Last week, when we released data revealing Facebook’s shortcomings as an advertising platform, we didn’t know how timely it would be. Then GM announced it was pulling its $10 million Facebook campaign, claiming the ads weren’t working. Coming right before the IPO, the news was a shock – but we were able to step in with an explanation for GM’s move. For example, despite its incredible reach, Facebook delivers lackluster results – the average Facebook ad has a click-through rate (CTR) of about 0.05%, which is half the average CTR for banner ads across the Internet, and just 1/10 as high as the average ad on the Google Display Network.
Because our research provided some answers, it led to some great opportunities to speak about the findings in the media. In the course of a few days, our intrepid CEO Ralph Folz appeared on Fox Business News and shared his expertise on both NPR and BBC radio. You can watch Ralph talking to Dennis Kneale here:
And here’s a clip where Dennis Kneale talks a little more about GM’s decision and Ralph’s take on why Facebook advertising as a long way to go:
Here’s a bit of their conversation (I'm not sure of the women's names, unfortunately):
Anchor 1: I thought this was one of the most interesting stories of the day because it goes against everything else we’re hearing on every network today about Facebook. What was behind GM’s thinking?
Dennis: So GM comes out and says, you know what, we’ve got our Facebook page, and that’s free, and we’ve got millions of fans we talk to, but why should we be spending money – and extra $10 million a year – on Facebook ads when we’ve decided they don’t sell cars? Why don’t we instead just work on Facebook as a presence? And someday you wonder whether Facebook should start charging companies to put those friendly pages up as part of a marketing expense. But then I talked to Ford and the global head of social media for Ford, Scott Monty, comes out and pointed out that click-through rates – you know a search ad, you click on 1 in every 40 ads. On Facebook, you click on 1 in every 2,000 ads, and that’s probably just a mistake that someone clicked on that one! So what do you do about that? And yet the Ford guy said that’s an idiotic way to look at it. He said it’s such a great environment, and you’re able to talk to people about their interests, and therefore they’re going to be increasing their ad spending. Over 20% of Ford’s global ad budget goes online.
Anchor 2: This just opens the floodgates, I think, for other companies to follow GM’s lead, though.
Dennis: Yeah you know what, the Journal has been on this, and they ran a story a month or so ago saying hey, big advertisers are starting to question this value. Now here’s the thing, Facebook says, We’re display not search. You know when you search for ballet slippers, and you click, and then an ad shows up for ballet slippers, on your way to buy it, that’s perfect. On Facebook it’s like, Oh, I see you’ve been to the ballet recently and so we’ll run an ad for ballet slippers. It’s less direct.
Anchor 1: What made GM think that it wasn’t working, though? What made them come to the conclusion that it’s not selling cars?
Dennis: I mean, here’s the thing: Online, more than ever before in the history of advertising, you can metric it. You know if they clicked on the ad. If they then went to a site and they then bought it, you can track that entire stream. You know, when you run a TV ad, you have no idea who saw it and whether anyone bought based on it. And clearly they’ve been watching the data and decided it’s not paying off.
Anchor 2: I can’t even see those ads on my mobile.
Dennis: This is the thing Facebook would have to do though, they have to become a good advertising service company. You know when Carol Bartz when in to run Yahoo, she told me they didn’t even have a SWAT team to serve the 10 biggest advertisers responsible for the vast majority of their advertising. They were a tech company, not an ad company. Facebook has to get an infrastructure in there to take great care of advertisers and to give them a good platform. We had an expert on who graded them, and he gave them a D+ for their advertising platform, for how hard it is to use, for how ineffective it is.
Ralph also made an “appearance” on BBC radio show The World Today, speaking with Linda Duffin:
Linda: Facebook, Mr. Folz says, trails behind because up to now it really hasn’t tried very hard.
Ralph: If I’m on Google, and I advertise today, I can choose a square banner, I can choose a long rectangular banner, I could put a video in front of a YouTube video, I could do mobile advertising, I can even do in-video game advertising. In Facebook I have one or two choices. I can have a simple display, a simple image and one line of text. It’s just not the engaging options. You’ve heard about General Motors. General Motors wants to sell cars, they’re sexy, it’s an emotional purchase – it’s hard to do that in very basic ad types.
Linda: Yet Ford is, on the other hand, actually spending more with Facebook. So it must think there’s a future in it.
Ralph: I think there’s a future in it. I find it interesting. I fall more on the side of GM than I do Ford. I think it’s great to experiment with these new media types and these new ad networks, but if I had $10 million I was going to spend, and I needed to drive people into my showrooms, I would probably use Google rather than Facebook today.
Click here to download an audio clip (MP3) of the show. Ralph was also on The Takeaway last week speaking on the same topic.
More Web Marketing Highlights
Via Kerry Jones on the Blueglass blog, here are 13 Ways to Make Idea Generation a Daily Habit, including reading blogs outside your niche (I’m a big proponent of leaving your filter bubble!) and scheduling uninterrupted time.
If that’s enough ideas for you, Ken Lyons describes how to mine your analytics and Q&A/how-to sites for common questions you can turn into content.
Brad Geddes names 8 Features Advertisers Really Need From Google AdWords, such as true ad rotation and extensions at the ad group level.
Via Angela Stringfellow at Unbounce, smart ways to market your startup, including word of mouth, partnerships, and a little pro bono work.
Rand Fishkin reminds us that correlation is not causation – even in marketing!
And a couple non-webby links for your fun and betterment:
Comic artist and graphic novel author Greg Rucka is often asked why he writes such strong female characters. He answers that question for io9, both in brief (“I don't. I write characters. Some of those characters are women”) and at length.
And, as long as I’m showing off my Rolodex, here’s Bryan Safi, “media personality” and old friend from my hometown, on why it’s so annoying when celebrities pretend they were ugly children (audio).
Also, we took the effort to compare the difference between Google and Facebook beyond ads.
Have a good weekend, folks.