Is Facebook losing its advertising power?

Is Facebook Losing its Advertising Power?

If you’re in marketing and advertising you might have seen the future on this one. Just as MySpace got too cluttered with spam and widgets, Facebook is now battling its positioning of Ad Space. When your business platform is about providing a social service of communication between approved friends you’re walking a tight rope between ads to pay the bills and ads that are relevant to the user.

Every user knows that Facebook holds enormous amounts of personal data about you, and that they use that data to present you with relevant advertising. But has the world finally come full circle to the point where we are desensitized to them and, as such, is Facebook losing its advertising power?

Lets take a look at the recent news regarding Facebook and Advertising:

  1. GM Pulls $10 Million Facebook Ad Campaign
  2. WashingtonPost: 57 percent of users said that they never click on ads or Facebook’s sponsored content
  3. Venturebeat: 44 percent would never click on display ads, only 3 percent of respondents said they “regularly” clicked a sponsored ad
  4. New Orleans Ad Horror Story – $10 return on a $240 investment
  5. We have our own odd May 2012 Data to add from the Tampa Area

Looking at the recent news there are negative views from many different sources. One extremely large American company pulling out of Facebook, two independent studies where people are split 50/50 on where they click ads on Facebook, and one average small American Company using a modest budget to try Facebook.

Now lets look at our May 2012 Facebook Campaign for a Tampa Business:

The Target:

Tampa Residents within 50 Miles that are 30 or older. 1,165,180 Facebook users.

The Actual Reach:

We started with a modest budget because after all this is Facebook not Google.

Date Range Bid Price Reach
5/3 – 5/9 $0.50 12,541
5/9 – 5/12 $1.00 24,843
5/12 – 5/16 $3.00 76,118

So lets break it down $0.50 let us reach just a hair over 1% of our targeted reach. That is pretty awful, and to make it worse, when you look at the graph daily, as we did, your frequency is the only number going up; so we advertised to that same group of 12,000 people multiple times.

When we doubled our bid we doubled our reach, and when we tripled that bid it tripled the reach again. You do the math how much it would take to reach our targeted 1 Million Users in Tampa.

The Proof is in the Graph:

From Facebook’s own graph you can see each time we upped the bid we had clicks the next day or second day and then dropped. Why? Going back to the frequency, we hit the reach they set for us and we were just advertising to the same people we hit yesterday.

The PPC State of Mind

We could compare this bid to say a bid on Google or Bing but to do that you have to factor in the PPC State of Mind (submit trademark later). Search engines are for people “searching” for something, Facebook is for people “socializing” , 2 very different states of mind. Now you can make up your own mind on whether a Facebook Ad Campaign is worth the money.

Sources:

1. socialmediatoday.com 2. Washingtonpost.com 3. Venturebeat.com 4. NPR.org

Jon Tsourakis

Written by:

Jon Tsourakis followed his dream of opening an independent digital marketing agency. As CEO of Revital Agency, he uses logic and intuition to help companies grow their business online.

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