(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)