The Facebook Advertising Debate

Facebook advertising is a controversial topic; it seems to generate rather passionate opinions. The big question is, does Facebook advertising work? Like a lot of things, I think the answer is heavily based on individual opinions and expectations.

So here are two imaginary characters that are going to duke it out for us. ‘Derek’ (D) is for FB advertising. ‘Gail’ (G) doesn’t think FB advertising is the best platform to invest in.

I’ll get the debate started…….

Do you think FB advertising works?

D: Yes, if it didn’t why would companies of all sizes continue to use it?

G: No and several large companies have pulled their FB advertising accounts. One that springs to mind is the $10 million General Motors account.

D: Well, at the time GM was emerging from a bailout crisis, they needed to cut costs in order to protect their balance sheet.  The company was reportedly targeted to reduce their marketing expenditure by $2 billion over the next five years. They did what any commercially savvy company would do, worked out what advertising worked best and cut out what wasn’t as successful. Mary Henige, GM’s Director of Social Media tweeted “We have more than 8mil friends on FB; not leaving them; engagement & content isn’t the same thing as advertising.”

G: Quote “cut out what wasn’t as successful.” Do I need to say anymore?

D: FB is a rich pool of data, I’d say pretty accurate too considering users update their profiles as they progress through the different stages of life. It’s also the largest single online community reaching millions of people around the world.

G: Yes FB is the largest single social network platform, it reaches 51% of all internet users but that’s nothing in comparison to Google’s Display Network reaching 90% of all internet users. The information may be valuable; however FB was never designed to be a marketing platform but a communication tool. An apple will always be an apple. Oh and I forgot to mention you can’t reach them through their mobiles!

D: The information available on FB can’t be replicated in the same quantity from any other single media platform; this data is valuable to marketers. It’s not necessarily about the mass reach but more so the targeting options available. Now you can target your ad’s based on demographics such as gender, marital status, geo-graphical area, interests etc…. the list is almost endless.

G: Blah Blah…. You mention the reach and targeting options, which all becomes insignificant when you take into consideration the click through rate. FB don’t actually publish the CTR (I wonder why), but I have come across independent analysis from Webtrends. They looked at over 11,000 FB campaigns and established the average CTR in 2010 was 0.051%. Let’s say a campaign targeted 80,000 impressions, using the average CTR around 40 people would click on the ad. That’s just clicking not buying; yes the conversion to sale will vary from business to business.

D: What do you think to these figures then? In 2011 Facebook made $3.7 billion and 85% of that was from advertising revenue. If it doesn’t work then how are they generating these sorts of revenue figures?

G: Have you seen the FB Q1 2012 revenues? Their earnings fell in the first quarter of 2012; they were 6.5% lower than in the fourth quarter of 2011 and profit was down 32% from the end of 2011. So whilst they have done well in the past, 2012 looks set to be a shaky year for them.

Back to me now!

This debate could have kept going on forever

And it’s not all about Facebook ad’s, they are now testing a new format that will see brands’ page posts appear in users news feeds regardless if they are a fan of their page or not. It’s not the same as the current sponsored stories which require a user’s friend to like the page before the sponsored story is displayed. The sponsored ads appear on both desktop and mobile news feeds, I wonder if users will deem this as socially acceptable.

Using Facebook adverts can be cheap, that’s not the same as cost effective. Because you can stipulate if you want to pay per click or by the number of impressions, it’s could be worth seeing if it is something that would work for your business. There are alternatives out there that warrant further investigation. Check out this infographic, it compares the value of the world’s biggest online display advertising networks: Facebook vs. Google Display Network.

As always please leave a comment below. I don’t doubt that I have missed points from both perspectives so please feel free to weigh in!

Email me Jodi.stuart@realradio.co.uk or tweet me @realradiojodi

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2 Comments

  1. Nik

     /  September 13, 2012

    The debate is exactly how people feel about it. There’s no right or wrong answer, it works for some but doesn’t work for others. Everything depends on your goals and the approach!
    Excellent article that covers the topic really well!

    Reply
    • Hi Nik, thank you for your comment. I totally agree with you, it works for some and not for others. There are strong reasons why it works but also strong reasons why it doesn’t, which is why I wanted to demonstrate both sides of the argument! I’m pleased you like it, especially as FB is your forte.

      Reply

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