I've had about two Facebook moments just today alone for two different clients. One client was looking to target the youth segment and the second client wanted to push widgets-applications out to a wide audience. For both clients I didn't recommend buying online ads in Facebook for reasons that I've given in the past (more on that in a second). Then I get back from my meetings in the city (my new favorite drink is Tanqueray 10, tonic and two slices of lime) and read this article in Fortune called Finding cracks in Facebook and I had to smile. Not because of any Facebooks woes because clearly they are a leader in social networking, but because of this line:
"Facebook ads can sell for as little as 15 cents per 1,000 impressions (CPM) - compared with the estimated $13 on Yahoo properties. And even at those bargain prices, marketers are reluctant to spend money on a venue where users aren't paying attention."
I'm hard pressed to buy any ads on Facebook for exactly this reason. I believe that social networking ads are online wallpaper especially for acquisition and even branding tactics. And even at 15 cent CPMs it would be a stretch to recommend them. Sure going after the youth market they are still the best place to find concentrated web surfers, but how good are those ads even at such a low rate. 15 cent CPMS with low click rates or acquisition is just what it is - cheap eyeballs and the vast majority of marketers have moved passed this.
I don't know why Facebook doesn't want to embrace what they are to a lot of marketers. A great place to engage customers, evangelize supporters, push information, and have users show their love by posting badges and widgets. It is a great, effective, and efficient tool for communicating with customers especially with the younger generation who increasingly uses email less and communicates via message boards.
The pressure started coming down when they wanted to monetize that traffic. Sure partnering with Google to place paid clicks ads is an awesome tool and that model works because Google serves the ads based on relevancy. Plus a lot of Google users don't realize that if you don't want your ads served on partner search sites you have to opt out of it. It is a great monetization model, but then extrapolating that for display ads is another thing where CPMS are believed to be higher.
However, it is hard to push CPMs up when you serve plain display ads without video. They seem so outdated and cheap, plus you can build them yourself without much creative experience. Those ads show that and contribute to their wallpaper feel. For example, I logged on tonight and here are the ten ads that were served to me:
- Verizon (placed probably by an ad network)
- Great-prizes.com correctly messaged to men over 34 (Facebook flyer)
- Savvy-daddy.com correctly message to me (Facebook flyer)
- All American Dish (Facebook flyer)
- NPD research correctly messaged to over 34 (FF)
- Some 30 Year Old Millionaire ad (FF)
- Puma ad for Like.com correctly targeted to men (FF)
- Myeasyrewards.com (FF)
- Same as #8
- Vacation homes
While they got the targeting correct for most of the ads, this isn't hard to do based on the profiles. The ads themselves are shall we say on the cheesy side of ads and would be hard pressed to be considered branding ad units. I built a few ads, didn't turn them on, and you know what CPM rate I was told to bid? 32 cents!! That's right 32 cent CPMs and if I wanted CPCs around 69 cents. The CPM IS DIRT FRIGGIN CHEAP, especially when you take into consideration their advanced targeting that seems to actually work.
It would be hard for any major marketers to justify spending marketing dollars for something like this. I don't want you to think Facebook has zero value, just when it comes to branding and acquisition. For customer relationship management and evangelizing your base it is great, for advertising I'd recommend passing unless you are on the very low budget scale. I think Facebook's new COO and former Googler Sheryl Sandberg has much longer to go to develop a new ad scheme aimed at the billions that marketers spend on branding ads every year. "I'm hopeful that we play a significant role in pushing the envelope [with] awareness building," she says. "How we get there, I don't think we know yet."