Interesting - but I'd have to disagree. I should say straight away that my company (iPlatform) build a lot of Facebook apps for brand clients, so I'm probably biased, but we don't get involved in any ad spend or media buying, and our apps focus primarily on engaging with fan bases, so I can claim some minor form of objectivity in that we see lots of good and bad Facebook ad campaigns without being directly involved.
So far, I see that a lot of people have initial bad experiences with Facebook adverts, get disillusioned and leave. However, I also know a lot of people who get amazing results on a regular and continuous basis from Facebook ads - including both large and small businesses. The bad experiences we see generally come about because people try and treat them like paid search ads. They use similar keywords/ targeting, whack in some money and then complain about it not working.
This is analogous to someone going on to Google ads and whacking in some un-optimised keywords and targeting and wondering why it's not working (and it wouldn't - a lot of people fail with Google ads as well). Everyone who's succeeded on Facebook have spent a lot of time experimenting and optimising their ads in terms of targeting and keywords, and also often work hard to build up fan pages to allow them to communicate directly to a userbase.
I have the feeling that there were probably similar posts to this in the early days of Google, with people saying that users just ignored the ads and clicked on the pure search results, and that it was easy to waste your money. Both true, as with Facebook, but also true that if you work at optimising your campaign for the relevant platform you can get the real value out of it. Until you've done that you can't judge.
joshuamarch: I am interested in hearing about these successful campaigns. How big are they? Are they targetting college students? How much does their product cost? What is there acquisition cost? Google's ad platform is amazing. I can't speak to the first year of operation, but I suspect it was similarly strong. It's the nature of search ads, they just target better. Moreover, anybody inexperienced can start having very effective Google ads pretty quickly. Google ads worked great for me for the same product.
What you say about Facebook fan pages is interesting. The best campaigns on Facebook I've seen are through the social part of Facebook. Get people to tag friends in photos. Create fan pages, groups. Blast out messages to discussion boards. Ads, on the other hand: nothing. And that's where FB makes the bulk of its money.
I think, more likely, the companies you mention are effective with FB marketing, not ads. I once helped this startup market on Facebook. I created a bot that befriended the owners of over 100 large groups. Then, the bot asked them to advertise the website by sending a mass message to the groups. Half the time, the bot successfully asked to become a co-owner of the group. We reached tens of thousands in a week.
You're almost completely correct - advertising 'off Facebook' products just isn't worth it... you can get better quality, lower cost clicks elsewhere. The same can be said for using Google though - that's far from the best place to advertise either.
However, advertising Facebook Apps through the Facebook Ads works extremely well, as long as you have some time to tinker. We've been running the same ad for a Facebook game since early 2009 with varying budgets ($5/day up to $300/day) and it's proved to be successful, although it does take a lot of tweaking to get the ad cost down when you first start.
Facebook's in fashion at the moment - they'll profit, they'll fade, and someone else will come along. (Although there are thousands who'll disagree with me on that, since Facebook is apparently soon going to be 'bigger than Google'.).
mattbeswick: That's cool. I actually heard that Facebook Apps are best advertised through Facebook Ads. That makes a lot of sense. My only question is, do you charge for the Facebook App? How do you make money off your app? Do you have investment and are you just burning through that, or do you already have a positive ROI?
ricburton: I already addressed that at the end of the post.
Joseph - Nope, no investment - all self funded since we launched on Facebook in December 2007. Revenue comes through a mix of virtual currency and banner ads (about 70% in favor of the former). Our ad spend is around 5% of daily revenue, although that's sometimes lower depending on what's going on at the time.
My experience is almost completely limited to Social Games (purely because that's where the money has been) so I can't comment in too much depth on the pros and cons of advertising corporate apps and pages. My ethos has always been to aim for as much viral growth as possible - we didn't spend anything to gain out first couple of million users - although Facebook, being the annoying bunch of capitalists they are, seem to be making that harder and harder by the day ;)
Rich: Long time no speak... glad things are still going well with HoodEasy - this site looks quality!
Very cool. I'm forming a theory that Facebook ads are good for college-demographic, small-spend, quick-purchase products. It seems like social games and novelty clothing sell pretty well. Social games especially make sense since they enhance the value of Facebook itself and in fact the social aspect is a main reason a user visits the site.
Do you think Facebook ads can eventually generalize to more kinds of products (all kinds, like Google ads?), or do you think that they may be a niche for advertising very social products?
You may be right the current Facebook ad product is a ponzi scheme. It's a clever thought. And thanks for putting your experiences out there. If it well and truly sucks, people should be discouraged from putting their hard earned money into it.
But your notion that this is the last Facebook ad product we'll ever see, barring a Zuckerberg "flash of genius", is a little hard to swallow. Do you really think that's how Facebook develops new ideas? Zuck sits in his office and thinks them up?
No, there are teams and teams of creative people at FB companies who are working every day on different products and solutions that may or may not make their companies money. Smart people. Applied effort. Over time. Trial and error.
Their ad platform might suck today. That is evidence it's a hard problem. But to think that they've exhausted the possibilities already, and that they are just going to burn up the billions of dollars of resources they have is a little naïve.
And don't forget that there are investors with 100s of millions of dollars invested in the idea that FB will find a sustainable advertising model. Investors who are absolutely tracking how much revenue is coming from repeat customers vs. folks coming in to kick the tires. These aren't idiots. They're going to keep pushing until they find a way to make back their money.
Interesting question - particularly with their 'Social Graph' announcement which seems to indicate that they might be edging towards providing web-search. My personal opinion is 'yes', but not until they can come up with a way of actually making the platform work properly.
Facebook is still slow, has a pretty awful UI, and is incredibly error prone - until they realise that this needs to be fixed before they take over the world the platform won't reach anywhere near its potential...
I've used Facebook ads several time to place micro-targeted ads for surveys with incredible, repeatable, success. Not sure what you're talking about with "no one clicks on them." I can get 1,000 people to take a survey on just about anything for dirt cheap with a very small incentive.
apart from discussing EBITDAs, there is something else that should be said about Ponzi schemes. In any grad level macro course one sees that a Ponzi scheme is an asset whose perceived value is higher than its intrinsic value. By the very same argument you can call the US (or the world's) economy a Ponzi scheme. However, the US economy is not one, if it grows at a faster rate than the interest rate -> something can grow as big as it wants if it doesn't too fast compared to some threshold. Same applies to facebook - as long as there is sufficiently high organic user and ad growth, this won't be a problem.
I'd have to agree with Aaron Richards: just because you know someone who couldn't get it to work for their book, doesn't mean the media itself is failing. There is a chance, just a chance, that the product is not appealing enough. and there is more than a fair chance that the person placing the ads is not quite grasping it properly.
I'd have to agree that conversion *can* be very low if you just blitz people anonymously, but if you're prepared to design and plan your campaign properly, you can get repeated success. I have personally got as many success stories as you have fail-stories for the FB ad platform, some of them spending many thousands of dollars, month after month, and shifting budget *away* from search precisely because it was *more* effective when they measured engagement derived from the respective traffic sources.
Micro-targeting, coupled with micro-messaging, has proven to be a very powerful response driver. We have called it "Lots of Little". It is all about the approach, and the continued bleating of failed exercises only serves to validate the fact that is working.
And to say no-one ever clicks on the ads? I have a campaign running right now that regularly gets 1.8% of the users it is targeted at each month clicking on the ads. It is for a financial services product, and is definitely not targeting teenage girls.
Sure, it will never work for everyone, especially anyone that treats it as just another display platform, and it is not appropriate for every product imaginable (I have fail-examples too), but to dismiss it as a Ponzi scheme is surely ridiculous. Drop me a line if you want to know more!
So far, I see that a lot of people have initial bad experiences with Facebook adverts, get disillusioned and leave. However, I also know a lot of people who get amazing results on a regular and continuous basis from Facebook ads - including both large and small businesses. The bad experiences we see generally come about because people try and treat them like paid search ads. They use similar keywords/ targeting, whack in some money and then complain about it not working.
This is analogous to someone going on to Google ads and whacking in some un-optimised keywords and targeting and wondering why it's not working (and it wouldn't - a lot of people fail with Google ads as well). Everyone who's succeeded on Facebook have spent a lot of time experimenting and optimising their ads in terms of targeting and keywords, and also often work hard to build up fan pages to allow them to communicate directly to a userbase.
I have the feeling that there were probably similar posts to this in the early days of Google, with people saying that users just ignored the ads and clicked on the pure search results, and that it was easy to waste your money. Both true, as with Facebook, but also true that if you work at optimising your campaign for the relevant platform you can get the real value out of it. Until you've done that you can't judge.
Google's ad platform is amazing. I can't speak to the first year of operation, but I suspect it was similarly strong. It's the nature of search ads, they just target better. Moreover, anybody inexperienced can start having very effective Google ads pretty quickly. Google ads worked great for me for the same product.
What you say about Facebook fan pages is interesting. The best campaigns on Facebook I've seen are through the social part of Facebook. Get people to tag friends in photos. Create fan pages, groups. Blast out messages to discussion boards. Ads, on the other hand: nothing. And that's where FB makes the bulk of its money.
I think, more likely, the companies you mention are effective with FB marketing, not ads. I once helped this startup market on Facebook. I created a bot that befriended the owners of over 100 large groups. Then, the bot asked them to advertise the website by sending a mass message to the groups. Half the time, the bot successfully asked to become a co-owner of the group. We reached tens of thousands in a week.
However, advertising Facebook Apps through the Facebook Ads works extremely well, as long as you have some time to tinker. We've been running the same ad for a Facebook game since early 2009 with varying budgets ($5/day up to $300/day) and it's proved to be successful, although it does take a lot of tweaking to get the ad cost down when you first start.
Facebook's in fashion at the moment - they'll profit, they'll fade, and someone else will come along. (Although there are thousands who'll disagree with me on that, since Facebook is apparently soon going to be 'bigger than Google'.).
ricburton: I already addressed that at the end of the post.
My experience is almost completely limited to Social Games (purely because that's where the money has been) so I can't comment in too much depth on the pros and cons of advertising corporate apps and pages. My ethos has always been to aim for as much viral growth as possible - we didn't spend anything to gain out first couple of million users - although Facebook, being the annoying bunch of capitalists they are, seem to be making that harder and harder by the day ;)
Rich: Long time no speak... glad things are still going well with HoodEasy - this site looks quality!
Do you think Facebook ads can eventually generalize to more kinds of products (all kinds, like Google ads?), or do you think that they may be a niche for advertising very social products?
But your notion that this is the last Facebook ad product we'll ever see, barring a Zuckerberg "flash of genius", is a little hard to swallow. Do you really think that's how Facebook develops new ideas? Zuck sits in his office and thinks them up?
No, there are teams and teams of creative people at FB companies who are working every day on different products and solutions that may or may not make their companies money. Smart people. Applied effort. Over time. Trial and error.
Their ad platform might suck today. That is evidence it's a hard problem. But to think that they've exhausted the possibilities already, and that they are just going to burn up the billions of dollars of resources they have is a little naïve.
And don't forget that there are investors with 100s of millions of dollars invested in the idea that FB will find a sustainable advertising model. Investors who are absolutely tracking how much revenue is coming from repeat customers vs. folks coming in to kick the tires. These aren't idiots. They're going to keep pushing until they find a way to make back their money.
Facebook is still slow, has a pretty awful UI, and is incredibly error prone - until they realise that this needs to be fixed before they take over the world the platform won't reach anywhere near its potential...
However, the US economy is not one, if it grows at a faster rate than the interest rate -> something can grow as big as it wants if it doesn't too fast compared to some threshold. Same applies to facebook - as long as there is sufficiently high organic user and ad growth, this won't be a problem.
I'd have to agree that conversion *can* be very low if you just blitz people anonymously, but if you're prepared to design and plan your campaign properly, you can get repeated success. I have personally got as many success stories as you have fail-stories for the FB ad platform, some of them spending many thousands of dollars, month after month, and shifting budget *away* from search precisely because it was *more* effective when they measured engagement derived from the respective traffic sources.
Micro-targeting, coupled with micro-messaging, has proven to be a very powerful response driver. We have called it "Lots of Little". It is all about the approach, and the continued bleating of failed exercises only serves to validate the fact that is working.
And to say no-one ever clicks on the ads? I have a campaign running right now that regularly gets 1.8% of the users it is targeted at each month clicking on the ads. It is for a financial services product, and is definitely not targeting teenage girls.
Sure, it will never work for everyone, especially anyone that treats it as just another display platform, and it is not appropriate for every product imaginable (I have fail-examples too), but to dismiss it as a Ponzi scheme is surely ridiculous. Drop me a line if you want to know more!