Well, all the news recently is about Facebook, isn’t it? With advertisers pulling out, a disastrous IPO, a plummeting share price, and now the latest news that Facebook users don’t actually click on ads, the social media giant may be looking a little shaky. In certain senses anyway.
Let’s take a look at what people are saying, and how it’s played out up ’til now…
GM Pulls Facebook Ads
If I recall, the first stirrings came just before the IPO launch, when General Motors, the third biggest US media advertiser, pulled $10 million worth of advertising from Facebook, saying that Facebook advertising didn’t work. You can read about it here on the Wall Street Journal.
Facebook Advertising Compared To Google Advertising
At almost the same time, Market Watch, part of the WSJ, released market research showing that the average click through rate on Google’s Display Network was 0.4%. Almost 10 times as high as the CTR on Facebook, with its increasing cost per 1000 impressions.
You can read the article here, but effectively, it suggests that Google continues to offer better advertising value, and that Facebook’s advertising hasn’t kept pace with its rapid market growth. A particularly significant issue it seems was Facebook’s ongoing failure to integrate its advertising into its mobile platform, and the comparatively limited targeting options Facebook offers.
Facebook IPO Launch
Within days, Facebook launched its Initial Public Offering, but it was off to an immediately shaky start, and began dropping value almost at once. At the time of writing, 3 weeks since the public launch, Facebook shares have dropped a full 3rd of their value, and are currently trading 33% lower than the price at launch.
(This has had an interesting and probably unexpected knock-on effect, with 44% of users saying that the IPO and subsequent drop in share value had reduced their confidence in Facebook.)
Within a few days, Facebook rolled out a new “Promoted Posts” feature, allowing page owners to pay to have their status updates promoted in fans newsfeeds, with different price options available, depending on how many fans you would like to reach.
Facebook Advertising Criticism
Perhaps unsurprisingly, Facebook has been receiving what must be a record amount of criticism regarding both its public offering, and its advertising. The technology review, occupying one end of the spectrum, published an article saying that Facebook would go down, and that it would take the rest of the web with it. (Read their article on The Facebook Fallacy here.)
Now, I don’t think that the author is necessarily right myself, but he does raise some interesting and legitimate points about Facebooks advertising model, which may be better explored in this article from Behind Companies, Facebook Advertising Is Fools Gold which expands on the question of Facebooks targeting, pointing out that their targeting model, which is to display ads to specific demographics, does not address the way, or the reason, that people actually buy things.
Stats, Stats, Stats
In the wake of the questions, US search marketing company Greenlight has released a survey that they conducted in the US, showing that 44% of internet users never click on a Facebook ad, and that 31% rarely click on them. That leaves 10% of users who often click, and 3% that regularly click. (The rest don’t have Facebook accounts.)
They also conducted a worldwide survey examining the tendency of users to “like” a brand or company on Facebook. According to the survey, 17% of users said that they would never “like” a brand or comapny, 37% said that they rarely did so, and 26% that they often did. (9% did so regularly, and the remainder of respondents did not have a Facebook account.)
A similar Reuters / Ipsos poll showed that 34% of users were spending less time on Facebook than before, and only 20% were spending more time on it, while 4 out of 5 users had never bought a product or a service as a result of either advertising or comments on the site.
So, Facebook probably needs to reconsider how it monetises its data. But it’s not all bad…
While all of the above may (and should) encourage people to review how they’re using Facebook advertising, and especially, to review their expectations, remember that not all advertising is about sales. Advertising has another, almost intangible, benefit. And that benefit is brand recognition.
Sure, nobody is clicking on your Facebook ad. But at least people are seeing it. (People who don’t block ads anyway.) That has to be worth something, right? Visibility is its own reward, and it looks like this is something that Facebook may be pushing in the future.
As a vehicle for brand exposure and recognition, Facebook can certainly leverage its 900 million users into something both valuable and useful.
Promoted posts and stories, Facebooks newest offering as mentioned above, can indeed increase the visibility of a brand. That doesn’t mean that people are going to click on your promoted post or status, and it certainly doesn’t mean that they’re going to buy anything from you, but it does mean that their chances of seeing it will be much higher.
So…what conclusions can we draw from this? Well, in terms of CTR’s and conversions, Google is still way ahead. Delivering ads to people when they’re in the process of looking for something that the ad is relevant to is not only smart, but it has always worked for them, and will continue to work for them.
In terms of brand recognition and exposure, something like Facebook advertising, (and other social media efforts) still has its place. Just don’t expect your sales figures to jump because you’re advertising on Facebook.