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How Facebook Can Fix Their Ads

Started by Nick O'Neill · 10 months ago

There has been a bunch of buzz today about how Facebook advertising produces poor results. Valleywag has also confirmed that the average click through rate of Facebook ads is 0.04%. This is horrendous. A few years back I tested out a $15 flier to see how effective the ad would be and [...%5 ... Continue reading »

5 comments

Colin Carmichael
1 year ago

What astonishes me about the advertising on Facebook is how poorly targeted it is (as you mention). The ads I consistently see on Facebook are national account CPM ads for things like the University of Phoenix and Classmates.com. Neither of which make any sense to me. From what Facebook knows about me (age & education), the ad system should realize that an ad for an online university is not likely to convert. The ads for Classmates.com are a complete mystery to me... why would I go there if I've already drank from the Facebook Kool-Aid?

If Facebook wanted to make some serious money with the display advertising, a) the flyers would go away, replaced by a paid distribution feature for the free 'Marketplace' and b) the CPM advertising system needs to get much smarter about who I am and what I'm likely to be interested in based on the wealth of information FB already knows about me. This isn't rocket science, is it?

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N.Cauldwell
1 year ago

Smells like a long-term strategy to me.

Zuckerberg wants people to stay on his site. He's not going to build up the social OS if his users keep trailing off down highly relevant advertising channels. And it's not like he doesn't have the development expertise to implement more relevant advertising.

He knows what he's doing - and it's an excellent strategy. Who cares if he isn't making the revenue now - look at the growth rate. It's all one big teaser for the big three.

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Jordan
1 year ago

To get from 18 to 30, you have to consider Facebook has other income streams than just display ads.

- Sponsored groups - Facebook has been known to ask in the range of $100,000k/month for these, but I don't believe they sold many.
- News feed ads. No idea what they charge for this, but this has to be a premium on their CPM for ads.
- Gifts - though this is likely declining with the introduction of F8 and Free Gifts.

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Minger
1 year ago

I agree with Caldwell... People are making too much of current snapshots -- the poor performance of FB's ads or supposed dominance of MySpace according to their PR. They can get the monetization right later, as long as operational cash flow is positive and covers capital programs. Take a snapshot six months from now.

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