Is Advertising on Facebook Really Effective?

Posted on January 22nd 2010


eMarketer has predicted a 39% increase in advertising spend on Facebook for 2010.  The popularity of advertising on social networks is primarily based on the notion that sites like Facebook  have a great deal of data on their users and this information can be exploited to deliver highly targeted ads to its huge user base. In theory, it makes a great deal of sense. Afterall, users are going crazy and sharing every little detail of their personal lives on these sites so why not leverage that information for marketing to them? In fact, Facebook goes on to claim that businesses should advertise on the site because:

“People treat Facebook as an authentic part of their lives, so you can be sure you are connecting with real people with real interest in your products.”

If that's true, it's absolutely baffling why the site serves up inane and irrelevant ads when you browse through it. Take a look at the ads on these 2 fan pages - Microsoft and BMW. You'll notice that ads on the right have no relation to the content on these fan pages. One's pitching designer hand baks (never mind that I am looking at a software fan page) and the other one serves up  a list of ads with the only unifying theme being they all have pictures of women (Did I mention that I am a woman?! How clever of them to figure that out).

 Microsoft Fan Page

 

BMW Fan Page

As if those 2 examples weren't enlightening enough, the ads on the Harvard Business Review fan page are just mind-boggling. I am baffled as to the connection between HBR and pets. And no, there's no information in my Facebook profile about my imaginary or real pets.

One would think there are advertisers in similar or related categories who would be interested in marketing to the same audience but apparently, that's not the case on Facebook. Of course, one can just blame the clueless advertisers who don't know how to optimize their targeting but when you look at the target filters Facebook offers, you soon realize their limitations. The site says you can,

“Target your exact audience with demographic and psychographic filters about real people.”

I am a “real” person, a female of “certain age” who also happens to be interested in luxury cars and operating systems (gasp!). Under Facebook's current ad model, no matter which page/group I am on, it only serves up ads based on my profile. As an user, it's annoying but as an advertiser, I would be very concerned about displaying ads to an uninterested audience and with zero context.

So here's my theory: Facebook either has a very low inventory of ads and that's why they cycle through the limited number of available but irrelevant ads or the ad targeting model is fundamentally flawed. In either case, I seriously doubt that advertising on Facebook is any more effective  than other advertising options like paid search or contextual ads on traditional sites.

I'll try to get some data from businesses who're currently advertising on Facebook and post the findings here as a follow up. If you want to share your experience, feel free to leave a comment below.

Posted in facebook, social media, social networking Tagged: ads, advertising, facebook, social networks, social+media

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MiaDand

Mia Dand

Based in San Francisco Bay Area, Mia Dand is a Digital & Social Media leader with an outstanding track record of building user-centric marketing programs at global brands like Google, HP, Symantec and eBay. Mia pioneered the first Social Media Center of Excellence at HP as well as their first Social Listening & Analytics program. She built and led the Global Social Media strategy for Symantec's Consumer Business. 

Most recently at Google, Mia drove the Community Support strategy for Google's Geo, Social and Search products including Google+, Hangouts, Maps and many others. Mia is also on Top Rank's list of "25 Women That Rocked Social Media in 2013". She is a frequent speaker at industry conferences on social media and digital marketing.

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Comments

Mia, glad you asked.  We're just putting together one of our world-famous webinars on using facebook for business, here's the link: http://bit.ly/7r3cj6

It's likely both a lack of inventory and failure to understand the medium. Let's face it—social media and SM ads are very, very low priority for a lot of companies with tried and true business and advertising models. So, companies that create those annoying, shaking, blinking banner ads are going to migrate to Facebook—not to promote a service or product, but make a quick buck.

Look for the creative of the ads (let's face it—they're limited) you can present and user targeting mechanisms to evolve, which will attract bigger names with more serious campaigns, which will force another evolution of FB ads, attracting more serious ads, etc.

I agree that FB has done a bunch of things wrong:  lack of focus, targeting, pricing and helping their advertisers understand the new business model of SM ads. Though, it seems to me that if they follow Microsoft's and Google's model and learn from their mistakes, they do have a potential gold mine on their hands.  Also, if advertisers think that they can use the same annoying, gimmicky ads on social sites, they will likely be disappointed in the CTRs and the affect on the brand.

Thanks everyone for chiming in!

@Andreas Great point. Social networks may be new but the traditional agency mindset still needs to change and FB needs to do a better job at targeting.

@Katie Completely agree. It is disappointing as there is so much potential. As some others have pointed out, desperate advertisers will continue to flock to Facebook because of the hype.

@Matt @David Excellent points! Unlike existing ad models, Facebook and other social networks have the ability to combine contextual information with demographics on the individual user to allow very accurate targeting. However, it will be a huge missed opportunity if Facebook doesn't get it right.
@Robin That should be one interesting webinar. Will check it out :)

@Bret Agreed, it's going to promoted like crazy by the "experts" and traditional marketers will jump on the bandwagon because they are too scared to be left behind.

@Barry Thanks for pointing that out. I wonder if click fraud is responsible for some of the highly positive results we've heard being touted.

@Extreme John I think it works for certain product/service categories, but their ad serving model is too simple and needs to improve.
 

I agree with many of the previous posts that the Facebook ad offering is lame -- especially to one who's accustomed to the sophistication of Google AdWords, paired with Google Analytics.
That said, I am right in the middle of experiencing a real-time success story that is, in part, driven by Facebook advertising.  So in the interest of fair-and-balanced, I thought I'd share it now, as it unfolds.
This past Thursday mid-day, Piper Aircraft launched a hip new airplane, the PiperSport. It's a cool design at a very low price (for airplanes), and does not require a full private pilot license to fly it.  In many ways, it's an "everyman's airplane".
I've been in charge of the social media launch of the PiperSport, and in addition to a really informative YouTube video and channel and a lively Twitter feed, we wanted to create a strong, vibrant community on Facebook.  In our experience, though, organically-grown Facebook pages are often slow to develop.  And there's nothing more depressing to a new Facebook fan than to enter a Fan page with only a handful of members and little conversation.
Enter the Facebook ad.  And how.
Within two hours of launch, we had 100 fans at www.facebook.com/pipersport, all chattering away about their experiences and ambitions, sharing photos, and generally enthusing about the airplane.  By the end of the day, we had almost 400 fans, and the wall was buzzing with comments and questions.  Fans were answering questions as quickly as they were asked - promptly and accurately - even before I needed to step in as the "voice of the product".
It's now 6:00pm on Saturday, and we have more than 1,000 fans and 2,000+ viewings of the video on Facebook and YouTube.  57 hours ago, nobody had ever heard of the PiperSport; now we have an army of advocates.
We have four documented instances of people hearing about the PiperSport first on Facebook, going to the fan pages, and deciding to buy (a couple had previously decided to buy another airplane but switched when they saw the enthusiasm and pilot reports on the Facebook page).  At $120,000+ a pop, that's a huge return.  Total investment to date: $665.
How did Facebook ads help?  More than 600 fans came directly through Facebook ads. I'm sure that many others came as second-order referrals from people who arrived first from the Facebook ads.
And Facebook does itself a disservice in limiting new advertisers to $250 a day.  Based on these results, we would readily have spent several times that to get the community going.
Lesson: one can never categorically say something works or doesn't work.  For this application, I'm a believer.  For some others, not so much.
Michael Kolowich
DigiNovations / ChannelOne Marketing Group
Concord, Massachusetts

 

 

Aren't we missing the point a little here? Advertising on Facebook isn't about some display ad talking about a tinpot brand; it's about interacting on Facebook itself. Just from the examples above, BMW and HBR are doing well to build a relationship with their customers with giving value as the key component. Music artists are other very good examples of brands that use social networking sites as a vehicle to form personable relationships with their fans. This ranges from informing fans of upcoming gigs, to tweeting their personal anecdotes to providing a platform for fans to talk to each other. Thoughts?

@Michael Thanks for sharing your experience. That's a great success story!

I've heard from numerous sources that Facebook ads work well for driving traffic to other social networks and in this case, to Fan pages on Facebook itself.

However, as you rightly pointed out, Facebook lacks the sophistication to allow accurate targeting. As a result, it works well for a limited number of products/services, but not as well for others.

I will go into more details in my follow up post.

@Dom Given that Facebook's revenue model is based on these "display ad talking about a tinpot brand", the point of this post is to examine the efficacy of these ads from both consumer and advertiser POV.

Yes, I completely agree with you that there are many brands doing a great job of building their community on Facebook and other social networks. However, that's a topic for a future blog post :)

Working client-side for a large organisation, I have to say that advertising on Facebook works much better for us then advertising with Google Adwords or other PPC systems.
I was just reading this paragraph in Social Media's article titled "Debunking Five Social Media Myths":

"When you’re communicating online, people are judging you. Sometimes they’re just jerks who judge people, or martinets who enjoy correcting others, but they can also be important people who can influence your success.

If I was going to hire a PR agency, I would read the agency blog to learn about the firm’s communications philosophy. If its employees write poorly on the company’s blog, which after all is just a new kind of company web site, then why should I expect good writing if I retained them for my company?"

I wouldn't have mentioned it, but as I was reading this article there were just too many errors to overlook:

"39% increase in advertising spend on Facebook" (and that's the first sentence!)

"One’s pitching designer handbaks"  (what are handbaks?)

"As an user, it’s annoying but as an advertiser,"

 Now I'm neither a jerk nor a martinet nor do I enjoy correcting others, but come on... at least use a spell / grammar checker before you post your article... and for gosh sakes, getchurself a copy of Strunk & White's "Elements of Style".

 

 

 

 

 


@analogboy Can you share which product/service category you've used Facebook for? Would be helpful for my follow up post. Thanks!

 

 

@Shari Gosh! You had me chuckling because it's the first time I've had someone completely ignore the content and focus instead on correcting it.

Thanks for the effort and since you took the time to comment, it's only fair that I respond. None of the "typos" you've pointed out are due to lack of diligence in the use of spellchecker or your whatchamacallit grammar book.

On the first one - try Googling "advertising spend" and you'll find that it's perfectly good use of the English language.

The "handbaks" part is baffling because it's spelled correctly in my original post on  http://marketingmystic.wordpress.com  But when I tried to correct it on this site, I got the message that "it's on the list of denied words". I have no idea what that means or how to fix it but my post got cancelled when I tried to use the correct version, so we'll just have to live with it.  

I am hardwired to add "an" in front of any word starting with a vowel. I don't claim to be an expert on grammar so I am glad that that despite my overzealous use of "an" and the occasional typo, previous commenters still found some value in this post and for that I am very grateful :)

Amen, Mia.  I was amused, too, at the commenter's faux-pas in criticizing your use of "advertising spend" -- a legitimate term-of-art in marketing.  How frightening is that?

Bravo for emphasizing substance over form, and keep the insights coming!

@Michael Thank you! Your feedback is much appreciated :)

Very interesting blog and comments.

As a small advertiser who has tried Facebook ads I am put off by the rapidly rising clicks bids price.

I was going to say that I cannot jutsify 90 cents a click.

But the Piper airplane example blows that away. But my product is only $5.00 retail.

 

 

SHAAAZAAAMMMM!!!! This is a great and valuable post for all marketer's, love the way you brought your ideas together. Keep it up. . My friend Jani has created a "little known" secret from siphoning traffic from facebook, none of the GURU's are teaching and it's working AWESOME! speak soon Julie 'FB Pro' Jameson

I think you see the same ads over and over because people are throwing lots of money at multiple ad variations, on a small target audience.  I wrote a blog post about it earlier this week, actually: http://www.lyndsysimon.com/2010/10/what-ive-learned-about-facebook-ads/

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Well, although you do make good comments and observations you are commenting more so on facebook determining who gets what ads displayed on each page. I don't know if you've made an ad on facebook but it is up to the advertiser to decide who they want to target. This is determined through age, sex, marital status, geographic location(s) and even your hobbies/interests/favourites. The advertiser has the ability to narrow their target audience results through these or they can keep their audience very broad. It is true that many business' use the service inadequately which is partly to blame. However, if the advertiser only specifies that they want people from the age 18-50 male or female and in canada anyone within those boundaries may have this ad displayed for them regardless of what other page you may/may not be looking at. So I believe that advertising on facebook can be highly effective if used and utilized correctly.

The popularity of advertising on social networks is primarily based on the notion that sites like Facebook  have a great deal of data on their users and this information can be exploited to deliver highly targeted ads to its huge user base.

We've tried out Facebook several times for clients of our ppc management company and have not had great results so far. Granted, the campaigns we've tried so far (health insurance, drug rehab, and retail online shoes) are typically ones that do better in search than in content match, but we expected better results than we got. We were hoping for results similar to what we get from Content Match ads in Google or Bing, but what we got was more like the results we'd expect from a banner ad on a relatively un-targeted site. Their targeting technology did not seem to be as good as Google's content match, for example. In all fairness, though, our last Facebook trial was over a year and a half ago and they may have improved their targeting since then. I have been told by a friend of mine in the diet & weight loss industry that he has had good success advertising on Facebook recently. I would be willing to give them a try again for certain types of products, especially 'impulse' products, hip or fashionable or trendy products, and products where brand-awareness rather than direct conversions was the goal. There are real people on Facebook, after all, so there are surely going to be some products that are worth advertising there. For 'search' products, though, which are products that people actively search for because of a current need in their life, I will stick with regular search-based PPC, since that's where the people who are actively searching for something can be found.

I agree with Steve here.  Working on Facebook platform is much easier and cheaper for me than Google.  The demographic option that narrow down the search help me find my potential customer in local area.  Facebook is now prob one of largest advertising platform out there online.

YES! Facebook advertising is IMO the new "Google". I was hesitant when I first heard about it, but it's been working out great so far.

Same goes for Twitter. Every day you spend thinking about it, the more you get behind the curve of cutting edge - and as marketers it's crucial to stay ahead.

http://www.imlabz.com

- Dean

Hi Mia,

I think you bring up a very good point about the limits of the Facebook's advertising platform, but really miss why most big brands are advertising on Facebook in the first place, which is to build Facebook fans for a digital brand / community. 

In my experience, you are exactly right about Facebook's ad effectiveness when it comes to sending users off site (i.e. away from Facebook). While paid search tends to be slightly more expensive CPC, it produces better bounce rates, time on site and - most importantly - cost per conversions. 

That is why my agency tends to use Facebook only when we're working on building a high quality, high quantity Facebook fan base, which, of course, we build so we can activate these fans later on. We've found we can pull in quality FB fans for about $0.77 per fan, on average, and it can be argued that a Facebook "like" is more valuable than an email address today, if only for the under 28 crowd. 

Then again, my experience is with my clients. What's been your experience? I'm I off base? 

We are an online site for c2c commerce, and we have tried to use Facebook ads, but we must admit there is very little effect. We tried various types of ads, did not give us any conversions. And our site is about trade of fashion!

To us, it is not so interesting to get the clicks but the conversion, and advertising even on Facebook is not very effective.

Targeted socal media marketing and affiliate marketing has proven to be much more effective.

One of the best things about Facebook advertising is the ability select who sees your ad using a number of variables, including keywords. Thanks for Informative sharing..

Facebook has come a long way since this article was written but unfortunately the tactics of the majority of advertisers on facebook has not - I am still seeing large amounts of irrellevant ads. People spending money on facebook adds really need to educate themselves on the all that facebook ads can offer and how targeted campaigns can be.

I've just finished reading a book called "Killer Facebook Ads" by Marty Weintraub - he's the CEO for aimclear (they manage some pretty high profile facebook ads accounts including MarthaStewart.com, Siemens and Second Life to name a few). It is an excellent resource for beginners through to the seasoned pro when it comes to Facebook Ads. I have a reviewed it here for anyone interested:

http://www.camwilkes.com/killer-facebook-ads/