Imagine there was a marketing medium that reached nearly one billion people (more than three times the entire population of the United States of America) and advertising on that medium was so generally ineffective that it was judged to be not even worth the effort by some of the largest advertisers on the planet. Impossible? That is exactly what is happening with Facebook, which has seen humongous corporations such as General Motors pull out completely since the effectiveness of their ads was being reassessed. This phenomenon points to a long-standing debate over social media: Sure there are countless millions of people on the various networks… but are they actually buying anything?
88% of Marketers Shun Facebook Ads
A recent study by 33across showed that a growing majority of advertising professionals are shying away from Facebook advertising. Fully 88% of the 2000 top ad managers surveyed stated that they would avoid Facebook advertising entirely. This does not in any way detract from the necessity of having a thriving brand page, but the actual insertion of paid Facebook ads on the social network may be providing the lowest tangible results in the history of advertising. When there are a billion sets of eyeballs being exposed to those ads and they’re not drawing flies to the checkout, it’s obvious that something is severely broken in the Facebook advertising model. As in the case of all social media, advertisers are discovering that engaging customers comes down to chatting with them on a one on one basis, not just blasting out an ad and watching the cash register ring.
Facebook Mobile Ads: No Meaningful Revenue
According to the company’s own IPO filings, they do “not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven.” At least in the mobile arena, Facebook is acknowledging that they are starving in a delicatessen. Hundreds of millions of people are accessing Facebook through mobiles, and the amount of response to the advertising served up along with their social media fare is tiny. You’re left to wonder in 20/20 hindsight why any sane human being would ever have bought Facebook shares in the first place, but that’s a discussion for another place and another time.
Slap in the Face to New EU Stealth Tracking Laws
Facebook is not placidly acknowledging that they will forever apply copious amounts of suction in the ad game, so they’re preparing to launch a barrage of new advertising offerings that they hope and pray will reverse their current freefall.
Sponsored Stories will now be available to be mobile-only if so desired, and Facebook Exchange will soon make its debut. This strategy is essentially a third party site tracking to serve ads on Facebook, which is such a blatant slap in the face to the new legislation in the European Union and many other countries that explicitly forbid such stealth tracking that you wonder whether Mr. Zuckerberg actually reads anything online other than his own glowing bios. Legalities are also affecting the one part of the company’s advertising strategy that has achieved a modicum of success: After a court ruling in California that cost them a $10 million penalty, Facebook will now have to allow users to opt completely out of Sponsored Stories. That does not augur well for Facebook as a recent report from TBG Digital shows that the traditional ads are being almost completely ignored and that Sponsored Stories was at least providing some response. Will the last even remotely effective advertising offering to leave the social network please turn out the light?
Facebook continues to be an advertiser’s wasteland as not only are the ads currently so ineffective as to be laughable, but the predominance of these ads being displayed to their users has caused a precipitous drop in the measurable level of user engagement. In this year’s American Customer Satisfaction Index, Facebook is down 8% from last year.