Is Advertising on Facebook Really Effective?

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 handbags (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.

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29 responses to “Is Advertising on Facebook Really Effective?

  1. Pingback: Tweets that mention Is Advertising on Facebook Really Effective? « Marketing Mystic -- Topsy.com

  2. Like yourt thoughts…
    It seems that the ads never correlate with the content on FB. Why spend marketers budgets on FB then? Is this because marketers are just about to realize the power of Facebook on purchase decisions? http://bit.ly/5BhygR
    Could be. We don’t know. But we know that social media and advertsing is an anti-thesis: advertising is monologue. social media is a dialogue/multilogue. Right?

    I’d be surprised if you get clients telling you about good results. But if …, let me know. Cheers

    • Thanks for the comment, Martin. Completely agree with your differentiation of advertising vs. social media. I’ll curious to see if anyone’s had any successes and whether the results are different based on industry, type of product, etc. I’ll post my findings on this blog.

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  4. I’ve noticed, as a user, that the ads are quite irrelevant. Yep, I’m female of a certain age, and I have a kid. But all of the pregnancy ads? Nope, not happening again. And all of the inane games like Farmville and Fishville and Petville and whatever-ville… I’m not interested.

    I get ad-bombed with educational opportunities, too. Did they miss the part of my profile where I said I have my Master’s degree? I’m not interested in a BA in [insert field here].

    I did notice one change based on my FB behavior, though. I became a fan of Search Engine Journal the other day… now half my ads are for hiring SEO services. (Note to Facebook: If I’m fanning Search Engine Journal, that means I’m in the field and probably not looking to hire someone else to do SEO.) I’m half-tempted to flag the “get tons of SEO content for $5 a page” ad as offensive, as I’m an SEO writer who writes quality content, not inane drivel written by people who can barely speak English.

    • Hi Christina! What’s asinine is that it doesn’t update the ad-serving logic based on the user’s latest interests or is intuitive enough to grasp that users are multi-faceted, interests change over time, and there can be different user types for the same content. In your case – practitioner vs. consumer (of SEO services). I am all in favor of flagging these inane ads as offensive 🙂

  5. Facebook advertising is like the Wild West. Rational optimization techniques don’t seem to work. Facebook automatically optimizes ads based on CTR, but the sample size is too small for it to be effective, so its hard to test creative.

    We’ve found that users do not consistently update their info tabs on their profiles, unless there is a life changing event (i.e. marriage, new job, etc.). Our targeting is based on that info tab. When we run campaigns, we always find the Bible as the number one book and the Family Guy as the new one show. People do not consistently change out their favorites or add new ones which makes real targeting impossible.

    The most effective feature we’re finding now is targeting friends of fans. So if your a fan of a brand page, we’ll target your friends which may create an incentive for additional users to join.

    Unlike AdWords, Facebook is cryptic in how their system works and the resources provided are somewhat limiting. The Lexicon feature went down in July which provided little insight into what is happening on the platform.

    What your really uncovering in your post is that Facebook advertising is a shame and if they don’t make significant changes moving forward more advertisers will discover their inefficiencies.

    • Hi there! Thanks for sharing your experience. Good to hear that “friends of fans” feature is working for you. I was debating the effectiveness of this feature just last night and whether it assumes that everyone’s social graph is fairly homogeneous with everyone having the same interests but I think it could work well for some product types and certain demographics. It’s ironic that the only viable revenue model for these sites is advertising and yet they do such a lousy job at it. I guess if businesses are desperate enough and have extra $$ to burn, we’ll see the predicted growth in the ad spend this year.

  6. I have been looking at many of these issues myself lately. I have also advertised on Facebook. While Facebook is OK at delivering clicks it has not been great with conversions for me. I think that is largely the case unless the ad is very specifically targeted.

  7. Hi all,

    personally, I think that FB rings all those bells and whistles simply based on the fact that “IF” the member takes the time to click on the thumbs up and thumbs down links for each ad he WILL be filtering out ads to his needs. So basically, for those who DO filter, I suppose that they will EVENTUALLY end up seeing ads that respond to their needs.

    • Hi there, Thanks for sharing your experience. Agreed! That’s a big “if”, most users would choose to ignore the ad rather than take the time to evaluate it. It’s disappointing that they have all this information on users and yet can’t figure out how to use it.

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  10. This is a very good article about the “optional” inefficiency of Facebook Advertising. As we know the power of good advertising lies in the message and how well the message is delivered to the target audience. In most cases when we see irrelevant, or even ridiculous ads on our profile pages the problem lies in the targeting. If the advertiser defines their target audience only as US> female> 18-58 then obviously their product is either very generic or they simply don’t know what they are doing. This is how we see those irrelevant ads on our profiles. If on the other hand they would target US> New York> New York> female> single> yoga> 25-35; their ad would only be presented to single women aged 25 to 35 who live in New York, New York and practise Yoga. Now that’s some pretty exact targeting! Facebook is one of the few digital medias out there who can really help advertisers reach their exact target market.

  11. I have become almost as addicted to Fishville as I was with Farmville! Theres something particularly calming about watching my Fishville empire grow. I wonder how long this craze will continue for though? What will be the next big thing to come along after Fishville, any ideas?

  12. I am very interested in hearing any follow ups from businesses who are currently using facebook for advertising. I my self question its distribution of ads.

    • Ran an ad for a musician I do bookings for. Ran for approx. 2 wks and he got almost 20 bookings. Really narrowed down the interest category to a paticular kind of music.

  13. Pingback: Latest facebook advertising news – Online Advertising 3.0: Harnessing Social Media Users For …

  14. I think one of the problems Facebook has at the moment is that it is aiming to do relevant ads but doesn’t have enough information. It’s insane to think Facebook doesn’t have enough information but the fact of the matter is if you like Search engine journal (like Christina did) that is all facebook knows. If we all (app developers) contributed to their open graph, it would also know you work in that field and have recently consulted on a project, and would theirfore suggest a trendy blog on the subject that it knows you haven’t subscribed to. That’s what web 3.0 will enable and I think that is what Facebook are trying to achieve. The next problem they face is that most app developers won’t want to do this as in effect they are helping Facebook become the web 3.0 platform (which just benefits Facebook).

    As a consumer web 3.0 would be cool. It would be able to learn what I work as, what i like, which music I’m into, where I currently am and suggest things based on that. What’s more it will enable me to control all the data that is stored about me. This will ultimately lead to a minority report style advertising that knows who you are as you are walking down the street! Far fetched, yes, far away, probably not.. @fatsomapaul

  15. To answer the headline I really think it depends on the ad cost in the particular country. Facebook cost per click differs wildly from country to country. In some countries the price is so hight per click that it isn’t really attractive to advertise on Facebook at all. An example of this would be Denmark (expensive) as opposed to Spain (cheap)

  16. Hello,
    I am studying on if I should place an add on Facebook. The remarks here are helping me tremendously and they have actually helped me to understand more about how this site works. I know that advertisers can pay per click with a set limit and when your limit is up per day your adds quit. Is this for the small add icon that shows on the page or for YOUR facebook page or both. I am having a TOUGH time finding this answer.
    Thanks

  17. I can only speak from experience, but for each of the clients of my small consulting firm, Facebook advertising has worked well…even beyond that, we’ve achieve spectacular results. For the small to medium-sized business in a local, regional or national market, Facebook ads do what traditional advertising never could – deliver highly targeted results at an extremely low cost. I understand your point of view as a Facebook user, but as one who managed successful FB ad campaigns, I have to say – give it a chance!

    E. Thomas
    Facebook Coach

    • Hi Elizabeth,
      Please be assured that I haven’t entirely given up on Facebook ads yet 🙂 I see your point of highly targeted advertising as the site has a great deal of data on its users. However, I checked again while I was typing out this response, and got ads for ADT, over 40 & overweight, and LG quantum phone for $.01, all which are useless to me. I concede that one person isn’t exactly statistically significant and that’s why I had to ask the question, is it working and for whom? Thanks for sharing your thoughts!

      I’ve moved my blog to a new site at http://marketingmysticblog.com/ I look forward to learning more about your experiences there as well.

  18. I actually have the opposite experience. I own a social media marketing company, and we handle 70+ fanpages for clients, 9 of which run FB ads. Out of the 9, 7 are very successful with ctr’s of .2 and above, and a definite result in roi.
    The problem is that most ads are terrible. Both in content and in targeting. Too many small biz owners think they can write and ad, pop in their logo, and target who they *think* is their audience.
    The fact is, most do this poorly. Since it is so easy to advertise on FB, it is falling lay people with no marketing background or solid foundations for online advertising.
    As far as ads showing up on fanpages you are visiting with no correlation to the ads, that is completely incorrect on how the ads work (see? Even the “pros” dont understand sometimes 🙂 The ads are geared directly from likes and historical data. iT is not a great scenario, but it has its merits. It just needs to be refined a bit.
    However, back on point, when you look at most ads, they may be targeted to an audience in the backgrounds (by choosing interests when setting up displays) but the imagery, titles and content does not catch the psychological eye of the beholder. Or the background set up is poor, entertaining too wide an audience. As well, many advertisers are lazy, set up one or two ads in a campaign, and run with it. We teach our clients to set up a minimum of 5-10 ads, each with a specific target, image, title and text geared toward that target. So no two ads look or read the same.
    It isnt so much that FB ads are broken (they DO need refining, Ill definitely agree), it seems more so the users are.
    My .02

    • Hi Bill, thanks for taking the time to share your experience. If the ads are served up based on historical data/likes, the relevancy part is totally missing and that leads to a lousy user experience. What makes search advertising powerful is that it serves up ads based on your current behavior and thereby leading to higher likelihood of relevancy. So I am curious, if a successful CT is .2 then what’s the comparable CTR you’ve seen for search advertising? Have you tried other social networking sites? In other words, what are you using as a benchmark?

      I’ve moved my blog to a new site so I would appreciate it if you could share any additional thoughts, comments at http://marketingmysticblog.com/

  19. Wow, It appears you have never used advertising on Facebook. How can you judge something from an advertisers point of view, if you haven’t experienced it. Facebook ads serve a definite purpose unlike most other online advertising, if you understand what it is, it can generate great results for your brand. I am not saying you do not end up seeing irrelevant ads from a users point if view. That happens alot but because of more ignorant advertisers then anything else. The system works and like any other advertising medium you need to learn it to take maximum benefit out of it.

    • The post was written from a consumer not advertiser POV. The point that I was trying to make is that if as a “consumer”, I find the ads to be so irrelevant, then what value are advertisers getting from these? I think your perspective that “it’s not Facebook, it’s those ignorant advertisers” is very intriguing to say the least, especially as you haven’t provided any data or examples to support that theory.

      Regardless, thanks for stopping by but I’ve moved my blog to http://marketingmysticblog.com/ Happy to carry on the conversation there.

  20. Just take a look for a moment at the Facebook “Advanced Targeting” options for advertising. For “Likes and Interests” you cannot select two or more likes as a combination such as “Only people who like A and B”, the default position is “or”. In other words you cannot select your target list down to a combination, it expands to anyone that has any one of the keywords you might select.

    Similar with age. If you select an age, you have the choice of ONLY that specific age (only 1 year) or that age and OLDER! This is not Targeted Advertising, it is minimal selection. Honestly, how hard is it to make the targeting options more relevant….?

    • Great point, Terrance. Based on the comments I’ve received on this post, sounds like this “minimal selection” advertising seems to work for some folks but then again, there are folks who still think television ads are effective…

      I have moved my blog to http://marketingmysticblog.com/ please book that page for future..

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