4 ms·

My suspicion is that Facebook will have to change how online advertising works, or die. Look at Compete data: average stay of 15 minutes * 350 million visits/m

by alex_c 19y ago

My suspicion is that Facebook will have to change how online advertising works, or die. Look at Compete data: average stay of 15 minutes * 350 million visits/month = 87.5 million hours / month in the US. That is coupled with decent demographic data and ability to target. How much would that much attention be worth in TV or newspaper advertising? A lot more than Facebook is currently getting, I suspect. If it can convince major brands that Facebook eyeballs are worth the same as traditional advertising (in effect sell them CPM, not CPC - "Facebook is the new TV"), then Facebook will do quite well. That's a very tough sell for smaller players, but it might not be impossible for Facebook.

run4yourlives 19y ago
That's a good point, but those players will want fb to adopt big msn style flash ads. I'm not sure fb's users will go for that now. I think they're going to have to look at membership or some other direct charge to users, and that's going to really affect that inflated valuation.
aswanson 19y ago
They can convince major brands to advertise there. The problem is, unlike traditional media ads, web based advertisers can quantify how much bang for their buck they are getting (click throughs, etc). Turns out that blanket, weakly-targeted advertising just doesn't perform that well, and companies get explicit feedback from these networks on just how bad the typical ad really is in terms of ROI.
- shawndrost 19y ago
  Brand advertising (most of traditional media ads) isn't measured in click throughs, isn't any easier to measure on the web than elsewhere, and can't be dismissed without evidence.
  - aswanson 19y ago
    It wasn't a dismissal. I would strongly disagree with isn't any easier to measure on the web than elsewhere though. If I place an ad on a site that results in 16 clicks which result in 4 transactions out of an audience of 32, I have a mathematical percentage of the effectiveness of my ad placement. This is possible on any ad placement on the web. If I run the same ad on tv or print, I have nowhere near the ability to accurately attribute any delta in sales activity to that specific ad run at that specific point in time.
    - alex_c 19y ago
      That's not the point of brand advertising though. The point is to hammer the consumer with a brand over and over again until they KNOW that's the brand for them and go out and seek it on their own. Think Coke, Ford, etc. Facebook has terrible click-through rates, so if they're going to make money from advertising, it'll probably be this way.
      - aswanson 19y ago
        That was not the point being argued here. He stated that web ads cannot be measured any more efficiently than any other form of advertising, and I provided evidence on how they can. You're probably right about that being the only form of ad they can monetize, though. The question then becomes when do companies spend as much in that space as they do on tv, if ever?
        nostrademons 19y ago
        That doesn't measure what brand advertising wants to measure, though. If one ad gets 16 clickthroughs that result in 4 transactions, that ad is inferior to one that gets 0 clickthroughs but results in 8 sales when customers actually go to the store. Brand advertising works because most consumers rely on a recognition heuristic when faced with the dozens of products in a store. They'll buy products they recognize, even if they have no personal experience with the product. You don't go out and buy an All-New Mercedes Benz immediately because you saw it on TV - but when it comes time to buy a car, you're far more likely to buy it because of all the associations that its name & image bring up. You can't measure this with any existing web metrics - it may be years before customers actually go out and make a purchase.
  - marcus 19y ago
    Use geotargeting to target a specific state or small country pour massive amounts of money relatively to the small target zone and monitor changes in consuming habits, brand reach and recognition etc. I'm not sure most consumer product companies know how to do it properly. Also some brand advertising isn't always about gaining ground, its about not losing ground to competing brands that do advertise, if Pepsi is pushing a huge TV campaign, Coke feels the pressure to play catch up.
- daniel-cussen 19y ago
  True. Advertisers sometimes say half the money they spend on advertising is wasted, but they don't know which half that is. Internet spending might be smaller because advertisers can figure out which half of ad spending they are wasting.
trevelyan 19y ago
Our conversion rates from Facebook were low compared to other methods like AdSense. That might be hurting them as well.

by alex_c 19y ago

run4yourlives 19y ago

That's a good point, but those players will want fb to adopt big msn style flash ads. I'm not sure fb's users will go for that now. I think they're going to have to look at membership or some other direct charge to users, and that's going to really affect that inflated valuation.

aswanson 19y ago

They can convince major brands to advertise there. The problem is, unlike traditional media ads, web based advertisers can quantify how much bang for their buck they are getting (click throughs, etc). Turns out that blanket, weakly-targeted advertising just doesn't perform that well, and companies get explicit feedback from these networks on just how bad the typical ad really is in terms of ROI.

shawndrost 19y ago
Brand advertising (most of traditional media ads) isn't measured in click throughs, isn't any easier to measure on the web than elsewhere, and can't be dismissed without evidence.
- aswanson 19y ago
  It wasn't a dismissal. I would strongly disagree with isn't any easier to measure on the web than elsewhere though. If I place an ad on a site that results in 16 clicks which result in 4 transactions out of an audience of 32, I have a mathematical percentage of the effectiveness of my ad placement. This is possible on any ad placement on the web. If I run the same ad on tv or print, I have nowhere near the ability to accurately attribute any delta in sales activity to that specific ad run at that specific point in time.
  - alex_c 19y ago
    That's not the point of brand advertising though. The point is to hammer the consumer with a brand over and over again until they KNOW that's the brand for them and go out and seek it on their own. Think Coke, Ford, etc. Facebook has terrible click-through rates, so if they're going to make money from advertising, it'll probably be this way.
    - aswanson 19y ago
      That was not the point being argued here. He stated that web ads cannot be measured any more efficiently than any other form of advertising, and I provided evidence on how they can. You're probably right about that being the only form of ad they can monetize, though. The question then becomes when do companies spend as much in that space as they do on tv, if ever?
      - nostrademons 19y ago
        That doesn't measure what brand advertising wants to measure, though. If one ad gets 16 clickthroughs that result in 4 transactions, that ad is inferior to one that gets 0 clickthroughs but results in 8 sales when customers actually go to the store. Brand advertising works because most consumers rely on a recognition heuristic when faced with the dozens of products in a store. They'll buy products they recognize, even if they have no personal experience with the product. You don't go out and buy an All-New Mercedes Benz immediately because you saw it on TV - but when it comes time to buy a car, you're far more likely to buy it because of all the associations that its name & image bring up. You can't measure this with any existing web metrics - it may be years before customers actually go out and make a purchase.
- marcus 19y ago
  Use geotargeting to target a specific state or small country pour massive amounts of money relatively to the small target zone and monitor changes in consuming habits, brand reach and recognition etc. I'm not sure most consumer product companies know how to do it properly. Also some brand advertising isn't always about gaining ground, its about not losing ground to competing brands that do advertise, if Pepsi is pushing a huge TV campaign, Coke feels the pressure to play catch up.
daniel-cussen 19y ago
True. Advertisers sometimes say half the money they spend on advertising is wasted, but they don't know which half that is. Internet spending might be smaller because advertisers can figure out which half of ad spending they are wasting.

trevelyan 19y ago

Our conversion rates from Facebook were low compared to other methods like AdSense. That might be hurting them as well.