The Business of Advertising on Facebook

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The Business of Advertising on Facebook

Added on: 05.16.12, by Jeremy Girard

With Facebook’s IPO looming, GM’s recent decision to pull their ads off of the social network because they “have had little impact on consumers” is generating quite a bit of buzz. When the third largest advertiser in the US decides to drop their ads from your site, people take notice. What I find surprising, however, is that their statement of the ineffectiveness of Facebook ads seems to have come as a surprise to many people.

I visit Facebook pretty much every day – most days I am on there multiple times. Despite the amount of time I spend on the social networking site, I can probably count on one hand the number of times I have clicked on an ad – and in those instances that I did click on one, it was either by accident or because of curiosity, not because I needed the product or service that the advertising company offered. I have never become a “customer” of any of the sites I visited. I’ve never signed up for an account, made a purchase, shared an article, or done anything other than look at the linked website for a few moments before then returning to Facebook to do what I was there for in the first place, connecting with friends or family – not businesses.

Is It Just Me?

Am I the in the minority here?  I have never been in need of a service and thought, “let me check for that on Facebook!” When I am on Facebook, I barely even notice the ads because I have an acute case of “banner blindness.” I spend enough time on the Web to have learned how to tune out anything that looks like an ad and not the actual content I am looking for. Again, am I alone here? Do people actually visit Facebook looking for services or products or do they allow their time connecting with their friends be interrupted because they saw an ad that they just had to click on?

Pretty much everyone I know has a Facebook account, which is why the site is so appealing to advertisers, but in talking to my friends, family, coworkers, students, and others, I have found that I am not alone. I haven’t spoken to anyone that has told me that they do, indeed, visit Facebook specifically looking for products or services. No one has said they routinely click on ads and actually become customers of the companies those ads are promoting.

It’s nice to know it’s not just me.

Lots of People, Lots of Clicks

In an article I recently read about GM’s advertising decision, I also saw some other companies that did not share the automaker’s opinion of the value of advertising on the social networking site. Fellow automaker, Subaru, had their spokeman, Michael McHale, quoted in the article saying “Advertising plus content equal more clicks to our website, which we like.”

I wonder if those are quality clicks? Sure, if you can spend buckets of money on ads on the social network, such as the reported $10 million that GM was spending, you will undoubtedly get some clicks to your website – but what are they worth?  How many of those clicks were accidental? How many of those visitors bounced almost immediately? Most importantly, how many of them actually converted to an actual customer?

What if you aren’t a company with the marketing budget of a GM or Subaru and can’t buy the quantity of ads that they can. Without the level of saturation their spending gives these larger advertisers, smaller companies with smaller budgets will of course get a smaller number of clicks – but again, are we really only after “clicks?” Clicks can’t buy your products or services, they can’t tell others about your company or engage with your organization. What you are after is not “clicks”, it is connections with people, and you get them through conversations.

Conversations and Customers

The question comes back to how you, and others, use Facebook. Are you there to connect with businesses? No – or I should say, at least not through advertising.

There IS a place for businesses and organizations on Facebook, of course, but I don’t think it has to be through ads. GM has stated that while they are removing their ads, they are not removing their Facebook pages. This makes sense to me. Instead of trying to hit users with advertisements, they will instead enter into conversations and make connections – a practice I recommend to companies and organizations all the time.

Again, think about how you as a person, not a business, use Facebook. You connect with people you know or have common interests with. You share things with these friends and engage in conversations. If you want your business to make connections on Facebook, maybe you should try thinking less like a company buying ads and more like a friend sharing information and conversations.

What Works For You

Like everything in business and on the Web, there is no “one size fits all solution.” I am sure that advertising on the social network has worked from some companies and I’ve seen it be very effective for some non-profit organizations looking to mobilize support for their cause. Nutella, for instance, was very successful with a recent campaign they did on the site. For them, it makes sense to keep that going because it’s working, but it’s not the right solution for everyone. Others are finding creative ways to use Facebook’s new timeline to set themselves apart and make their pages memorable.

I applaud the fact that GM is evaluating their approach to ads on Facebook. They certainly could afford to just keep those ads going, but by looking at them with a critical eye and deciding that the value is not there, I hope others will do the same and evaluate their own strategies. Just like many companies jumped onto the social networking scene because their peers were doing so, maybe this approach to start speaking WITH people with engaging conversations instead of AT them with advertisements, will catch on too.

You can also see another article we have written on a similar topics about Facebook conversations or contact us if you’d like to speak more about how your business or organization can better use Facebook and other social networks to make connections with your audience.

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