5 ms·
I don't see the evidence here as being compelling at all. Even if you could prove that Facebook is filling the gaps between new users and churned users by crea
by ssharp 7y ago
I don't see the evidence here as being compelling at all.
Even if you could prove that Facebook is filling the gaps between new users and churned users by creating fake accounts, you also have to draw a line between those fake accounts and the company's bottom line.
Fake accounts don't buy products, so if advertisers are making decisions off of CAC, numbers potentially inflated by fake accounts (reach, clicks, engagement, etc.) are secondary.
Facebook's ad power comes from their egregious data collection and lack of privacy concerns. The more they know about you, the more relevant your ads will be and the more likely someone seeing your ad will be to buy. And if advertisers can draw a line that says "if I spend $50 on Facebook ads, I'll increase my bottom-line line $100", they'll spend money until it's no longer profitable to do so.
That said, it's not like all Facebook advertisers are acting rationally in that manner. I don't know what % of Facebook revenue to coming from unsophisticated advertisers, so it's possible that they could be making a lot of money from people focusing on fuzzy metrics like reach.
- blazespin 7y agoI doubt it. Such naive advertisers don't make much profit and can't afford to really contribute to Facebook's bottom line.
- philistine 7y agoSo the whole aspect of Zuck lying and the stock price being apparently propped up by its fake growth is irrelevant?
- astrodust 7y agoFacebook advertising is really trash. If you spend $50 on Facebook ads you'll increase your bottom line by -$50.
- a13n 7y agoThat might be your experience but I know people who turn $10k campaigns into $80k LTV. Billions of dollars don't get spent for years on end without an ROI.
- astrodust 7y agoTheir video platform was based on lies and junk metrics. People still spent millions and in many cases revamped their entire organizational structure around video only to see it fail.
- _Understated_ 7y ago> The more they know about you, the more relevant your ads will be and the more likely someone seeing your ad will be to buy How much ACTUAL evidence is there for this? Take Amazon for instance... they know everything I have bought from them ever and employ some mega-smart people but the number of times I buy something and they then recommend either absolute shite or the same damn thing is not an insignificant number. Another thing is if I am an advertiser and FB says "your ad was seen by 20 million people", how can I dispute this? It's a closed system. I am sorry... but from my comfy armchair position I'm calling shenanigans on mass-data collection in advertising being able to move the profitability needle in a measurable way. Edit: Added a bit more stuff
- tehlike 7y agoI worked in ads. You individually is not what makes advertising useful or lucrative. Aggregate numbers do. How many people see ads on tv, and buy the thing they saw right away? You guessed it, it is probably less than a percent. There are so many impressions in the world, from billons of users. You cannot expect each of them to do meaningful conversions. On a super off the cuff calculation, assume each user see 100 ads a day, 2b users makes it 200b impressions. If each user generously converts once a day, that is 1%. If they convert every other day, it is 0.5% per impression. I particularly left clicks out went straight to conversions. Usual flow goes like this: query, matched query, impression, click, conversion... The funnel is super large and drop offs are huge.
- _Understated_ 7y agoIs the ad industry ever going to say that mass-data collection doesn't work? They're always going to say it works.
- thinkcomp 7y agoNot creating fake accounts. Allowing them. Imagine you're Coca-Cola. You have an on-line ad budget for this quarter. Where should you spend it? Probably the places that have the most reach: Google and Facebook. Do you know how many cans of Coke or other drink brands you will sell based on these ads this quarter? No. Is there any way for you to figure it out? No. All you know are the numbers Facebook tells you. And those numbers look pretty good. This is how "sophisticated" ad buyers work. It's actually far easier for a tiny business to measure the conversation rate between clicks and actual purchases. Big ad buyers throw stuff at the wall to see what sticks, and they rarely bother truly measuring because that's often impossible. The entire ad industry is based on fuzzy metrics. Within that fuzz is an awful lot of room for fraud.
- landryraccoon 7y agoIs this how you think ads work? This is horribly naive. If an ad exec at a large corporation thinks this way they should be fired immediately. To answer directly : of course you can measure how effective your FB ads are. Pick two markets with similar demographics and a timeframe. Run FB ads in one market as an experiment and traditional media ads in another market as a control. If sales increase in the experiment market vs the control that is strong evidence that FB ads are more effective than traditional marketing. For higher confidence repeat the test with multiple markets and multiple controls. That experiment took me 30 seconds to think of. A sophisticated marketer can probably come up with one that gives even more solid evidence.
- navigatesol 7y ago>Pick two markets with similar demographics and a timeframe. Run FB ads in one market as an experiment and traditional media ads in another market as a control. If sales increase in the experiment market vs the control that is strong evidence that FB ads are more effective than traditional marketing. This sounds like an incredibly naive and expensive experiment, filled to the brim with noise.
- disgruntledphd2 7y ago