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They're not as profitable as they like us to think. I am guessing declining game ad spend and increasing cost from new users in countries that cannot be moneti

They're not as profitable as they like us to think. I am guessing declining game ad spend and increasing cost from new users in countries that cannot be monetized.

il 16y ago
You got it. As an advertiser/agency, US traffic is worth significantly more to me than international traffic, and I'm willing to pay a premium for it. Facebook growth in the US is slowing, and international traffic is not doing well. In some ways, the Facebook ads ecosystem is a replay of the first .com bust. Ad-supported games are buying ads on other games to get users to click on their ads advertising more games. It's not sustainable at all.
- jayzee 16y ago
  Besides I think that some marketers are discovering that facebook is not that effective at converting users. At least that is our experience. We are into enterprise software for researchers and though we can target even grad students at universities these grad students are not in the frame of mind to consider enterprise software while checking out profiles on fb. Google just turns out to be much cheaper to per conversion. And I think that our experience is not uncommon. If you are doing something cool/trendy/luxury/consumer facing business then may be facebook is for you. For the rest of the market Google is way more effective
  - ig1 16y ago
    I'm building a job board for developers, and Facebook is giving me cheaper conversions than anyone else. But you need to invest the time in building high-performing ads, the current ads we run are performing 50x better than our initial ads. Good ad copy and appropriate demographic choice is critical. I suspect when a lot of people say they find Facebook ads not being effective, they've just stuck an ad up seen a 0.0001 CTR and given up. Not that I'm complaining, it makes the ads cheaper for me :-) Facebook could do a lot more to make it easier for advertisers to build high-performing ads, but I suspect they're afraid that it'd mean that the advertisers would end up spending less money of Facebook.
TomOfTTB 16y ago
Just to put a number on it Facebook was spending an estimated $50 Million a year just to lease space for its data centers in September (http://www.datacenterknowledge.com/archives/2010/09/16/facebook-50-million-a-year-on-data-centers/ http://www.datacenterknowledge.com/archives/2010/09/16/faceb...). Assume that more than doubles due to the cost of moving into other countries and their rising userbase. In that context $500 million doesn't even get them to through the IPO (Zuckerberg has said he won't even consider an IPO until 2012 at the earliest) Again that's just space. Not employees, hardware, etc...

They're not as profitable as they like us to think. I am guessing declining game ad spend and increasing cost from new users in countries that cannot be monetized.

il 16y ago

You got it. As an advertiser/agency, US traffic is worth significantly more to me than international traffic, and I'm willing to pay a premium for it. Facebook growth in the US is slowing, and international traffic is not doing well. In some ways, the Facebook ads ecosystem is a replay of the first .com bust. Ad-supported games are buying ads on other games to get users to click on their ads advertising more games. It's not sustainable at all.

jayzee 16y ago
Besides I think that some marketers are discovering that facebook is not that effective at converting users. At least that is our experience. We are into enterprise software for researchers and though we can target even grad students at universities these grad students are not in the frame of mind to consider enterprise software while checking out profiles on fb. Google just turns out to be much cheaper to per conversion. And I think that our experience is not uncommon. If you are doing something cool/trendy/luxury/consumer facing business then may be facebook is for you. For the rest of the market Google is way more effective
- ig1 16y ago
  I'm building a job board for developers, and Facebook is giving me cheaper conversions than anyone else. But you need to invest the time in building high-performing ads, the current ads we run are performing 50x better than our initial ads. Good ad copy and appropriate demographic choice is critical. I suspect when a lot of people say they find Facebook ads not being effective, they've just stuck an ad up seen a 0.0001 CTR and given up. Not that I'm complaining, it makes the ads cheaper for me :-) Facebook could do a lot more to make it easier for advertisers to build high-performing ads, but I suspect they're afraid that it'd mean that the advertisers would end up spending less money of Facebook.

TomOfTTB 16y ago

Just to put a number on it Facebook was spending an estimated $50 Million a year just to lease space for its data centers in September (http://www.datacenterknowledge.com/archives/2010/09/16/facebook-50-million-a-year-on-data-centers/ http://www.datacenterknowledge.com/archives/2010/09/16/faceb...). Assume that more than doubles due to the cost of moving into other countries and their rising userbase. In that context $500 million doesn't even get them to through the IPO (Zuckerberg has said he won't even consider an IPO until 2012 at the earliest) Again that's just space. Not employees, hardware, etc...