Facebook Ads…Useless?

Over 67% percent of Internet users in the United States use some form of social media. A large portion of that demographic uses primarily Facebook. It has the most users worldwide of any social networking site.

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I consider myself an typical 19 year old male, using Facebook just about daily to do a number of different things, keep in touch with friends at other schools, see what new spring break album one of my friends has posted, and most importantly to kill time. Notice what is missing there? Clicking on the ads littering my screen.With the exception of one time where I got a great deal on a Vineyard Vines button down, I have never clicked on an ad on Facebook. That being said, unless my eyes accidentally, for some ridiculous reason, are directed towards the ads, I won’t even take a peek at them.

Facebook_Ad_Example

Uh oh. This can’t bode well for Facebook. Facebook derives the majority of their revenue from selling advertising space on their website. In theory each “advertising campaign” is specifically directed at you, taking into account what you’re interested in, as well as your age and sex.  Seems like a great idea!

 

Well, think about it from the other side of the screen. A company wants to target a specific demographic with advertising and what better way to do it than on a site where it is extremely easy to track what the user likes and easily compiles this data. Apparently this isn’t working for companies, and they are not satisfied. Today Google, Twitter, and Facebook convened for a panel on digital advertising.

 

Facebook Ad Products Director Gokul Rajaram addressed the issue of not getting enough clicks and engagement through their advertisements. He said that in today’s social media climate and advertising climate, the most important thing are not the standard measurements of an ads success, but instead just pure exposure to a brand, company, product or service. Previously the success of an ad were measured “by impressions (how many ads served up), clicks (how many people click), and conversions (how many people buy)”. This model was extremely successful, especially for Google. Just look at the graphic below

google-adwords-ad-impressions

Luckily for Rajaram there are studies to back up his claim.These studies back up the theory of “demand-generation”. Just like TV ads or radio ads, it plants an idea in your mind and influences you to purchase their product or service down the road. Rajaram claims it is the same idea with digital advertising, but I question whether that is true or not. With the ability to purchase of product from that point in a few quick clicks, Facebook should be much more focused on conversion rates. Thankfully Rajaram recognizes that digital advertising shouldn’t be like a TV ad or radio ad and calls for a “move towards a more sophisticated, multi-touch model and figure out how to accrue value at each touch point.”

ad spending growth

With such an innovative approach and the brightest minds in social networking as well as advertising working for them, look for Facebook to change the way they advertise on their site. Look for more engaging and different approaches.

 

Since Facebook has noticed this trend, do you think other media giants, specifically Google will follow suit?

 

What about Twitter? How will they become profitable and capitalize on their growing user base?

 

What do YOU think the future of online and digital advertising is?

This video will give you a bit of better idea of the controversial nature of digital advertising and the possible negative impact on consumers.

http://www.businessinsider.com/facebooks-gokul-rajaram-2013-4

6 thoughts on “Facebook Ads…Useless?

  1. I found your blog post to be very interesting and entertaining to read. I’ve often wondered how Facebook ads could ever be successful because personally I pay no attention to them. I think it’s odd how they know my interests, but I never click on the ads out of habit. I think Google’s AdSense was very successful with starting an ad campaign that operated based on user preferences, and Facebook has tried to mirror that type of advertising. Although it may have been successful, and still could be, I think there must be a better way. First of all, I think there could be a way to change public opinion about the advertisements. I used to never click on the side bar of ads because I thought “what if it’s spam?” and I didn’t want to get unwanted pop-ups from other sites that I had never intended on visiting. However, there are better firewalls and pop-up blockers now so this happens less frequently. On the other hand, it is difficult to completely ignore the ads on the page, and often I noticed whether I recognize the product or if it is relevant to me. I think that this is what companies are after. Like you said in the post, many companies just want brand recognition and exposure so they are not worried by low conversion numbers. Although most companies require the numbers to justify their advertising campaigns, I think it is important to take into account that public opinion may be changing regardless of the number of clicks on a particular ad.

  2. This was a really interesting post. While reading it, I realized that I wasn’t even aware of the ads on Facebook. Never before have I even consciously noticed that they’re were ads on Facebook. This is obviously a huge problem for Facebook, as its prime source of revenue comes from these ads. I have also read a really interesting article that claims ads are beneficial not for people to click on them, but to influence their purchases down the road. However, I wonder whether Facebook ads can even accomplish this (especially if some users, such as myself, don’t even notice the ads are there). I wonder if Facebook can change the layout of their ads or find a way for users to click on them more frequently. However, I think Facebook might have to pursue other sources of revenue altogether in order to keep generating profit. It will certainly be interesting to see where its future goes.

  3. It’s funny you mention this subject because I had the same thought the entire Google ad class, about the power of Brand Recognition and what it can do for a business. I have never clicked on a Google ad, Facebook ad, or any other sidebar add that usually appears while I am busy doing something else. But I can’t help it if my eyes glance over and recognize a name or brand. How else do people learn of companies? Word of Mouth is such an antiquated method of information. If tomorrow I wanted to go out and buy a pickup truck, then I would look towards Ford, Chevy, Dodge because those are the ads I see the most on TV. The same goes for Facebook ads. When all of a sudden I need a good that may have been advertised on Facebook, I can remember a brand name from an old ad and just head to the company website. The problem this creates is for companies to understand where the ads are bringing them the most revenue.

  4. This was a really good post. I like how you compared something we discussed in class (Google) with your topic of Facebook ads. When we talked about Google in class, I understood why they were so successful. It is easy to advertise on Google because people go there when they are looking for some good or service in particular. All Google has to do is put the right advertisements with the right keywords. I did not see how Facebook could use the same method. I do not go on Facebook to look for a good or service and I usually don’t even see the ads on the website. I thought it was interesting that Facebook acknowledged that they could not use the same advertisement strategy as Google and were doing something completely different. I do not think Facebook can come close to Google’s success in online advertisements, but I think they might be able to find a way to improve their system.

  5. Great post! I was very intrigued to read about this because I have the same feelings about ads on Facebook as you do. I have never clicked on one and I am often “creeped” out when I see that they are being tailored to me. Your blog has a great use of graphs and facts, however, that help me understand why the advertisements are necessary. The claim that the exposure of the ads to consumers even if the consumer does not click is enough for the brand to make a mark is very interesting. It is difficult to prove that this is true but I understand the likeness to ads on TV. Over time if consumers begin to completely tune out advertisements on social media it will be interesting to see how companies react and try new ways to get their message across.

  6. Just like you described, I never take a look at the ads on the side of my Facebook page and, most of the time, I don’t even realize that they’re there. For this reason, I’m pretty skeptical when Rajaram says that digital advertising has the same goal as TV or radio ads of planting an idea in your head. Although you can change channels/station with TV/radio, you inevitably wind up watching/listening to at least part of the ads. With Facebook on the other hand, you can simply disregard the advertisements altogether. I agree with you that Facebook’s focus should be on conversion rates since the ability to purchase a product instantly upon clicking an ad is a unique advantage of digital advertising that TV and radio ads simply don’t have. At any rate, I found this to be a very interesting post since I’ve often wondered just how sustainable Facebook’s advertising-based business model can be.

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