Facebook Ads Don't Rock

(If you like this post, come check out my new blog, Marketing With Meaning, where I am trying to literally "write the book" on a new way to do business by creating marketing that people choose to engage with, marketing that itself improves people's lives)

Elvis Presley once sang, “Before you abuse, criticize and accuse…walk a mile in my shoes.” Last week I walked a mile in the shoes of a Facebook advertiser and can now officially criticize Facebook as an option for marketers who seek the Holy Grail of digital marketing. The purpose of this blog is to drive improvement through challenge; and I hope that by challenging the hype I can help improve the future of digital marketing.

Facebook is definitely on a roll. The company was recently valued at $15 billion in an investment by Microsoft, it is gaining traffic, stealing employees from Google, and just took up its revenue forecast and staffing levels.  Forrester claimed the sheer mass of the company's page view inventory would make it a winner, especially with small businesses.

All of this money and attention is a gamble that the millions of daily page views will be populated by paying advertisers. The hope is that, like Google Adwords, Facebook members will pay more attention to ads that are closely linked to their personal interests.  For example, the manager of a punk rock band who is getting ready for a show in Detroit can create an ad targeted to the people near Detroit who say they like punk.  These 40 people (true number) should look at this ad as added value.

In my day job as Chief Marketing Strategist at Bridge Worldwide, my role is to help clients navigate from traditional to digital marketing. That means I have some personal incentive to jump on the bandwagon of anything digital. I am also a frequent Facebook user, so I have some personal interest in seeing the service succeed. But my experience in running a Facebook campaign leaves me unable to recommend the service—and makes me fear that a new bubble might be forming. Let me share my experience.

My Experiment:

Two weeks ago, my company ran a 24-Hour Rock-a-Thon event to benefit the Cincinnati Fine Arts Fund. It was basically an excuse to play Rock Band and Guitar Hero all night long (you can see the entire story here). A few days before the event I decided to invite my network of Facebook friends to either join in person or watch us on a live feed online. After setting up the invitation, Facebook asked if I would like to advertise the event. I clicked “yes” and decided to run a little experiment.

I really enjoyed the Ad Manager interface. I was able to quickly create an ad, play with different targeting audiences, set a budget, and monitor progress. My main goal was to drive traffic to our event via an ad that targeted people over 18 who say they are fans of Guitar Hero. There are a little over 42,000 of these people within the entire Facebook population of 24 million. You can see my ad at the top of this page.

My hypothesis was that this highly-targeted ad would drive a good deal of traffic (clicks). After all, Guitar Hero fans are really into their craft (yes, I am one) and it seemed to me that getting a targeted ad would drive much higher clicks than the industry average of around .1%. I ran three test legs:

• Targeted CPM (to the 42,000 Guitar Hero fans)
• Non-Targeted CPM (to all 24 million-something U.S. Facebook users)
• Non-Targeted CPC (same as above, but pay-per-click)

Results:
You can see for yourself what I encountered after a ten day campaign...

So, with a highly-relevant ad served to a highly-targeted audience, only 12 of the 71,023 ad impressions led to an action. That’s a .02% click-rate.  As an advertiser I was completely under-whelmed. Sure, I only paid $22, but I paid almost $2 per visit. I achieved no scale, no efficiency, and no real results.

But it gets more interesting, my completely non-targeted ad earned 23 visits among 149,081 impressions. That’s the exact same .02%.  Extreme targeting made zero difference. 

What does this mean?

I believe this means Facebook advertising is a failure; and others are beginning to agree.  A few other advertisers are sharing their poor experiences. Take Venture Capitalist, Fred Wilson, and Gawker’s Nick Denton, who also find Facebook ads to be worthless. Both of these guys invest in ad-supported net companies. Throw in Google’s announcement that they have not met expectations in MySpace or YouTube ads. Another buddy of mine in an unnamed Fortune 100 company reported similar click results for a huge, recognized brand.  MySpace is even running a half-off sale to try and move unused ad inventory.

The big moose we need to put on the table is that people have learned to ignore information on the web that is irrelevant to their task at hand. Google Adwords work because people are actively searching, and the ad units sometimes add value. When updating our profiles on Facebook or watching videos on YouTube, we simply have no reason to give ads any attention.  That's why at least one fellow blogger called Facebook "the worst traffic on the net."

Some will say that “clicks are the wrong way to measure internet media” and that studies show people exposed to banner ads buy more product, just like they buy more product when they are exposed to print or television ads. Maybe. But digital marketing and extreme targeting is supposed to offer more than a different way to hit an eyeball.  That's not worthy of a revolution.  Rather, we should expect digital marketing to build deeper engagement and drive action.

I wish more advertisers would come out and share their (poor) results, and more investors/analysts would challenge these valuations. Perhaps user experience legend Jacob Nielsen nailed the issue in Advertising Age in March:

"There’s a huge financial incentive to say advertising works. To say that it doesn’t work—I don’t get anything out of that."

I believe we digital believers do have a huge incentive to not waste dollars either as advertisers or investors. If we fail to closely analyze digital alternatives we might blow ourselves another bubble and hype ourselves back to the unemployment line.

Instead, we need to challenge the impression-based advertising model and create marketing that consumers actually want to engage with. Now that’s a marketing model worth the hype, and certainly an improvement for both marketers and their consumers.

(UPDATE: George Colony at Forrester has some great counterpoints to the belief that advertising will continue to drive business models.  Jon Fine at BusinessWeek reports more on how making money on YouTube will take longer than expected.  And Chris Anderson at The Long Tail reports that broad interest targeting is working better on focused networks through Ning.)

(MORE UPDATES: Paul Soldera takes my challenge to do better and while he improves his click rate, he agrees that Facebook is in trouble.  AND in this week's Advertising Age my new company-related blog, Marketing with Meaning was featured and included a piece on this Facebook experiment.  Neat stuff.)

(If you like this post, come check out my new blog, Marketing With Meaning, where I am trying to literally "write the book" on a new way to do business by creating marketing that people choose to engage with, marketing that itself improves people's lives)

Comments

[Bob]

What's your results, Jason? C'mon, everyone else is sharing here. "Best type" means nothing unless you're sharing data.

[Manuel]

Hi,
I draw the same conclusions with Ads on Facebook and Google. Almost the same advertisement (OK, on Facebook you can upload a photo:-) had a CTR of 7,2% with Adwords and only a CTR of 0,06% on Facebook.

Manuel

[Tom]

I'm not really upset by the low CTR I get on Facebook ads. I realize that the audience is otherwise engaged and may not be interested in shopping for my particular product while they are on FB. However, the fact that many FB users have clicked on our ads and our revenue is up the first week of our test shows that the ads are working. My measure of success is not CTR but rather ROI. At this point in the experiment, we are on the plus side of that equation.

[donnella's closet]

Thanks for the article.
This was extremely helpful as a small business owner.

Especially when so many free-lance "marketing pros" are offering their services to "optimize" your site for traffic.

[patrick]

hi Bob,

Thanks for the insight. Although you make good points, in statistical terms you're only basing your results on your single facebook ad experience. Maybe some products/services are more successful than others?

I'm trying to convince my boss to give facebook ads a try for our radio show. I'm expecting good results.. but all the reviews so far have concluded that their experience has been satisfactory or less.

Thanks again,

[Steve Barber]

As a Facebook user, I am appalled by the number of deliberately fraudulent ads that the company runs, especially the ones advertising "make money typing for Google". Facebook has so destroyed their credibility that I believe most of us expect ALL Facebook ads to be fraudulent. I've set up an informal network (outside of Facebook) to discourage these fraudulent ads by having people "click and close" on them repeatedly. Hopefully driving up the fraud artists' costs will cause these maggots to leave. I'd suggest that legitimate advertisers pressure Facebook to refuse obviously fraudulent and misleading ads; otherwise we will, as a group, continue to ignore them.

[Jim Lee]

I don't think it's a case of Facebook advertising being worthless...it's a case of you over estimating the popularity and draw of guitar hero and rockband.

[Alisa]

Well I am using the 100$ coupons Facebook is giving away, but the CTR is unbelievable low...At least the conversion is allright, but overall I will not advertise after the coupon ist finished.

[Bob Gilbreath]

Thanks for the continued points and discussion to all.

Alisa, thanks for sharing your story.

Steve, you're hitting a key point - since no real advertisers see the benefit in Facebook ads, the only ones who are willing to waste their time are these cheesy bottom-of-the-barrel advertisers. Sadly for Facebook's revenue hopes, these poor ads only reinforce users' habit to completely ignore the ads they see when they log on.

Jim, the point is that I was targeting people who took the time to raise their hand and say that they are very interested in Guitar Hero and Rock Band, so you're point doesn't make sense.

[Facebook Social Ads]

I've had some limited success with Facebook Social Ads.

It's important to remember that people on Facebook are not there to shop or to research commercial products. I've had some limited success with my experiments. I'm currently trialling Myspace MyAds and will publish my results shortly.

[Todd]

Just to add some stats as I did a test today. 170k impressions and .03% CTR. i beat the poster. But going to Google analytics as to what they did when they got to the site. Aver time was 50 seconds up from 43 on mmy normal traffic. 100% new people which was nice. Bounce rate 87 which is higher then my normal 75%. But .03 hardly makes it worth our time to pursue as if we increase it 300% so what?

[Bob Gilbreath]

Todd, thanks so much for sharing your information. I'm glad to see so many people compare notes in this space.

You've nailed a key issue that many people have missed here: even at significantly better click rates the numbers are so small that it's not worth the effort.

[AbsintheDrinker]

Great insights. As many have stated, the ironic thing here is that Facebook is actually a fantastic marketing platform for those who know how to best exploit it. (Not necessarily thru "ads")

Having people who are interested in what you are saying/selling, and having a platform to invite, and share events can be more valuable than the actual advertising itself.

[Marv]

This doesn't seem to be close to a valid test. Did you run the same ads on other networks? Did you run targeted CPC? I've experienced CTR as high as .36% on facebook through doing many tests for ads. I believe your ads need work.

[Bob Gilbreath]

Marv, take a step back and look at your comment with a fresh mind. Try reading it this way, "I've had as many as 36 out of 10,000 people click my ad." That's what .36% CTR is: still such a small number, Marv, that even if I was an expert ad-maker like you, it's essentially meaningless. That's the whole point of this post!

Brands rely on getting 1 million people or more to do something. By your CTR rate, I need 278 MILLION impressions to get 1 million website visits. And of course, not every website visit leads to a sale, so I actually need a lot more than 278 MILLION impressions.

[Dominik]

Low CTR is irrelevant for the advertiser, who only cares about cost per click.
Facebook makes up for the low CTR by massive user base.

[Bob Gilbreath]

Wrong, Dominik.

Marketers only care about selling product/service, actually.

A massive user base is irrelevant for the advertiser if it doesn't translate into sales.

Low CTR suggests that no one is paying attention to the advertising. If an ad is placed on billions of screens but no one sees it, the ad it not successful.

[Brian]

Whoa. 12 clicks is AWESOME! I think you're in the wrong business! lol I pay 500 bucks to have 10 people live transferred to me. For that same 500 bucks on facebook (bidding is at 67 cents right now on the high end) I'm looking at, what like 900 people coming to my site? People don't click on ADS because ads suck it. You have to brand yourself and who YOU are. That's what people want to invest time in -- especially on social networking sites. All of my branding goes to married women in their 30s. I've had no problems and have no complaints with facebook ads. Thay ARE worth all the hype.

[Alessandro]

Hello,
I read your article and I want to share my personal experience with Facebook Ads. I started a campaign a few days ago to promote my website about sugar gliders. Well, yesterday I spent $5,01 and I got 410 click to my website (232.824 impressions, CTR 0,17%). For me it's not so bad! The only problem is that people on Facebook get used to your ad and after two or three days the CTR% goes down.
Ciao! Alessandro, www.petsugargliders.eu

[Rohan]

You have based your analysis on 2 small a sample size.

The similar CTR could have been coincidence.

I would think you cant judge the effectiveness of Facebook over 12 clicks.

Facebook has been doing very very well for my clients.

Agreed its not as eed based as Google but it's cheap traffic.

[A]

Hey,

I realise this is an old article but here goes anyway;

You had waaay to much text in your ad - too hard to read. I have recently started FB ads and have found that a tiny amount of text and getting straight to the point have helped go from poor results like 0.03% CTR to 0.33% CTR.

I can suggest maybe should have done "Non-Stop Rock" as title, "Bridge Worldwide playing Guitar Hero all night. Watch now." and a more visually attracting / pleasing image.

-A

[Band]

I think the targeting does work, but it is not hugely effective. I recently did some ads for my band. With a non-specific ad aimed at the general population in the UK, i got a 0.021% CTR. I then made a new ad with targeted at people who said they liked "indie" music and made the ad more specific to these users. This was more effective at around 0.05-0.06% CTR. Still not great, but the conversion of clicks to fans was good.

[Nathan Taber]

I disagree with your conclusions. The first major flaw in your ad was that the photo says exactly what the same thing as your title. More so, in FB ads, it seems that the photo is what people look at first. So boring photo, little result.

For promoting my book and website http://www.survivetheib.com, I have a few ads running. With an audience of about 10,000 I have a CTR of .498%

Additionally, by becoming a "fan" of my product, I have a "string" on my future customers that lets me directly contact them and pull them into my product and promotions whenever I want.
You should try your experiment again before dismissing Facebook.

Ever heard of affiliate programs? These are forms of Internet advertising that rewards the affiliates for driving traffic to the advertiser or for other transactions. The advertiser pays the affiliate to place a link on their website, and the affiliate sends traffic to the advertiser in return. Simply put, it’ s about paying commissions to people[...]

[Partyforever]

There is some truth here. My Facebook visitors doesn't spend as much time on my website as my Adwords visitors. Same ad. Same areas. Just the pic is added. I do like facebook more than adwords - which is a pain in the a - quality score and that doesn't cater for small advertisers that want a really low low cost PPC price - say 0.01 cents per click.