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.
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.
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
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.”
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.