rate - Conversion Rate (Kaushik, 2010)

The first two metrics Sessions and Unique users are basis for website analytics. They are closely related and the understanding of their difference is crucial to grasp the rest of the metrics. A session could be defined as a time range between the first user request on a website and the last one. Metric Unique users tries to measure the number of distinct people who visited a website. It uses cookies files that are saved in the user’s browser to distinguish between individual sessions (Kaushik, 2010).

Average Session Duration might seem obvious as the time the user spent in one visit. However, it is necessary to keep in mind that the metric is based on an average and is distorted by visits with only one page. This is because the browser cannot detect the duration of a session with only one-page visit as it is acquired after a transition to another page. Very useful metric Bounce Rate is on the contrary quite straightforward. This metric shows the percentage of people who visited only one page of a given website and then left (Kaushik, 2010). It is very useful when deciding whether a landing page for paid search or social is relevant. Average bounce rates for e-commerce industry are around 30% (Corell, 2015).

However, bounce rate should not be taken dogmatically. Other metrics ought to be taken into account like Conversion Rate and subsequently cost per conversion. The optimal definition of conversion rate according to Kaushik is the number of conversions divided by number of unique visitors. This method of calculation is recommended because it takes into account behavior of most shoppers to visit the website several times before purchasing. Cost per conversion is calculated quite simply by dividing total advertising spend by the number of conversions (Kaushik, 2010).

37 3.4.2 Facebook Ads Metrics

Finally, the crucial metrics of Facebook advertising can be found in the Ads Manager and should be monitored ideally on a daily basis. However, there are hundreds of metrics available and choosing the relevant amongst them is not an easy task when starting off.

Vanity Metrics

Before presenting the 5 most useful metrics to follow, it is good to mention metrics that are often overrated and are getting too much attention.

- Click Through Rate (CTR) - Clicks - Cost Per Click (CPC) - Reach/Impressions

These metrics are handy for evaluation of how to campaign has lifted off after launch and how is delivering but should not be used as a final yardstick for the performance. It is because most of the time the campaign’s objective is not to acquire clicks, impressions or reach people but to get valuable actions (i.e. conversions) (Loomer, 2013),

Neil Patel offer three more metrics that are often given too much weight: Page likes, Total number of post clicks, and Relevance Score (Patel, 2016).

Key Metrics

To get the full story about the performance of campaigns Loomer recommends following five metrics to observe:

- Actions - Cost Per Action (CPA) - Spend/ Revenue

Action is any event that is triggered by a member of a target audience that depends on the goal of the campaign. It could be a number of things including website conversion, page like, link click, app install, share, video play etc.

The number of actions itself does not provide much information, that is why in context with cost the metric Cost Per Action has been developed. It allows comparison of different campaigns by its effectiveness. However, there needs to be a sufficient number of actions (data) to get a statistically relevant sample. Spend metric shows how much money has been spent in selected time frame. Knowledge of revenue is essential for calculation of profitability. To track the Revenue it is necessary to have conversion tracking set in place (Loomer, 2013).

All following metrics are going to be utilized for evaluation of campaign performance. Actions and CPA will be used to determine whether the goal of the campaign (either clicks for acquisition or conversions for remarketing) is being met in a cost-effective manner. Spend a revenue metrics will allow to calculate return on investment (ROI) of a given campaign. ROI is calculated as a difference between profits from investment and cost of investment (spend) divided by cost of investment. Profit is acquired by multiplying revenue by profit margin (Mayer, 2015).

38 4 Introduction of the Company

4.1 PROTECT CZ s.r.o.

The company associated with this thesis is called PROTECT CZ s.r.o. and specializes in wholesale and retail of occupational safety workwear and cleaning agents. It was founded in 1991 as a limited liability company and has been operating on the market for more than 25 years. Currently, there are 12 employees ranging from saleswomen, warehouseman, shop assistants, invoice processing specialist and several auxiliary workers. The two managing directors and also owners of the company are author’s parents.

The current company’s e-commerce solution has been created around the year 2009 and has been updated only slightly since. This version was hosted at www.protect.cz but at the time of writing a new redesign is being finished which will be launched at eshop.protect.cz. The reasons for the update were both the dated looks of the website and also technical deficiencies limiting the implementation of Facebook marketing. Besides the modern look, the new version includes features like responsive mobile version, better administration of products and orders and improved navigation in categories thanks to the dropdown menu.

4.2 Situation analysis

As mentioned in the third chapter in the first part of the thesis, the situation analysis is crucial for laying a foundation for marketing strategy. This subchapter will deal with five parts of the situation analysis: business itself, competitors, customers, goals, and KPIs.

4.2.1 Business

The first deciding factor of the business analysis is to know whether is target audience present online and whether are the offered goods suitable for online promotion. Both conditions are met as it can be empirically proven with the fact that the e-shop has been running for almost ten years without any substantial investments into marketing and yet is generating stable, although small source of revenue (see graph below). Figure 20: Monthly Revenue and Sessions of Protect.cz in 2017

Revenue and Sessions of Protect.cz in 2017

60 000 3 500 50 000 3 000 40 000 2 500 2 000 30 000 1 500 20 000 1 000 10 000 500 0 0 Revenue in CZK Sessions in thousands

Revenue Sessions

Source: PROTECT CZ, s.r.o. company data

39 The second factor is presence of human resources. As the company has dedicated staff in place that manages the processing of orders, packaging, and delivery, this condition can be considered as met. This means that there are sufficient resources and processes in case of a potential surge in the number of orders and website traffic. Initial marketing budget assigned for Facebook advertising is CZK 10,000 per month and the person who will manage all the online campaigns is the author himself.

4.2.2 Competitors

The first step to competitor analysis is to find all the relevant potential businesses that operate online and sell the same or similar goods. The second step is to find out whether this competition is running online campaigns. If yes, determine which channels are being utilized and evaluate whether they pose threat to the current strategy.

Competitor research via search engines Google and Seznam revealed 38 e-shops that sell the same or very similar goods like PROTECT CZ. Most of the webshops had same or lower prices. In the table below, 20 biggest competitors (by monthly traffic) are shown with their pricing strategies and online marketing activities (0 = not implemented, 1 = implemented). The traffic data are estimates acquired from SimilarWeb browser extensions.

Table 1: Major PROTECT CZ Competitors

Company Pricing Analytics AdWords Sklik Chat FB Traffic/Month Source: pícha oopp higher 1 0 0 1 0 82000 Author’s pracovniochrana higher 1 1 0 0 0 60000 own odevypracovne lower 1 1 0 0 1 58000 research rucedozadu lower 0 1 1 0 0 50000 forjobprotect lower 1 0 0 0 0 47000 flopp lower 1 0 1 0 0 46000 workouse lower 1 1 1 0 0 38000 tomis same 1 0 1 0 0 35000 korus higher 1 1 1 0 0 31000 The profi odevy higher 1 1 1 0 1 27000 analysis brudra higher 1 1 1 0 0 22000 of totalprotect lower 1 0 0 0 0 20000 inzep lower 1 1 1 0 0 20000 vochoc higher 1 0 0 1 0 19000 fachman lower 1 1 1 0 1 16000 propomFigure 21: Sharelower of competitors' online1 marketing1 activities1 1 1 9000 delnikShare of competitors' online marketing activities lower 1 0 0 0 0 9000 profesional95% plzen lower 1 1 1 0 0 7000 100% septa lower 1 0 0 0 0 6500 90% kapo same 1 0 0 0 0 6000 80% 70% 60% 50% 47% 50% 40% Percentage 30% 16% 13% 20% 10% 0% Web Analytics AdWords Sklik Live Chat Facebook

40 competitors’ online marketing activities was carried out with help of Chrome Extensions called Facebook Pixel Helper and BuiltWith. The former allows checking whether is Facebook Pixel (JavaScript code for tracking website visitor activity) implemented. The latter provides the same information and additionally reveals other implemented tracking codes such as Google Analytics, AdWords or Sklik retargeting, and live chat tools.

Source: Author’s own research

The first insight of the analysis is that half of the competitors are using paid search advertising (AdWords and Sklik) and vast majority of them have some kind of website analytics in place (Google Analytics, Piwik, Yandex, etc.) The fact that BuiltWith detected these tracking codes does not mean that the websites have running campaigns, so the percentage is probably lower.

Search advertising is very competitive and only 3-4 top positions are available for winners of PPC auction on Seznam and Google search engines. Last year, the author tested paid search advertising on both platforms and only Seznam was slightly profitable. The analysis also revealed that new competitors and search advertisers appeared since the previous year.

The second insight is that only 16% of the analyzed websites offer live chat customer support (Smartsupp, Zendesk, Intercom, etc.) and only 13% have implemented Facebook Pixel for website visitor activity tracking. This creates interesting opportunity to combine Facebook advertising campaigns with Smartsupp live chat, which is implemented on PROTECT CZ website and use it as a competitive advantage.

4.2.3 Customers

Demographics (age, education, gender) and psychographics (interests, lifestyles, and habits) are going to be used for customer analysis. This data is acquired from third-party systems like Google Analytics Facebook and will be cross-checked with firsthand knowledge of staff. Figure 22: Session share by age

41 Session share by age

35% 30% 30% 27% 25% 20% 17% 13% 15% 10% Percentage 10% 4% 5% 0% 18-24 25-34 35-44 45-54 55-64 65+

Source: PROTECT CZ, s.r.o. company data

The first analyzed demographic is the age of website visitors and the used Google Analytics metric are sessions. The range of the data set is 10 months (since January 1st). From the graph above, it appears that the relevant audience to target might be people from 25 to 55. However, after segmenting the data by users who made a transaction and calculating their conversion rates, the plotted graph looks as follows.

Figure 23: Sessions with transaction by age

Sessions with transaction share by age 27% 30% 24% 2,5% 25% 2,0% 17% 20% 16% 1,5% 15% 9% 7% 1,0% 10% 0,5%

Percentage 5% 0% 0,0% 18-24 25-34 35-44 45-54 55-64 65+

Sessions Conversion rate

Source: PROTECT CZ, s.r.o. company data

This segment shows that even though people 45+ visit less, their transaction share and conversion rate is 60% higher. The difference could probably be explained by a lower proficiency of older people in comparing prices and offers of competitors on the internet. The gender ratio in the first graph was 44/56 (women/men) and shifted only slightly towards 47/53. This insight can be used to decide whether to target older generations in Facebook campaigns. It appears it would be appropriate to target a wide range of ages from 25 to 65+ both women and men. According to PROTECT CZ staff, the age distribution acquired from the previous data analysis matches the one of brick and mortar store visitors in the city of Humpolec. Psychographic data (interests, lifestyles) is more difficult to acquire as the categories in Google Analytics are very broad and doesn’t provide much context.

42 To acquire this qualitative data the author decided to use internal data from Google Analytics. An analysis of demographic data from this service revealed following characteristics of the company’s customers:

- Hobbyists o Gardeners o Cottagers, Loggers & Villagers o Fishermen o Hikers o Do it Yourself (DIY) enthusiasts - Professionals o Craftsmen & Tradesmen o Fishermen o Farmers o Construction workers

These categories of interests and professions are matching with Facebook demographic and behavioral targeting and are going to be tested as audiences.

First buying persona is a male in his 30s, 40s and 50s, either blue-collar workers or craftsmen living in the Czech Republic. Second persona is in a similar age group that includes women and is interested in hobbies like fishing, gardening, hiking and other outdoor activities. Income level might range from CZK 15k to 30k (working class and lower middle class). Both personas are people who are used to purchasing goods online.

4.2.4 Goals

There are two goals for the planned Facebook advertising campaign. The first one is to drive new traffic to the company website as until now, it only had organic traffic of around 100 visitors per day on average. The second goal is to drive conversions by retargeting visitors acquired from the traffic generation campaign.

Out of marketing objectives Facebook offers, “Traffic”, “Product catalog sales”, and “Conversions” are going to be used (they are all mentioned in Figure 14 in subsection 3.2.1). Selection of marketing objective tells Facebook on which goal to focus and optimize.

In accordance with SMART criteria, target goals for traffic and conversion campaigns are following:

- Traffic: >2% CTR, CPC max 4 CZK, >1% Conversion Rate, CPA max 250 CZK - Conversion: >3% CTR, CPC max 5 CZK, >3% Conversion Rate, CPA max 200 CZK

Time range for evaluation is one week.

4.2.5 Key Performance Indicators

KPIs should show whether and how much are the chosen goals being achieved. First set of metrics used as KPIs, that show how is the ad or ad set delivering, are the previously mentioned “vanity” metrics, i.e., CTR, CPC, Clicks, Reach, and Impressions.

43

The second set will be metrics that show the invested resources and acquired benefits, i.e., Spend, Revenue, Conversions, Cost per Conversion, and Conversion Rate.

The third set of KPIs will take the data from the third set (Spend, Revenue) and evaluate the financial viability of the campaign. The metrics used will include Gross Margin, Profit, Return on Ad Spend, and Return on Investment.

4.3 SWOT Analysis Table 2: SWOT Analysis

Source: Author’s own research

There are three possible strategies that emerge from SWOT analysis. The first strategy (cost leadership) is not feasible as price cutting in retail and wholesale is often frowned upon from suppliers. Additionally, competing by lowest prices is the easiest strategy and is often short- lived when new competitors with even lower prices enter the market. Differentiation strategy (concentration on customer benefit) can be implemented via Live Chat support to customers acquired via Facebook Ads (matching strengths with opportunities). Focus strategy can be used by promoting only narrow segment of the whole range of offered goods and stocking up on the one segment (minimizing weaknesses and threats). 5 Facebook Advertising Plan

44 Out of the gathered data from the situation and SWOT analyses a following ten-step plan has been formed. It will be used as a blueprint for preparation, launch and evaluation of the Facebook advertising campaign:

1) The company PROTECT CZ will allocate an investment of CZK 10,000 for the advertising campaign 2) The length of the campaign will be approximately one month 3) The author is the person responsible for the management of the campaigns 4) The acquired traffic will land on the eshop.protect.cz website 5) The communication channel used will be Facebook 6) Smartsupp live chat will be launched at the same as the advertising campaign to provide better support for the acquired customers 7) The target audience for the acquisition campaign will range from 25 to 65 years – both men and women 8) Profession and interest targeting offered by Facebook Ads will be used to for the acquisition campaign (e.g. hobbies and professions like gardening, fishing and farming) 9) There are three goals: acquire traffic, increase conversions and boost sales 10) The final metrics for an evaluation will be Profit, Return on Ad Spend, and Return on Investment

5.1 Best practices for e-commerce Facebook advertising

This subchapter will deal in more detail with best practices for e-commerce. That includes Facebook Pixel, XML Feed (or Product Catalog), campaign objectives, audiences, bidding, and ad formats. The prerequisites for advertising on Facebook (Page and Business Manager) are not going to be mentioned as they can be found in chapter 3.3.

5.1.1 Facebook Pixel

JavaScript code called Facebook Pixel is needed for conversion tracking and remarketing. The Pixel can be found in Business Manager in Measure & Report section. Figure 24: Facebook Pixel in Business Manager

Source: Facebook

After selecting “Create Pixel”, Facebook offers two options:

- Automatic integration of pixel into e-commerce platforms like WooCommerce

45 - Raw JavaScript code that should be copied and pasted between HTML tags on every page of the website (this is the option used for PROTECT CZ)

Base code for PROTECT CZ website looks as follows:

Figure 25: Facebook Pixel Code for PROTECT CZ

Source: Facebook

The number in blue is Facebook Pixel ID that allows it to be paired with Business Manager, Ad Account and Product Feed. In addition to basic Page View event that tracks all pages that user visited there are two more events necessary for e-commerce: AddToCart and Purchase

AddToCart event should get triggered when user clicks button that adds product to basket and Purchase event after users clicks the last confirmation button in a checkout process and places an order. For these two events there are additional JavaScript parameters that need to be tracked in order for Dynamic Ads to work (the text in italics is example of variables from protect.cz):

- content_type: product - content_ids: XY123456 - value: 2378.6 - content_name: ATLAS ESF sandal - currency: CZK (Facebook, 2017)

Event tracking is useful for three main reasons: 1) Allows performance evaluation thanks to measurement of revenue 2) Allows segmentation of website visitors according to visited pages, products or categories 3) Allows Facebook to remember people who took a specific action (Add to Cart, Purchase) and optimize campaigns for this event in the future. (Lörincz, 2016)

Facebook pixel was implemented on Protect.cz with all mention parameters and events prior to launch of the campaign. 5.1.2 Product Feed

46 To use dynamic retargeting on Facebook it is necessary to generate Product Feed. Google’s definition of product feed is “a file made up of a list of products which use groupings of attributes that define each one of your products in a unique way” (Google, 2017).

The file used for Facebook Ads must contain 9 attribute columns that include ID, availability, condition, description, image link, link, title, price and brand of the product. Facebook allows using four following formats for product feeds: CSV (comma-separated values), TSV (tab- separated values), RSS XML and ATOM XML. (Facebook, 2017) For PROTECT CZ website a CSV format was used and is available at eshop.protect.cz/facebook/feed.csv address. Figure 26: Product Catalogs in Business Manager

Source: Facebook

After the feed is set up the next step is to create a Product Catalog in Business Manager. Product Catalog is basically a Facebook’s database of products from e-shop which uses data from the provided Product Feed. In case the Product Feed is set up properly, Product Catalog should import all products available on the website with all provided parameters (name, id, price, image, link, etc.). The last step is to connect the Product Catalog with relevant Facebook Pixel in order to pair products that users visited with the ones in Product Catalog. Figure 27: Product Catalog for PROTECT CZ

Source: Facebook 5.1.3 Campaign Objectives

47 Out of the 10 campaign objectives offered by Facebook that were mentioned in subchapter 3.2 only four are recommended for use in e-commerce industry. In the Consideration phase those are Traffic and Engagement objectives and in Conversion phase are Conversions and Product catalog sales. The main difference is between them is how Facebook delivers ads in those campaigns. For each objective Facebook uses artificial intelligence to show ads to people who are most likes to take desired action (MarketingPPC, 2017).

Traffic objectives are ideal for driving cheap click-throughs to the target website. However, a lot of the acquired visitors will leave without purchase; those people are ideal candidates for remarketing. The remarketing message should ideally offer some additional value or present benefits in order to motivate the customer to complete the purchase process (MarketingPPC, 2017).

Conversions objective tells Facebook to acquire people who will likely take selected actions on website (Initiate Checkout, AddToCart or Purchase). This campaign requires Facebook Pixel to be implemented. Prerequisite for effective optimization of this campaign is that its ads receive between 15 and 25 conversions per week. In case there are not enough purchases per week to optimize a selection of event lower in a purchasing funnel (AddToCart) can solve the problem (Butler, 2017).

Engagement objective focuses on targeting users that are most likely to interact with an advertisement that may include reactions, shares and comments. This is useful for promoting organic Newsfeed posts that would otherwise reach only small portion of the target audience (Kaushik, 2017).

Product Catalog Sales campaign allows to create dynamic ads that draw product info from website via previously mentioned Product Feed. The campaign keeps ads automatically up to date with the newest images and pricing and enables advertisers to retarget people who visited specific product page or category. This is the most profitable and low maintenance campaigns that is available for e-commerce (Butler, 2017).

Only Traffic and Product Catalog Sales goals were used in the launched campaign. Conversions objective was not suitable for Protect.cz campaigns due to the lack of conversions per week (Facebook would not be able to optimize). Engagement objective was not used because it is suitable for promotion of content which there was none available on PROTECT CZ Facebook page.

5.1.4 Audiences

There are three available audience types that Facebook offers for targeting users:

- Custom audience - Lookalike audience - Saved audience

Custom audience is a group of users that already made contact with a business. Facebook allows creating audiences out of Website Traffic, Customer File (e-mail list) or users who engaged with Facebook Page and its posts. This audience is located in the bottom of the purchasing funnel and can be targeted with a concrete product offer (MarketingPPC, 2017).

48 Lookalike audience is created from any previously mentioned Custom audience. After selecting source audience, target country and size of the audience, Facebook creates an audience that is most similar to users in the source audience. The size of the created audience ranges from 1% to 10% of the whole country population. This audience is higher in the conversion funnel and consist of people who most likely don’t know the advertised company; therefore, it is advisable to target these people with content rather than products (Loomer, 2015).

Saved audience is a term Facebook uses for any kind of other audience targeting that can be selected and subsequently saved. The types of targeting include geographical location, language, age, gender, interests and behaviour. Individual targeting options can be either combined or narrowed down. For example, PROTECT CZ can target men in the Czech Republic aged between 25-55 who are interested both in fishing AND online shopping and additionally exclude from targeting people who purchased any product in the last 30 days (MarketingPPC, 2017).

Lörincz (2016) recommends following audience segmentation for e-commerce:

All visitors in the last 180 days 180 days is the largest time interval out of which Facebook can create audience. This segment is ideal for creation of lookalike audience as it has the largest amount of customer data. This audience was created for Protect.cz but because the website and pixel was too new there wasn’t enough data to create good enough source audience.

Visitors who added to cart without purchase This is the most “hot” audience, that means it is in the bottom of the funnel and can be retargeted with a message that pushes them complete the unfinished order. This audience was targeted in Product Catalog Sales campaign in addition to people who only viewed a product (did not add to cart).

Visitors who purchased Customers who recently purchased should not be targeted anymore. This audience should be excluded from targeting in all acquisition campaigns. In case the business sells products that are purchased on a regular basis, it can target the customer again in accordance with the length of the repeated purchasing cycle. Audience of visitors who purchased in the last 30 days was created for Protect.cz campaign as it was planned for only this period of time.

E-mail contacts of registered users This group of users already know the company’s brand as they already registered or purchased. E-mail contacts list can be used as a source audience for lookalike audience as well. For purposes of the PROTECT campaign e-mails of all registered users were used to create 1% lookalike audience.

5.1.5 Bidding and Optimization

In order to start display ads on Facebook it is necessary to enter an auction where other advertisers compete for a limited advertising space. The Facebook auction is a similar process to a real-life auction where the highest bidders receive the most impressions and vice versa. However, other factors such as quality of the ad creative and targeting subsequently influence the results of the auction (where Facebook prefers better ads with more accurate targeting) (Chieruzzi, 2017).

49 Facebook offers three main types of bidding strategies: CPM (Cost per Mile), CPC (Cost per Click), and oCPM (optimized CPM). When bidding with CPM, user decides his maximum bid for 1000 impressions. This method is unpredictable and not recommended as it can spend a lot of money without any results. CPC bidding tells Facebook maximum bid for one link click. This is optimal for large number of advertisers as if the ad receives many impressions without any click, advertiser doesn’t get charged. oCPM is a type of bidding on conversions that lets Facebook automatically choose CPM bids to receive as many conversions as possible. As the name implies, Facebook charges for impressions. As mentioned in chapter 5.1.3, Facebook need between 15-25 conversions to optimize efficiently (Chieruzzi, 2017).

There are two options for bidding: either manual, when advertiser chooses maximum bid or automatic, when Facebook chooses bid to acquire as many action as possible.

Recommended process for e-commerce is following:

- When the campaign is new, choose CPC with automatic bidding - Over time, after accumulating conversions, switch to automatic oCPM - Decide which strategy delivers cheaper conversions - Eventually try manual bidding to optimize more effectively (MarketingPPC, 2017)

As was already mentioned, Protect.cz is not spending enough to get between 15-25 conversions a week that means only manual CPC bidding is used.

5.1.6 Ad Formats and Placements

Out of 11 possible ad formats, following three are the most suitable for e-commerce purposes:

Carousel (Multi-Product) Ad Carousel ad format allows showing up to 10 images in a single ad unit, making it extremely useful for e-commerce advertisers. Recommended placements are Desktop/Mobile Newsfeed, and Instagram.

Dynamic Product Ads (DPA) DPAs are remarketing display ads that allow to display products based on past user actions. The prerequisites are Facebook Pixel and Product Feed, which were already mentioned in sections 5.1.1 and 5.1.2. Right Column placement is available for this format in addition to placements that are available for Carousel Ad.

Image (Link Click) Ad The simplest type of ad that allows use of one image, ad copy, headline, link description, and call to action button. For this type of ad, it is important to test different variants to find the most resonating combination of ad image and message. (AdEspresso, 2017; MarketingPPC, 2017)

Only carousel ad has been used in the campaign for reasons mentioned in the next chapter.

50 6 Campaign Launch and Evaluation

The campaign ran for approximately 14 days (November 5th – November 19th) and depleted whole allocated budget (CZK 10.000). Six product categories were promoted to audiences with following interests and demographics: - Work trousers and jackets – DIY, Home Improvement, 1% Lookalike Audience - Winter jackets – 1% Lookalike Audience - Hiking and trekking shoes – Hiking - Winter work boots – Construction, Farming - Winter work gloves – Gardening, Agriculture - Rubber Boots – Fishing

Carousel ad format was used for all ads, displaying between 8 to 10 products form each of the six categories. This format was selected after a test where it performed significantly better in comparison to classic banner ad. Carousel (left) had 4,6% CTR and CZK 2,45 CPC, banner ad (right) had 3% CTR and CZK 3,3 CPC. The data was evaluated after reach of 1000. Figure 28: Carousel and Banner ads

Source: Author

Two types of campaigns with following goals were created: Traffic and Product Catalog Sales. For Traffic campaigns two types of targeting were tested: - Interests and Demographics o Home Improvement o Do It Yourself (Hobbies) (Hobbies) o Construction (Industry) o Gardening (Hobbies) o Agriculture (Industry) o Hiking (Sports and o Farming, Fishing and Outdoors) Forestry (Industry) o Fishing (Sports and Outdoors) - Lookalike Audiences o 1% Audience from visitor in the last 180 days o 1% Audience from all registered users' e-mails

Product Catalog Sales remarketing campaign was segmented as follows: - DPA visited product/added to cart in the last 7 days – Desktop Newsfeed Placement - DPA visited product/added to cart in the last 7 days – Mobile Newsfeed Placement - DPA visited product/added to cart in the last 5 days – Right Column Placement

51 6.1 Traffic Campaign

Initial settings of ad sets in traffic campaigns was following: daily budget CZK 250, targeted interest was narrowed down by “online shopping” interest, desktop Newsfeed placement, optimization for link clicks with manual bid of CZK 4, excluded audience of people who purchased in the last 30 days, audience were both men and women between 25 and 65 years.

Traffic campaign targeted people in either SEE or THINK phases. The ad copy was mostly two or three sentences long and contained emoji to grab attention. It often started by pointing out coming cold weather, presented benefits of the products (e.g., comfort and warmth) and concluded by stating one or two features. An example can be found in Figure 32 above.

Results for Interest and 1% Lookalike Audience targeting were following:

Table 3: Traffic Campaign Results

Ad Set Name Reach Impressions Clicks CTR CPC Purchases CR Agriculture - D 322 388 6 1,55% 3,75 0 0,00% Home Imp. - D 670 724 14 1,93% 3,58 0 0,00% Gardening - D 1744 1823 42 2,30% 4,85 0 0,00% Construction - D 1882 1990 69 3,47% 3,36 0 0,00% 1% LAL 180d 1604 1772 79 4,46% 2,99 0 0,00% Farming - D 2350 2615 68 2,60% 3,74 0 0,00% 1% LAL E- mails 1741 1949 73 3,75% 3,48 0 0,00% DIY - 3382 4128 177 4,29% 2,22 0 0,00% Hiking - M 2586 3107 190 6,12% 2,30 0 0,00% Hiking - D 4128 5581 226 4,05% 3,14 0 0,00% DIY - D 7139 9963 382 3,83% 2,73 3 0,79% Fishing - M 12662 22440 1344 5,99% 1,36 13 0,97% Fishing - D 12287 22354 1019 4,56% 2,45 14 1,37%

Ad Set Name Spend Purchases CR CPA Revenue Profit ROI Agriculture - D 22 0 0,00% 0 0 0 -100% Home Imp. - D 50 0 0,00% 0 0 0 -100% Gardening - D 204 0 0,00% 0 0 0 -100% Construction - D 232 0 0,00% 0 0 0 -100% 1% LAL 180d 236 0 0,00% 0 0 0 -100% Farming - D 260 0 0,00% 0 0 0 -100% 1% LAL E-mails 261 0 0,00% 0 0 0 -100% DIY - M 393 0 0,00% 0 0 0 -100% Hiking - M 437 0 0,00% 0 0 0 -100% Hiking - D 709 0 0,00% 0 0 0 -100% DIY - D 1044 3 0,79% 348 2723 762 -27% Fishing - M 1828 13 0,97% 141 14665 4106 125% Fishing - D 2497 14 1,37% 178 13726 3843 54% Source: PROTECT CZ, s.r.o. company data

52 All metrics besides Conversions Rate (CR), Profit and Return on Investment (ROI) were acquired from Facebook Ads reports. Conversion rate was calculated by dividing purchases with link clicks. Average mark-up for goods is 40%, therefore, profit margin is circa 28%. Revenue sent to Facebook Ads is without a value-added tax, which means it can be multiplied by profit margin to calculate profit. ROI has been calculated by using spend and profit.

As can be seen in the table above, Figure 29: Rubber Boots Ad Feedback only three ads sets generated conversions: Fishing and DIY interests. Additionally, only ad sets targeting Fishing interest attained positive ROI.

Initially, the Fishing ad set was targeted only at desktop (D) users. However, it quickly started acquiring conversions, therefore second ad set targeting mobile (M) was launched. The mobile ad set had better CTR and CPC and started acquiring conversions equally quickly, becoming the most profitable one. The reason for the success of this ad was a perfect match between the product (rubber boots) and target audience (fishermen). As can be seen in the figure on the right, the ad was overwhelmingly shared and liked. Two users commented and asked for a recommendation (which they received) and eventually both completed purchase. Fishing ad sets were the only ones that ran 14 days.

Source: Author Next two Interests with similarly good CTR/CPC, DIY and Hiking, were also tested both on mobile and desktop. However, all four ad sets have been stopped after a week because, despite positive feedback, only three purchases occurred for DIY and none for Hiking. This may have been caused by inappropriate selection of offered goods. A work clothes offered to DIY enthusiasts is probably a type of clothing that is widely offered in many non-specialized stores. Trekking shoes offered to people interested in Hiking failed probably due to the fact that this type of shoes needs to be very carefully tried out prior to purchase.

The rest of the Interest targeting campaigns were stopped quickly mainly due to low CTR and high CPC. Targeting of winter work gloves to audiences interested in Agriculture and Gardening retrospectively does not make sense because the price of the gloves is around 300 Kč. That makes them unprofitable to promote even at a cost per acquisition as low as CZK 150. Winter work boots promoted to Construction and Farming interests were stopped quickly as they had relatively low CTR and high CPC and did not bring any conversions.

The two Lookalike campaigns promoting winter jackets and work trousers had higher CTR but otherwise did not convert any users. This might have been caused by smaller source audience (1200 for website visitors and 2400 for registered users’ e-mails). Also, the Lookalike audiences were not narrowed down by specific interest, making them less relevant.

53 6.2 Conversion Campaign

Product Catalog Sales campaign was the only campaign with conversions for goals. The campaign was remarketing to the users who visited the target website in the last seven or five days. Figure 30: Product Catalog Sales Ad The ad was targeting people in the DO phase, users who clicked through acquisition ad and shown interest in the promoted product but did not purchase. As can be seen in Figure 33, the ad copy inquired whether is user still choosing and then proposed a benefit in the form of customer support on the website.

Only placement that generated conversion was desktop newsfeed (and ran full 14 days). The other placements were stopped in the first week as they did not convert any users. Right column placement was stopped due to high CPC (low CTR is common for this placement). Mobile newsfeed placement performed fairly good CTR and CPC-wise, however, did not convert even after spending of CZK 350.

Source: Author The author is not sure why even the desktop newsfeed placement did not succeed (when measuring success by ROI) but has a few hypotheses. The first one is a selection of too broad remarketing window (7 days), which may have caused negative feedback from customers leading to decreased rating from Facebook and increased cost per click. The second is the use of a whole range of products for remarketing which might have led to displaying of very cheap products with low margins. Possible solutions are following: shorten the remarketing window to 5 or even 3 days and try to create a product set with goods that are only above a specific price range (e.g. CZK 700+).

Table 4: Conversion Campaign Results Ad Set Name Reach Impressions Clicks CTR CPC Purchases CR D-RHS 5d 508 4006 32 0,80% 4,46 0 0,0% M-NF - 7d 470 1694 91 5,37% 3,92 0 0,0% D-NF - 7d 1002 5488 296 5,39% 4,42 6 2,0% Ad Set Name Spend Purchases CR CPA Revenue Profit ROI D-RHS 5d 143 0 0,0% 0 0 0 -100% M-NF - 7d 357 0 0,0% 0 0 0 -100% D-NF - 7d 1308 6 2,0% 218 3475 973 -26%

Source: PROTECT CZ, s.r.o. company data

54 6.3 Overall Evaluation

Following data has been acquired from Google Analytics. Before campaign launch target website acquired 650 sessions and 8 transactions per week. Average sessions before campaign were 650 per week and 8 purchases. During the campaign, sessions increased from the average by 323% to 2750 per week and purchases to by 337% to 35 per week. Revenues increased from average CZK 10,500 per week to CZK 31,300 (198%). Drop in purchases to zero one week before launch of the campaign, was caused by malfunctioning Google Analytics tracking script after a transition to the new website. Figure 31: Sessions and Purchases before and during campaign

Sessions and Purchases before and during campaign

3000 40 2500 35 30 2000 25 1500 20 1000 15 10 500 5 0 0

Sessions Purchases

Source: PROTECT CZ, s.r.o. company data

Traffic campaign as a whole maintained positive ROI of 6% (profit of CZK 519) and Return on Ad Spend of 4 (every invested crown brought in 4 crowns). Results of Conversion campaign were significantly worse with negative ROI of 46% and ROAS of only 2.

Overall results of both campaigns were not profitable as well but with negative ROI of 3%. CR and CPA goals were not met for Traffic (CR 1%, CPA max CZK 250) or Conversions (CR 3%, CPA max CZK 200). CTR and CPC goals were met for both Traffic (CTR 4.8%, CPC CZK 2.15) and Conversion (CTR 3.75%, CPC CZK 4.31) campaign.

Table 5: Overall Campaign Results

Campaign CPA CR Spend Revenue ROAS Profit ROI Traffic 273 0,86 8193 31113 4 8712 6% Conversion 300 1,43 1807 3475 2 973 -46% TOTAL 277 0,87 10000 34588 3 9685 -3%

Source: PROTECT CZ, s.r.o. company data

Live chat which has been implemented before the campaign launched was used by 22 website visitors. Asked questions were concerned mostly with sizes (measurements) of products.

55 7 Discussion

The main objective of this thesis was to plan, launch and evaluate Facebook advertising campaign. Additional goals were to analyse company’s market situation in order to create a suitable marketing plan and align business goals with the campaign goals. These goals were fulfilled as the campaign with goals to increase revenue and profit were realized and were based on Situation and SWOT analyses.

Research goal was to formulate a theoretical and practical approach to planning, creation and evaluation of Facebook advertising campaign. This goal was fulfilled as well as thesis covers both broad high-level strategy approach to campaign planning and detailed campaign tactics including performance measurement, campaign setup and optimization. The proposed marketing campaign strategy and tactics could be used by other e-commerce for planning of Facebook advertising campaign.

First research question was dealing with best practices for e-commerce Facebook advertising. This question was answered in the practical part of the thesis in subchapter 5.1, presenting following best practices: implementation of Business Manager, Facebook Pixel and Product Feed, usage of Traffic and Conversions Campaigns Objectives, targeting of Custom, Lookalike and Saved audience, link clicks and oCPM bidding, Carousel ad formats and desktop/mobile newsfeed placements. Used best practices are mentioned in the part 5.1.

Second research question inquired how Facebook campaign influenced revenues and profits. This has been closely examined in subchapter 6.3. Revenue after campaign launch almost tripled (198% growth) but overall return on investment remained slightly negative (-3%). This has been caused mainly due to the fact that whole campaign was a pilot project in social media advertising for PROTECT CZ. A lot of testing and trial and error happened that can initially appear as a failure, however, it is extremely useful for future promotion campaigns and optimization processes. Traffic campaigns that did not convert any new users might have contributed to brand building.

Traffic campaign revealed that it is extremely important to achieve the right match between offered product, audience and timing. Further advertising activities in traffic acquisition should focus on finding and promoting products similar to the rubber boots campaign that was targeted at fishermen. The goal should be to promote similar mid-price niche products that would get shared and liked and to additionally provide high-quality customer support.

Conversion campaign was expected to be the highest performing. However, despite utilization of Dynamic Product Ads, the ROI of all Product Catalog Sales ad sets was negative. As was already mentioned, this might have been caused by the promotion of the whole range of products (even the very cheap ones). Solution is to segment the whole Product Feed into Product Sets and test promotion of different price ranges. Another solution that might lead to increased conversion rate is a change in the ad’s message. In addition to already promoted customer support on the website, PROTECT CZ could implement free shipping offer for purchases above specific volume (e.g. CZK 1500-2000).

Overall, the campaign was very barebones using only product images for acquisition and dynamic retargeting for conversions. This was mainly due to the fact that the campaign was managed only by the author who had limited time and resources. Ideally, the campaign should use multiple levels of acquisition ranging from videos, blog posts content and then finally promotion of concrete products. This is something to strive for in the following campaigns.

56 Conclusion

Social media are becoming increasingly larger parts of our everyday life. In addition to old media like TV and Radio, people are spending several hours a day using their smartphones and computers to communicate and consume content. Many companies are aware of this shift and are allocating significant amounts of money to promote their products and services in the online space. However, investments in online marketing without any strategy or goals are doomed to fail.

The first step is to keep in mind the existence of a buying funnel. Be it STDC, AIDA or any other, it is important to remember that not all customers are the same. Some are not aware they might want something, some are considering it and some are sitting in front of a checkout process with a credit card. The offered content, communication and evaluation of results should correspond with customer’s buying stage.

The second step is to create at least some rudimentary marketing strategy. It starts by analysis of both internal and external business environment. That means getting to know own business as well as competitors’. Subsequent analysis of present and potential customers is a must because without this knowledge company has no idea who to target and how to communicate with the target audience. Finally, no strategy is complete without set goals that are concrete, measurable, assignable, realistic and time-bound.

These are the necessary groundworks for the creation of any online marketing campaign. Additionally, to succeed on Facebook it is important to remember following:

1. It is a social network that is based on connections between users that puts pressure on businesses to act in a similar way as users do in order to grab attention and persuade. 2. It is crucial to focus on metrics that matter. Likes, shares and even clicks are useful; however, the main goal of business is to make money and not to engage people. 3. Customers are the ones that are bringing in the money, therefore it is of the highest importance to provide them with the best customer support and service as possible (this is especially relevant for e-commerce where competition is extremely high). 4. Measurement of all online advertising activities is now easier than ever and thus it is important to use this data and evaluate what works and what does not, try to fix what does not work or cut the losses as soon as possible.

Even after adhering to all proposed frameworks, methods and tactics the results are not guaranteed — the campaign carried out in this thesis can serve as a good example. Famous quote from John Wanamaker “Half the money I spend on advertising is wasted; the trouble is I don't know which half” could be paraphrased to “Half the money I spend on advertising is wasted and I know exactly which half.” to fit current circumstances. However, the initial failure should not be taken as discouragement but rather as an important and useful feedback on what to improve in the future.

Limitation of the research in this thesis lies mostly in the fast-developing field of online marketing. Facebook advertising especially is rapidly changing from month to month and new features are being added or modified. Even though the author tried to use the newest sources in his research, readers in the future need to be cautious and should check whether is presented information up to date.

57 Further research in the future might include methods on how to integrate Facebook marketing with other advertising channels such as Search, Display and E-mail. Additionally, advanced methods of cross-channel measurements and attribution might be investigated. Creation of an advanced content marketing strategy might be one of the closely examined topics as well. In case larger budget is available a more extensive testing of copy and ad formats should be carried out

Even though limited by the recommended range of bachelor thesis this work tried to grasp the topic of Facebook marketing in a comprehensive manner. The research contributed to furthering knowledge of online and Facebook marketing by utilizing the newest findings and turning them into actionable blueprint on how to plan, launch and evaluate Facebook advertising campaign.

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65 List of figures and tables

Figure 1: Average daily hours spent watching TV ...... 13 Figure 2: Number of social media users from 2010 to 2017 ...... 16 Figure 3: Number of active social media users as of January 2017 ...... 16 Figure 4: Difference between digital and internet marketing ...... 19 Figure 5: US Consumer Media Consumption Share ...... 21 Figure 6: US Consumer Media Consumption Share ...... 21 Figure 7: Distribution of advertising spending in the Czech Republic ...... 22 Figure 8: STDC Framework ...... 23 Figure 9: Features, Benefits, and Dreams ...... 24 Figure 10: STD Marketing Focus ...... 25 Figure 11: STD Complex Marketing Focus ...... 25 Figure 12: STD Stage Metrics ...... 26 Figure 13: Number of monthly Facebook active users ...... 27 Figure 14: Facebook Signup Page ...... 28 Figure 15: Facebook marketing objectives ...... 31 Figure 16: SWOT Diagram ...... 33 Figure 17: Facebook Page Creation ...... 34 Figure 18: Business Manager Setup ...... 35 Figure 19: Ad Account Creation ...... 36 Figure 20: Monthly Revenue and Sessions of Protect.cz in 2017 ...... 39 Figure 21: Share of competitors' online marketing activities ...... 40 Figure 22: Session share by age ...... 41 Figure 23: Sessions with transaction by age ...... 42 Figure 24: Facebook Pixel in Business Manager ...... 45 Figure 25: Facebook Pixel Code for PROTECT CZ ...... 46 Figure 26: Product Catalogs in Business Manager ...... 47 Figure 27: Product Catalog for PROTECT CZ ...... 47 Figure 28: Carousel and Banner ads ...... 51 Figure 29: Rubber Boots Ad Feedback ...... 53 Figure 30: Product Catalog Sales Ad ...... 54 Figure 31: Sessions and Purchases before and during campaign ...... 55

Table 1: Major PROTECT CZ Competitors ...... 40 Table 2: SWOT Analysis ...... 44 Table 3: Traffic Campaign Results ...... 52 Table 4: Conversion Campaign Results ...... 54 Table 5: Overall Campaign Results ...... 55

66 List of abbreviations

SWOT – Strengths, Weaknesses, Opportunities, Threats TV – Television API – Application Programming Interface SNS – Social Network Services STDC – See, Think, Do, Care SEO – Search Engine Optimization PPC – Pay Per Click AIDA – Attention, Interest, Desire, Action TOFU – Top of the Funnel MOFU – Middle of the Funnel BOFU – Bottom of the Funnel B2B – Business to Business B2C – Business to Customer ROI – Return on Investment FBX – Facebook Exchange KPI – Key Performance Indicator SMART – Specific, Measurable, Assignable, Realistic, Time-related XML – Extensible Markup Language CTA – Call to Action BM – Business Manager CTR – Click Through Rate CPC – Cost per Click CPA – Cost per Action CZK – Czech koruna FB – Facebook DIY – Do it Yourself ID – Identifier RSS – Rich Site Summary TSV – Tab-separated Values CSV – Comma-separated Values CPM – Cost per Mile oCPM – Optimized Cost per Mile DPA – Dynamic Product Ad CR – Conversion Rate ROAS – Return on Ad Spend

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