Social Media Tools, Facebook

Are Facebook Ads a Failure?

badge guest post FLATTER Are Facebook Ads a Failure?Even though Facebook continues to maintain its impressive user growth and rack up advertising revenue, that growth is coming despite a major shift in the promise of advertising on that platform. Right now, Facebook is on track for $6 billion in ad revenues but it’s walked away from the fundamental premise of its ad platform.

As Facebook was growing, the excitement of social ads’ potential was palpable among Facebook execs and marketing leaders. Imagine a platform that users voluntarily populated with their likes and affiliations. The ads would be so finely targeted that they’d dramatically outperform other advertising options.

Facebook Gives Up on “Real” Facebook Ads

Facebook ad reps today, however, sound a lot more like those from any other digital site. Partly because less skilled marketers used Facebook’s self-service platform to spray and pray their ads for Zumba DVDs and underwear, and partly because the algorithm required to translate your likes into real ad preferences is way too complicated to actually build, Facebook has largely walked away from that grand promise.

Now, Facebook reps will tell you about retargeting, a marginally effective but not so cutting edge option. Or custom audiences, which is basically demographic profiling. More recently, they’ve partnered with Google to make it easier for advertisers to reach the Facebook Exchange ad inventory. All fine moves, but miles away from that initial grand promise.

Facebook’s Failed Advertising Promise

Facebook advertising has failed in part because the Facebook like doesn’t mean as much as Facebook initially thought it would. Sometimes we like something because we passionately support it. Other times, out of sense of irony or nostalgia. Occasionally, we hit like just to support a friend.

Even if all likes were equal, imagine the complexity of an algorithm that could translate our friendships, movie, book, car, electronics and news item likes into a predictor of what advertising we would like to see. It’s phenomenally (perhaps impossibly) complex. Add in the huge array of products that marketers want to advertise, and matching ads with what we care about has proven too difficult.

Facebook today is very much a company responding to the short-term pressures of the stock market. As a result, they have worked furiously to develop ad packages that advertisers will buy so they can report the next “strong quarter.” Sadly, the ads have ended up as irrelevant and ineffective as anywhere else and Facebook click thru rates are even lower than traditional banner ads.

Absent Changes, Facebook Will Fade

Clearly, Facebook is the number one social network and it will be for at least the next few years. But a decline is starting and must be reversed by Facebook if it doesn’t want to go the way of Myspace and AOL. The risk isn’t so much that we’ll run to another network in the near term as that we’ll visit Facebook less frequently. That decline in user sessions is a huge risk to the company’s continued growth.

The problems with Facebook go beyond the quality of the ads, but this issues are also quite fixable. Hopefully, we’ll see changes to the platform, including increasing the speed of the news feed, to keep interest high. But marketers relying too heavily on advertising on Facebook will never be as successful as those who learn how to earn their exposure across many networks.

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  • http://www.jeffgibbard.com/ Jeff Gibbard

    Spot on. Herein lies the issue with public companies in a rapidly developing, very misunderstood, and relatively new space like social media. The pressure to drive quarterly revenue is at odds with the fundamental fact that these spaces are “social” first, and (if handled properly) have the POTENTIAL for profit.

    Ads are becoming less and less effective as our mass reaction to it is apathy over attention. Great post, agree 100%.

  • http://welfle.com/ Andy Welfle

    What really gets my goat about it is that Facebook says their algorithm changes are in order to “weed out spammy posts” that might occur in organic posts. As if paying for the post will inspire marketers to make the content of it better. If anything, it’ll be worse, since advertisers know all they need to do is pay to get it seen!

    That is a frustrated exaggeration on my part, but you get my drift: Facebook needs to do what Facebook needs to do to make money, but they should at least be up front about it.

    • http://www.ignitesocialmedia.com Jim Tobin Ignite Social Media

      Thanks Andy. If they just let the quality of the content rule, some brands would do well. But that’s not what I’m seeing in our data. Recent changes seem to be penalizing the strongest pages, which is bizarre.

  • Rob Mobberley

    In line with Andy’s comment – it is becoming increasingly frustrating to be bombarded with poorly targeted ads. To be honest it wasn’t so annoying when the side bar was the position of choice, but with the vogue now being newsfeed I fear things are only going to get worse before they get better.

    Don’t get me wrong I believe that done correctly that Facebook ads can provide great returns for advertisers and value for users but as Jim eludes to, the challenge is for both marketers and Facebook to ensure that user annoyance does not erode this potential.

  • http://jonloomer.com/blog Jon Loomer

    Granted, Facebook ads are my business so any response here will be colored with a level of bias. But Facebook ads are my business because of the results I see.

    The bottom line comes down to sales and ROI. I absolutely see it. Clients and other marketers I know well see it. But this comes with understanding how it all works.

    You can’t spray, as you described, poorly targeted ads to users who have expressed no interest in your product. You can, however, use Custom Audiences (not sure if you realize this includes targeting your email and customer list), Lookalike Audiences, website retargeting, conversion tracking and Graph Search to target the ideal customer.

    But it’s a process that those in the AdWords world don’t grasp. That’s why they spray, looking for a buyer when the buyers aren’t looking for them.

    Facebook is most effective as a sales vehicle when you first build a highly relevant audience. You then share highly valuable and helpful content with those who most want to see it. And when you sell, these are the people who will be most ready to buy.

    So, sure, my disappointment here is colored by bias. But that bias is colored by results and an understanding of how powerful Facebook ads can be if used properly.

    And maybe part of the problem is that it is complicated. You can’t just hop into Facebook, dedicate limited time and research, and expect to succeed. It takes a lot of work.

    But I compare it to blogging. This website is successful due to the commitment to understanding how to make it successful. It didn’t happen overnight. It was through a combination of finding a niche, consistent quality, marketing across multiple channels, understanding some SEO and a whole lot more.

    Similar can be said for Facebook. But few put in the same type of work.

    • http://www.ignitesocialmedia.com Jim Tobin Ignite Social Media

      Thanks Jon. It comes down to a few things for me: 1) The failed initial promise, which is unquestionably gone; and 2) The mistakes many brands made in buying disinterested fans. I’m not 100% against Facebook ads, just against their indiscriminate use.

      So I have no doubts certain brands can drive sales via Facebook that make them “work” for them. But unless Facebook fixes the larger problem I allude to at the end, eyeballs will drop and we’ll all struggle even more.

  • http://sproutsocial.com/features/social-media-engagement Sarah @ Sprout Social

    Your last sentence sums it up perfectly. Any marketers that put all of their eggs in one basket (social channel) will face challenges in the long term.

    A presence beyond Facebook is necessary for small businesses with the increasing need for paid ads to be seen anywhere in the newsfeed. I love the creativity other channels merit too, like the short format of Vine or disappearing content in Snapchat.

  • http://rockthestatusquo.com/ Carrie Morgan

    Some wonderful comments here!

    Facebook has shifted substantially, in terms of how valuable it is to smaller businesses. If you can’t wrap advertising dollars into growing the brand page and there isn’t demand for using it as a customer service platform for your business, then why bother? Many can do without it entirely – especially small local businesses. There are other ways to invest the same amount of time that will pay off in a higher return.

    It is a different conversation for larger brands willing to invest in advertising, though. It can be very effective but I agree with @JonLoomer that it is an area of expertise, not something one can dabble in and be terribly effective. Far too many agencies sell the service while having no clue how to do it correctly and zero internal training to improve their skills.

  • http://www.CommunitiesDNA.com/blog Rolando Peralta

    Really useful questioning about the platform.
    Facebook is evolving, and its current iteration is actually a little bit cumbersome.

    After Facebook gain the traction from users, and they decided to pursue advertising revenue, every change from them will be towards increasing advertising budgets.

    You can see your interaction metrics declining along the year, and they “announced” that you can move the needle to possitive numbers using advertising. I blogged about it just yesterday ( http://bit.ly/1f30go7 [spanish] ).