Category: Social Media

Facebook Ads Click-Through Rates Don’t Matter

facebook ads

Nick at allfacebook.com raises some interesting issues about the poor click-through rates for Facebook’s new advertising system. I subscribe to Nick’s blog and had meant to write about this, but appreciate Jeremiah Owyang making Nick’s post part of his weekly digest so it brought it to mind again.

I’m not sure why a low click-though rate on Facebook ads should matter to advertisers, if they are only paying for the clicks.

For instance, I ran a brief campaign in a major metropolitan area and was able to target to a specific age group and communities. For less than $20 I got more than 137,000 impressions and 39 clicks, or a click-through rate of about .03 percent.

But why does that low rate matter? Could I have bought even one 30-second radio ad in a top-ten market for under $20. Not a chance, unless it was a low-power obscure station with 1,000 listeners.

How about a newspaper classified ad? Not likely to get much for a pair of Hamiltons in newsprint, either. I certainly wouldn’t have been able to include a picture.

It’s doubtful I could get a single ad on any TV station, even in a bottom-10 market, for that price.

And if your potential “customers” are not concentrated in a geographic area, obviously national mass media are prohibitively expensive.

For radio and TV there also would be creative costs for ad production, whereas Facebook ads are do-it-yourself.

Which is why I think the advertising that will be successful on Facebook will be more like eBay and less like NBC. It won’t be the huge brands dumping their tens of millions of dollars into buying push advertising. It will be mom-and-pop shops targeting ads to people most likely to need their products and services. And it will be about two-way dialogue, not pushing out messages to amass eyeball counts.

Low click-throughs may not be great news in the short term for Facebook, though, because it only gets paid when someone clicks. But the Facebook management is walking a tightrope in trying to avoid the garishness of the MySpace experience for its users. This leads them to disapprove some ads for the simple offense of one capitalized word in the text.

The new Social Ads system is only a couple of weeks old. I think it’s too early to tell whether big corporations will find ways to use Facebook effectively. They’ll need to invest more in people (staff) to engage with the community and listen to customers, and spend less on just pumping out the mass-media messages.

But for smaller businesses, non-profits and others that haven’t had opportunities for widespread advertising reach based on demographics, I believe Facebook will be a great medium. For organizations that have loyal members or customers, it will be an excellent way to spread word-of-mouth as people become Fans.

And like Craigslist and monster.com, Facebook’s ad platform is one more serious challenge to newspapers as we have known them.

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IBM: You Won’t Recognize the Ad Industry in 2012

IBM has issued a report that crystallizes and formalizes through survey research what many of us have understood intuitively. It’s called “The end of advertising as we know it.” Duncan Riley pointed it out on TechCrunch late last week, and I’ve just finished reading both the report (get the PDFs of the Executive Summary and the full report here) and the accompanying press release. As the release says:

Traditional advertising players risk major revenue declines as budgets shift rapidly to new, interactive formats, which are expected to grow at nearly five times that of traditional advertising. To survive in this new reality, broadcasters must change their mass audience mind-set to cater to niche consumer segments, and distributors need to deliver targeted, interactive advertising for a range of multimedia devices. Advertising agencies must experiment creatively, become brokers of consumer insights, and guide allocation of advertising dollars amid exploding choices. All players must adapt to a world where advertising inventory is increasingly bought and sold in open exchanges vs. traditional channels.

In a previous post I wrote about PR measurement and blogging, and how because of their ability to give lots of numbers, social media can be over-valued relative to news editorial coverage. Even though I’m a huge social media supporter, I still believe that for most businesses the value of mainstream media news coverage is currently much greater than that of online “buzz.” Social media have engagement value, too, and businesses should be getting involved. But editorial coverage still has huge value.

I believe technology and social trends are much bigger threats to traditional advertising than they are to public relations. I will get into reasons for that in a future post.

But as the IBM report indicates, these next five years will be tumultuous for everyone who has been involved in the “one to many” mass media industry that has pushed messages at consumers for the last 50 years. IBM sums it up best by saying: “The next 5 years will hold more change for the advertising industry than the previous 50 did.”

The IBM report, and its four scenarios of how drastic these changes will be, is well worth reading and pondering for anyone interested in marketing and advertising. I’m betting that the “Ad Marketplace” scenario will best describe the picture in 2012.

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Facebook in Diverse Decades of Life

facebook thirtysomethings
The Austin American Statesman has a helpful article on Facebook for thirtysomethings (which also applies to those in their 40s and 50s, too.) Hat tip to Mari Smith. It gives a window into the thinking of recent Facebook adopters.

Jeremiah Owyang recently posted a good explanation of “The Social Graph.” I agree with Jeremiah that social networking features may become a greater part of all web sites, but unless someone makes it extremely simple to carry your social networking identity across sites, there will be a gravitation toward the top-tier sites like Facebook and MySpace. That’s why Michael Arrington reports that top leaders and founders of some of the second-tier sites are leaving (or bailing, depending on your perspective.)

The thirtysomethings, fortysomethings and fiftysomethings who will create the critical mass for social networking are not geeks, for the most part. They also seem to be coming to Facebook in large numbers.

As the American Statesman article indicates, these people don’t belong to a ton of social networking sites. They are just now getting into Facebook. Transporting identities isn’t a big deal to them, because they are mostly just starting on their first site. If they find one that is meeting their needs, as Facebook seems to be, they won’t feel the urge to join another one. They can form new groups effortlessly within Facebook. Why go elsewhere?

And now, with Facebook’s Beacon (although it is somewhat controversial), what they do on other sites can find its way into their Facebook news feeds. So that does provide some of that information flow.

For most non-geeks, the issue won’t be “How can I reconcile all of the social networking sites to which I belong?” It will be, “Which one site gives me everything I really need?”

I had dinner with my twentysomething daughter and her husband last night (they met through Facebook), and she asked, “Are people thinking that Facebook is just going to be a fad?” I explained how some believe that thirtysomethings, fortysomethings and fiftysomethings joining Facebook will cause the college crowd to exit to whatever comes next. But I said I don’t think that’s likely, because of how much I see her younger siblings using Facebook, and how they have all of their Homecoming pictures and the like stored there. It’s the world’s biggest photo-sharing service. I don’t see them leaving that, and their friends, to join other sites.

“I just see it as a another way to communicate,” Rachel agreed. “I tell people who want to get in touch with me to ‘Facebook me.’ It’s just like the telephone or the text message.”

Geeks like having interoperability standards between social networking sites. But so far Google’s OpenSocial is just a common language that widget makers can use to make their lives easier in application development.

For everyone else, I think even relatively easy interoperability between sites may be too complicated. I have a bunch of real-life friends who are starting to get into Facebook. Like those mentioned in the American Statesman article, they are starting to see the potiential benefits and usefulness.

What would they have to gain from joining a second social networking site?

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Facebook vs. Google: Ads and Applications

The news this week in the Facebook vs. Google battle for social networking supremacy has been all about applications or widgets. Next week will likely be about advertising. Here’s a review of the week that was and a look forward to what Facebook likely will be announcing to begin its competition on Google’s online advertising turf.

Applications

Don Dodge has a level-headed analysis of Facebook vs. the OpenSocial platform. Facebook may well decide to incorporate Google’s OpenSocial, but developers aren’t going to abandon the Facebook platform. Certainly having MySpace as one of the OpenSocial sites gives it critical mass, but with 50 million Facebook users, the developers will continue to program for it as well as OpenSocial. It really is about the community, and Facebook has that.

Jeremiah Owyang likewise has a good post on what OpenSocial means, as does his colleague Charlene Li. As she says, developers will deploy for Facebook first, before OpenSocial. Her post was written before MySpace joined the OpenSocial junta, but I still think Facebook has the momentum and critical mass of developers. If it takes a few days to produce two versions of an application, one for Facebook and another for OpenSocial, I think it’s likely developers will do both.

Ads

Next week, Facebook is slated to make some big announcements about how its Social Ad network will be implemented. Techcrunch gave a preview last Tuesday, and has updated it with more detailed information, based on some leaked documents, on what Facebook will announce this Tuesday. Search-based advertising with Google is obviously a huge business, but Facebook’s ability to target demographically (particularly as it now will be gathering more opt-in information about user purchases) and to place ads on other sites (not just within Facebook) will give it an opportunity to deliver relevant advertising.

It’s like my recent Netflix experience: I rate movies I’ve seen, and Netflix suggests others I may enjoy. I’m now getting recommendations based on movies I’ve rated, and many of those are ones I’ve already seen. As I continue to rate those, Netflix further refines the recommendations. I see the new Facebook ad program working similarly, but with suggestions coming from my friends, too. Some people are concerned about privacy implications, but users can either opt out or choose to opt in on a purchase-by-purchase basis.

By the way, I have a Facebook Flyers experiment running, testing some different flyers on the pay-per-click Flyers Pro model. So far I’ve spent the princely sum of about $6.5o for about 18,000 impressions. Given that the Flyers Basic program costs $10 for 5,000 impressions and isn’t targeted as well, the PPC program is a better deal. If you don’t get the clicks, you don’t pay. I will be interested to see if the click-throughs lead to people taking the next step.

This week Facebook was on defense as Google (teaming with MySpace) took a run at the Facebook’s platform supremacy; next week Facebook returns the favor with its enhanced ad platform (and if rumors are correct, also will take on MySpace with a new music offering.)

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In Search of a Cure for LFS

Chris Anderson, Editor in Chief of Wired, has published a list of PR spammers who made his “one strike and you’re out” list.

I’ve had it. I get more than 300 emails a day and my problem isn’t spam (Cloudmark Desktop solves that nicely), it’s PR people. Lazy flacks send press releases to the Editor in Chief of Wired because they can’t be bothered to find out who on my staff, if anyone, might actually be interested in what they’re pitching.

I wonder how many of these offenders were “reaching out?” And in the turnabout-is-fair-play department, Chris has posted their email addresses on his blog. It’s a long list. He says it’s not specifically intended to allow spambots to harvest their addresses and subject them to spam, but if that happens, so be it.

Glenna Shaw in HealthLeaders News likewise shares some tips for hospital PR staff in her column, “Please Release Me.” Her pet peeve is PR people who call to ask, “Did you get our press release?”

Chris says there’s no way off his block list. If you’re on the list and really want to send him something important and that will be meaningful and interesting to him, you’ll need to get another email address to send it.

That’s a bit of a problem for his solution, because getting a free email address takes just a couple of minutes, and his ostracized ones will be right back at it (although it might cause them to think twice.)

I think using Facebook for PR/journalist interactions could be a better way. You only get one Facebook identity (Facebook works really hard to keep it this way; there are some exceptions, but for the most part this is true.) So if you block someone (and maybe you wouldn’t want to do it on the first offense, but could give a warning), they stay blocked.

Journalists who want to get better targeted pitches could list in their Facebook interests the beats they cover and the types of stories that are most appealing. This could be done in their individual profiles. One downside to this approach is that it requires someone to be your “friend” before they can see your interests. But with various levels of “friends” coming as a new feature in Facebook, I see it having potential to enable people to show a limited profile (that might include these work-related interests) to a wider community, while keeping the really personal stuff more private. The messaging system in Facebook would enable you to have much more control over the types of messages you get. And don’t get.
There’s no complete cure for LFS (Lazy “Flack” Syndrome), but I firmly believe the social networking sites, be they Facebook or another platform, will play a role in improving relations between PR professionals and journalists. As Bob Aronson said in a comment on the previous post, it really is all about relationships. And sending a thoughtless pitch (or “reaching out” without thinking about whom you are reaching), is a bad way to start a relationship.

It may just end it.

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