11 ms·

Brands Are Wasting Money on Facebook and Twitter, Forrester Says

170 points by selmnoo 12y ago

unclebucknasty 12y ago
Man, this is intuitively and empirically so true. I'm not sure who would be surprised by this study, though some may point to specific exceptions. But, there are a number of reasons this is obvious, not the least of which is that people go to Facebook to socialize, not befriend companies. So, it always felt like a ruse that brands should encourage their customers to engage on Facebook's turf, as it always seemed that it accrued much more value to Facebook than to the brands. Why do I want someone else owning or even inserted between that relationship with my customers? Yet companies (regrettably, including my own), would even hold contests, etc., effectively paying to get more likes from customers they already had! Then, Facebook pulled their master-stroke of ratcheting down the reach to all of those fans unless the company paid for it. It really was like some kind of racket or "minor extortion". Remarkably, they also really began to push the idea of paying them even more to get more fans. So, send you my current customers by converting them to fans, advertise with you to get more fans, then pay you again to advertise to reach all of them? No thanks. I'd rather get a good old-fashioned email address. I look at their ad numbers and I just don't get it.
- shostack 12y ago
  This is the root of my concern with where Facebook and Google are heading. In the email world, you invested in building your house list, and it was likely your most valuable marketing asset. You... -- Controlled it -- Could associate whatever data with it you had access to -- You could (pending deliverability) communicate with them as frequently as you wanted for a fixed/variable rate depending on what your send costs were. For most ESPs (email service providers) there is typically a fixed platform fee, and a variable volume fee -- Most importantly, your costs to message to your acquired audience was relatively fixed which helped balance the variable cost of acquiring them With Facebook, they abused the trust marketers put into them. From day one the conversation was about building your brand's presence on Facebook with the "understanding" you would more or less be able to communicate with your audience freely once you invested in building the list. I put "understanding" in quotes because there was of course nothing ever spelled out...but that was literally how it worked at the time, so it became understood to be how it worked. The reality of what Facebook has done and where they are going has changed that relationship... -- They want you to invest a variable (and likely ever increasing) cost to build your list within Facebook -- They own the majority of the data on that list and their targeting tools are essentially you renting that information from them -- They own your list, and want to charge you a variable cost via a black box algorithm to reach said list at the scale/frequency you desire It is this last part that is the biggest issue. Email was a space where marketers had control over their ability to reach their opt-in audience, not the platform or network. But fixed-price models are not always as profitable as variable priced models run through a black box. My broader fear is that Google has come to the same conclusion, and Inbox (and the tabs before that) is the first manifestation that Google is working on a serious monetization play for email beyond the horrid Gmail placements in AdSense and whatever targeting data they may be able to indirectly monetize. He who owns the ability to reach that contact list has a company by the balls. End of story. Once you have that, why charge them a fixed rate when you can maximize profit by tweaking whatever variables you want whenever it suits you with regards to the costs (ie. the auction model)? It remains to be seen if Google is going down that path, but it is clear Facebook already has. There is still hope for off-site ads with them for advertisers who know how to measure it from a conversion standpoint, and more importantly, a cross-channel attribution perspective. Social tends to be more of an awareness/upper-funnel driver when you can see the birds-eye attribution picture, with some exceptions like mobile app installs that see success from a direct response standpoint. Smart marketers will likely focus on owning their audience data to market to them as much on their terms and a predictable cost structure as possible. Their continued ability to do so may be largely out of their control however if the companies who own the ability to reach their "list" have visions of being more than a basic fixed-price conduit.
  - evgen 12y ago
    With Facebook, they abused the trust marketers put into them. From day one the conversation was about building your brand's presence on Facebook with the "understanding" you would more or less be able to communicate with your audience freely once you invested in building the list. Bullshit. There was never this "understanding", just an assumption by people who were too blinded by greed to do a little simple math. There is only so much attention to go around and only so many items that can be put into a persons feed before it loses any value to that person. You were only able to communicate freely to this audience because there were so few using the channel. Once it was shown to actually be effective you were competing with everyone else for that small slice of attention. Welcome to the market pal, hope you brought your wallet! If a marketer complains because everything they post each day isn't pinned to the top of people's news feeds for free then it seems to me that FB is doing it's job. I would much rather have my feed curated for things that are relevant for me than for every piece of marketing some store I once liked four years ago wants to send me.
    - unclebucknasty 12y ago
      >There is only so much attention to go around and only so many items that can be put into a persons feed before it loses any value to that person. True, but it's reasonable to expect that users might've simply dialed down the noise by "un-liking" whatever pages with which they no longer wanted to be engaged. So, I don't think it was at all unreasonable for a company to assume that it would have to compete on interest and thus ensure that its content was more compelling/engaging. That versus simply being forced to pay, else reach only 1% of the people they worked so hard to gain as "fans". Further, if FB's direction should have been obvious to companies, as you say, then FB should certainly have known. So, while encouraging pages/likes/etc., why not telegraph to the businesses that their reach would eventually be so heavily gated behind a paywall? You're being far too "forgiving" of FB and far too harsh on the companies that were, effectively, on the receiving end of a bait-and-switch.
    - shostack 12y ago
      The harsh words here are unnecessary and don't do anything for your argument. There were actually plenty of people using the channel when advertisers still had the ability to reach their entire fanbase. There was a long period of time when this was simply the way it worked. Thus, I think it is reasonable for companies to be forgiven for thinking that they would continue to be able to reach this audience in the same manner once they invested in acquiring them. Now, I have always thought email had more value just because of what you can do with it, but if you tell me to invest in your ad platform to drive people to signup for me to contact them on a page on your platform, and let me reach them for free after the initial investment, I think it is perfectly reasonable to feel extremely cheated when you change the terms of the deal to suddenly double-dip. There is a reason a large part of the ad industry has erupted at FB over this and why anyone spending serious money on social these days is driving all that traffic offsite to places they control, and/or using their own audience data through a DSP with FB simply serving as a "dumb" placement.
- deleted 12y ago
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michaelbuckbee 12y ago
An important distinction: the waste in this case is on "organic" non-paid interactions with users on the social networks. For Facebook, this means getting "Likes" on your dedicated Facebook Page (aka https://facebook.com/your_brand_name https://facebook.com/your_brand_name) for Twitter I'm presuming it's followers of @brandname. This is separate from the actual paid advertising that the platforms offer - which is likely far more effective, targeted and profitable than say a magazine or newspaper ad. Running a nail salon and want to reach women 18-45 who live in your city? Facebook lets you target that exactly and clicks to the ads just go to your website.
- unclebucknasty 12y ago
  >the waste in this case is on "organic" non-paid interactions with users True, but the two seem inextricably linked. Hard to imagine that the perception of value on one front won't impact the perception on the other. >Facebook lets you target that exactly and clicks to the ads just go to your website. This has always been the theory and it sounds really compelling--even intuitive. But, in reality, click-rates on FB ads tend to be abysmally low. We have experimented quite a bit and FB ads are consistently outperformed by Adwords campaigns. This has been the case across different products/services with different demos. Our experience seems to be common. Interestingly, the thing we found most effective on FB was promoting our page through FB ads. But, of course, the value of the fans we acquired is relatively low, as is the point of the article. I think this is in part due to the core problem that people are on FB to socialize and "do" FB. So, they will click a like button, but they don't want to leave FB. But, it is ironic that the thing FB ads do best actually creates more value for FB.
  - shostack 12y ago
    Out of curiosity, when you say that FB ads were consistently outperformed by AdWords, can you clarify on the metrics you were using? Also, can you clarify on whether you were looking at it from a cross-channel attribution perspective? In many cases, a successful conversion might require multiple touch points, and Facebook can actually be a pretty effective tool for building awareness and peaking initial interest. There are many marketers out there who will tell you they have social networks as a high-volume first (or early) touch point, and then it takes several organic clicks, display impressions, maybe some email, paid search, etc. before someone actually converts. Each of those touch points ads some value. Calculating exactly how much they actually add is at the bleeding edge of problems the ad tech industry is trying to solve as it is a staggeringly difficult puzzle to solve with any degree of accuracy. But with the right analytics in place, it is currently pretty easy to see where certain channels tend to impact the funnel, and if you can control for it enough in your tests, you can try to measure the lift they contribute. Heck, you can start looking in the multi-channel and attribution reports in the free version of GA to get a sense. Of course the data-driven dynamic attribution modeling capabilities are reserved for GA Premium (or companies like Adometry, VisualIQ, Convertro, etc. which have all been acquired by Google, AOL, etc.).
snowwrestler 12y ago
The idea of a "social relationship" with a brand was always pretty silly, I think. But Twitter is a good tool for PR (because every blogger and reporter uses it), and Facebook can be an efficient content distribution channel. I think brands have a hard time on social media when they have nothing interesting to say. "Like my page" or "download my app" or "tell us how much you love your toilet paper" are not interesting, and Facebook is doing the right thing to hide that crap from more feeds. But if you can create good content, you can spend money very efficiently on social media. You just need to boost it a bit over the noise floor, and then folks will share and comment to spread it farther.
- com2kid 12y ago
  > The idea of a "social relationship" with a brand was always pretty silly, I think. I think this depends heavily on the size of the brand. Facebooks recent actions annoy me as a consumer, there are local small companies that I want to keep up with! Yes I do want to know when my local chocolate shop has a sale on, yes I do want to know about my local farmer's market.
  - snowwrestler 12y ago
    Isn't there a setting on FB where you can ask to see all the updates from a particular person or page? There used to be.
- blumkvist 12y ago
  > The idea of a "social relationship" with a brand was always pretty silly, I think. You are not a marketer, are you?
- williamcotton 12y ago
  You know how people want to interact with products? By using them. Not "engaging" with them as an abstract concept on Twitter. They don't give a crap about having a conversation with a Mt Dew representative. They do give a crap about a YouTube video of a guy jumping out of a plane with a wing-suit and if it happens to be covered with Mt Dew logos, it might just help move some product. You know what all this "social relationship" and "engagement" talk reminds me of? Telemarketing. New buzzwords for what seems to be about as effective as calling up someone while they're eating dinner and trying to talk about their favorite brand of dish soap.
PublicEnemy111 12y ago
Facebook blew away earnings this summer citing "mobile ads" as the reason for growth. Instagram had its first ad ever a few weeks prior to the earnings release, which had hundreds of thousands of comments. I can't help but feel Facebook was being misleading when they cited "mobile ads" for the revenue spike. Merchants had renewed faith in the platform thus resulting in a positive feedback cycle(merchants come back/signup -> more revenue -> revenue jumps again -> repeat). I think a break down of their mobile ad revenue would tell a much different story than the one they were trying to promote
- jhulla 12y ago
  How much of mobile ad revenue is VC money recycled by startups through facebook seeking installs of their apps? Is there a breakdown of this somewhere?
  - mbesto 12y ago
    In the same breadth - how many startups doing B2B today exist purely because of SV affinity? (not expecting a response honestly, just pondering) I could probably name a few...quite a few actually.
  - unclebucknasty 12y ago
    Interesting question. Makes me wonder about the breakdown of those astronomical numbers in general. Is it longer tail, with tons of smaller buys, or fewer large companies with massive buys that are generating the bulk of it?
    - blumkvist 12y ago
      It's always 80/20.
- deleted 12y ago
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kumarm 12y ago
Facebook mobile ads are pure crap. Here is a proof if anyone needs one: http://forums.makingmoneywithandroid.com/income-reports/16351-expense-report-wordsearch-hero-5.html#post91053 http://forums.makingmoneywithandroid.com/income-reports/1635... Most installs from Facebook Mobile ads never even open the app once (Yes even Once). If you read the post from the same guy, you will notice he actually targeted to People who play word games on mobile.
- shostack 12y ago
  I would caution against making broad sweeping generalizations (most installs from FB mobile ads never even open the app once) from one incident where this one person had an issue. Companies like King and others have VERY competent teams of digital media and analytics experts, as well as the engineering resources to implement VERY advanced tracking. They would most definitely not be spending the large sums they are if they were not very confident in the return it gave them.
  - vsloo 12y ago
    I agree. Targeting on fb ads seems to be improving. Real ROI comes from expert ad buying teams that know exactly what they're doing.
  - hagbardgroup 12y ago
    The reason why these guys are getting cleaned up is because the teams at companies like King set it up so that they will choke out their possible competitors with sky-high rates. Working as intended.
    - shostack 12y ago
      Right, but the entire point is that companies like King are continuing to do it because it is profitable.
- jsonne 12y ago
  I'm going to disagree. My agency helped take one of our clients to #1 grossing in education off the back of mostly facebook and twitter mobile install ads. We had an average of $0.60 to $0.80 downloads with an over 10% conversion to our $30 paid version. I've also tried some things that don't really work on facebook at all. I think as marketers, we need to be nimble and quickly figure out if a given platform is where our audience lives. Iterate quickly and do statistically relevant test sizes before you commit a massive budget to anything.
walterbell 12y ago
http://stratechery.com/2014/dependent-digital-whales/ http://stratechery.com/2014/dependent-digital-whales/ "These ad units are largely purchased by free-to-play game publishers such as King (maker of Candy Crush Saga) and Big Fish Games, which leverage Facebook’s incredible demographic data to target the small percentage of players who will spend hundreds of dollars on in-app purchases.” .. So to recount, Facebook is going gangbusters because of ads for free-to-play games, developers are excited about the chance to cash in via Facebook ads, Google and Twitter are trying to mimic Facebook’s success, and Google and especially Apple are hanging their app store hats on the amount of revenue generated by in-app purchases. In other words, billions of dollars in cold hard cash, and 20x that in valuations are ultimately dependent on a relatively small number of people who just can’t stop playing Candy Crush Saga." Many of whom are women, their purchases leveraged up into Valley value. How is that for irony?
- ivanca 12y ago
  Not much, because the ones in the valley are the wives (or daughters, or mothers) of the men working in the valley. And you could label such users as anything you want based on your political agenda, I would have labeled them "remote addiction targets".
- tomp 12y ago
  I don't see how you reached your conclusion, and why would it be ironic if true.
  - walterbell 12y ago
    The demographic information has been stated by King, maker of Candy Crush. I'll let someone else explain the irony :)
    - spindritf 12y ago
      I still don't get it. Is there something in the name, a pun?
_almosnow 12y ago
I found out this very early, a few years ago when their ad platform was barely launching for everyone. I had a digital magazine and overall it seemed like a good deal, send me people interested in music from these countries at very low CPCs, nice. In total, I may have spent around $1200 USD over a month for a little more than 100 subscribers; needless to say I felt scammed. When trying to figure out what happened (w/ Google Analytics, my own event tracking code and even a few apache logs) I found out very interesting stuff, like that 99% of those clicks were people who didn't stay for more than a second on my webpage, like in: they didn't even wait for the page to load completely... weird. Just for the record, my ads were not clickbaity and were targeted fine, and my magazine didn't suck (IMO at least heh), so if someone clicked on my ad I would pretty much expect it to stay in the page and have at least a look at the cover of the current issue. Why did I burn $1200 if the ads weren't working from the start? I wish I had figured that out earlier and spend that money on a fancy chair or whatever instead... The thing is that I was only looking at my daily visitors and believed that everything was fine, it was until the end of the month (where I always made some kind of audit thing to see if I was growing or not) where I noticed that the number of new subscribers had remained the same even though FB ads were active all time. Since then, the only advice I give to friends and clients is "stay away from Facebook ads, it's not what you think they are". And on a small side note, I tried a lot of advertisers at that time and the best experience I had was with StumbleUpon, their referrals converted to subscribers at an incredible ratio (like >50%!!!) and on top of that they drove some extra organic growth even a few months after then campaign was finished, respect for them.
- walterbell 12y ago
  There are a few bots & bot hunters out there, http://online.wsj.com/articles/SB10001424052702304026304579453253860786362 http://online.wsj.com/articles/SB100014240527023040263045794...
- brainflake 12y ago
  This article is not about the ad platform... It talks about reach from the normal page posts of brands.
- seanp2k2 12y ago
forrestthewoods 12y ago
Every mobile game dev that I know claims Facebook ads are, by far, the best for acquiring users. <shrug> Take that data point as you will.
- Romdeau 12y ago
  This is more specifically talking about maintaining your facebook company page and trying to engage with your userbase/followers. After Facebook introduced the promoted posts concept if you were a brand you saw your engagement rapidly die off unless you were spending the money on it. Purchased adds still work well if not better when targeted properly.
devindotcom 12y ago
Sure. If you think you're reaching half a billion people, you're deceiving yourself (and/or falling for Facebook's deceptions, which, as an advertiser, you ought to know better than to have done) — it's a great place to put your information publicly and communicate with interested people instantly and directly. Wonderful tool for that purpose and used well by savvy brands that way today. But for actual advertising? Good god! A hole for money.
coenhyde 12y ago
We were successfully running retargeting ads on Facebook by uploading our customers email addresses. We were getting lots of conversions cheaply. Initially CPM was $1.70, then a few months later it was $4, now 6 months later it's $9. At this point it became unviable. I spoke to our account manager at Facebook and he confirmed my suspicions. Every time one of our customers converts though our ads, Facebook assigns a high value to that user, since that user purchased something through a FB ad. So now I have more competition to get in front of our existing customer from our competition who our customer is not interested in. FUCK THAT. Moral of the story DO NOT tell Facebook about conversions from your existing customers. Keep that info to yourself.
- spacefight 12y ago
  Maybe also don't leak your customers email addresses to FB at all.
  - tonyedgecombe 12y ago
    Yes, if I was a customer I'd be a bit miffed if a supplier sent my email address to Facebook.
  - nodata 12y ago
    yeah wtf is going on here: a company is bulk uploading all customer e-mail addresses to facebook?
    - blumkvist 12y ago
      To you and the others: yes you can. You can also upload phone #s. They are hashed.
      - robzyb 12y ago
        > They are hashed So what if they are hashed? Facebook has the solution to all the hashes.
rebootthesystem 12y ago
We stopped advertising on Facebook. The whole thing is a big scam. Not only do I have to pay to get people to my pages, I have to pay again and again and again every time I need to reach those who liked my pages. I have no way to reach all of my page members without paying FB dearly for every single post. Then there's the issue of FB ratcheting up your cost for those who actually respond to your message. And, of course, then there's the lovely fake/unresponsive likes problem. Nah, it's a big mess. Don't need them. I'll wait until they hire some grown-ups who can relate to real people and understand how honest and serious people do business in the real world.
- mirko90 12y ago
  Thats because the like button is not the same as permission to spam. I see tons of websites hiding content before you "Like" the page or nagging users to "Like" the brand, even the big ones. People hated Facebook previous year because there was tons "spam". Basically every shitty page owner or marketer was thinking this is great, i can send my marketing or "spam" message to everyone dump enough to "Like" for no cost. Also i don't know why people thing that facebook is worse then google adwords. In adwords you pay for every click, and lets say it converts. The next time that same user searches for something on google you will again pay for that click, And if you want to re market to that same user, you can do that but you have to pay. At least with facebook you get some of that reach for free after people liked you page. Im not going into is it worth the money people pay, and facebook sure is pleased that people keep poring money into its platform thinking it is something its not.
  - rebootthesystem 12y ago
    I think you are wrong on many points. First, if someone likes a page and later does not like the content they can unlike it. They are not hostages of bad pages. When a page owner publishes a post FB uses a very limited distribution (2% or less) to pretty much force page owners to pay to boost the post. So, you already spent thousands to get people to your page and now you have to pay again to communicate with them. Sorry for saying it this way: That is bullshit. With AdWords the model is simple: Drive traffic to your site, get registrations and then communicate with your audience on your own terms. That is precisely what the article says brands are doing once they understand facebook's problems. Sure, you could use the same model with FB. Within limits. They are very aware of the exodus they face and seem to be making moves towards limiting your ability to take the same kind of approach you might with AdWords. My position is simple: People who sign-up to my page/group are MY audience. I ought to be able to communicate with 100% of my page/group members at no additional cost. Give users their own moderation tools. Let them decide, not FB. They already have the ability to unlike. That's easy. Next would be a throttling control. Let them choose what percentage of posts they want to see and maybe even set a schedule. So, on Mondays I want 2% of my page/group content to come from the Tesla page; on Tuesday's I want 10% from the Richard Dawkins page and 10% from the America's Cup page, etc. In other words, no rulings from an immature totalitarian regime. Mimic the freedom of choice that exists on the net. If someone is hell-bent for the Underwater Pumpkin Carving page and don't want to miss a single post it ought to be THEIR CHOICE, not Facebook's. Note that, as an advertiser, I am not advocating shoving my page's content to all my members. I want to deliver value and have THEM decide if what I am saying is worth their while.
elvis635 12y ago
Do you know if there is a way to access that report? I'd be interested to read it, but $500 is way out of my personal budget
Eye_of_Mordor 12y ago
Don't think Facebook offers relationships at all - just an endless stream of adverts and selfies. Like watching TV with all the programmes removed. Anyway, it's all going to be totally different with smartwatches...
romain_dardour 12y ago
Interested to hear the Hacker community's take on this. We've been forecasting this for 2 years and agree with Nate Elliott : "As a result, marketers hoping to interact with consumers online might be better off investing in social features that exist on their own websites, or in smaller, more niche social networks, Mr. Elliott said." That's why we built Hull in the first place. Now this subject is this 15min's subject. What does the Hacker community think of this specific idea?
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billwilliams 12y ago
For the record, when people talk about "Brands" on Facebook, we're not talking about janky startups. We're talking about big old companies that blow >10 Million dollars in ad buys.
websitescenes 12y ago
Our company successfully manages multiple Facebook and Twitter campaigns. Not only do we post on social media, but we also pull that content into website feeds with api's. This ensures visitors to the site see the latest social media posts. This, in conjunction with paid and targeted ads, produces a high level of customer interaction. Just posting on Facebook/Twitter without purchasing ads and leveraging the content off/network won't produce favorable results.
photorized 12y ago
That's because those companies are doing it wrong. They view social as yet another mass marketing channel, one where you spam, convert, etc, and the use the same Google Analytics/Google Ads type of approach to CPM and 'conversion'. What they are missing entirely is that, unlike the traditional web marketing world of clicks and IP addresses, social media gives you an opportunity to understand your target audience, see what interests them, what influences them - and lets you interact with them. Once you truly know the audience, it opens up whole new opportunities for marketing (subtle product placement, indirect promotion via influencers etc) - which almost nobody is doing effectively right now. What we see instead is the same tired web banner concept, clumsily applied to FB or Twitter, and we're getting inundated by ads (that annoying DOMO 'are you still using Excel for your data?' ad comes to mind) - no wonder they are not seeing any ROI.
- hagbardgroup 12y ago
  Which their ad platform is mostly OK at doing. This is about using the social channels as a business like an ordinary user. Which is overall not a good move to make. >Once you truly know the audience, it opens up whole new opportunities for marketing (subtle product placement, indirect promotion via influencers etc) - which almost nobody is doing effectively right now. 'Subtle' is actually illegal, but that doesn't stop a whole lot of people... these kinds of arrangements will deplete the trust of social channels, which I don't care about, because I expect it to happen, but some of you people might. >What we see instead is the same tired web banner concept, clumsily applied to FB or Twitter, and we're getting inundated by ads (that annoying DOMO 'are you still using Excel for your data?' ad comes to mind) - no wonder they are not seeing any ROI. Domo probably sees ROI, even though I agree their product is dumb. Most banners are mediocre formats because of the way that the human eye tracks the page. These are increasingly being replaced by in-stream or semi randomized formats that mimic print tradition more than banner methods. The in-stream formats used by the social networks are not like banners because a( they're randomized b( they're within the typical user's eye-path Those two points go after the banner blindness issue. I think the bigger problem is that social networking is a fad that may not be capable of really supporting advertising, just because of the value that users expect from using them. For the same reasons we hate unsolicited marketing that comes in by phone, many people dislike advertising that comes in by social networking. Girls clip out the ads in Seventeen magazine to save for later. Almost none of them save-as the ads they see on social networks. I would not care, as an advertiser, if all the social networks popped out of existence tomorrow and banned advertising. I would adapt. It really doesn't matter to me whether these companies live or die.
icedchai 12y ago
well, they're also wasting money on Forrester...
anon4 12y ago
By twitter, do they mean promoted comments? Because each time I see a promoted comment on my twitter, I block the sender and report it as spam.

170 points by selmnoo 12y ago

Man, this is intuitively and empirically so true. I'm not sure who would be surprised by this study, though some may point to specific exceptions. But, there are a number of reasons this is obvious, not the least of which is that people go to Facebook to socialize, not befriend companies. So, it always felt like a ruse that brands should encourage their customers to engage on Facebook's turf, as it always seemed that it accrued much more value to Facebook than to the brands. Why do I want someone else owning or even inserted between that relationship with my customers? Yet companies (regrettably, including my own), would even hold contests, etc., effectively paying to get more likes from customers they already had! Then, Facebook pulled their master-stroke of ratcheting down the reach to all of those fans unless the company paid for it. It really was like some kind of racket or "minor extortion". Remarkably, they also really began to push the idea of paying them even more to get more fans. So, send you my current customers by converting them to fans, advertise with you to get more fans, then pay you again to advertise to reach all of them? No thanks. I'd rather get a good old-fashioned email address. I look at their ad numbers and I just don't get it.

shostack 12y ago
This is the root of my concern with where Facebook and Google are heading. In the email world, you invested in building your house list, and it was likely your most valuable marketing asset. You... -- Controlled it -- Could associate whatever data with it you had access to -- You could (pending deliverability) communicate with them as frequently as you wanted for a fixed/variable rate depending on what your send costs were. For most ESPs (email service providers) there is typically a fixed platform fee, and a variable volume fee -- Most importantly, your costs to message to your acquired audience was relatively fixed which helped balance the variable cost of acquiring them With Facebook, they abused the trust marketers put into them. From day one the conversation was about building your brand's presence on Facebook with the "understanding" you would more or less be able to communicate with your audience freely once you invested in building the list. I put "understanding" in quotes because there was of course nothing ever spelled out...but that was literally how it worked at the time, so it became understood to be how it worked. The reality of what Facebook has done and where they are going has changed that relationship... -- They want you to invest a variable (and likely ever increasing) cost to build your list within Facebook -- They own the majority of the data on that list and their targeting tools are essentially you renting that information from them -- They own your list, and want to charge you a variable cost via a black box algorithm to reach said list at the scale/frequency you desire It is this last part that is the biggest issue. Email was a space where marketers had control over their ability to reach their opt-in audience, not the platform or network. But fixed-price models are not always as profitable as variable priced models run through a black box. My broader fear is that Google has come to the same conclusion, and Inbox (and the tabs before that) is the first manifestation that Google is working on a serious monetization play for email beyond the horrid Gmail placements in AdSense and whatever targeting data they may be able to indirectly monetize. He who owns the ability to reach that contact list has a company by the balls. End of story. Once you have that, why charge them a fixed rate when you can maximize profit by tweaking whatever variables you want whenever it suits you with regards to the costs (ie. the auction model)? It remains to be seen if Google is going down that path, but it is clear Facebook already has. There is still hope for off-site ads with them for advertisers who know how to measure it from a conversion standpoint, and more importantly, a cross-channel attribution perspective. Social tends to be more of an awareness/upper-funnel driver when you can see the birds-eye attribution picture, with some exceptions like mobile app installs that see success from a direct response standpoint. Smart marketers will likely focus on owning their audience data to market to them as much on their terms and a predictable cost structure as possible. Their continued ability to do so may be largely out of their control however if the companies who own the ability to reach their "list" have visions of being more than a basic fixed-price conduit.
- evgen 12y ago
  With Facebook, they abused the trust marketers put into them. From day one the conversation was about building your brand's presence on Facebook with the "understanding" you would more or less be able to communicate with your audience freely once you invested in building the list. Bullshit. There was never this "understanding", just an assumption by people who were too blinded by greed to do a little simple math. There is only so much attention to go around and only so many items that can be put into a persons feed before it loses any value to that person. You were only able to communicate freely to this audience because there were so few using the channel. Once it was shown to actually be effective you were competing with everyone else for that small slice of attention. Welcome to the market pal, hope you brought your wallet! If a marketer complains because everything they post each day isn't pinned to the top of people's news feeds for free then it seems to me that FB is doing it's job. I would much rather have my feed curated for things that are relevant for me than for every piece of marketing some store I once liked four years ago wants to send me.
  - unclebucknasty 12y ago
    >There is only so much attention to go around and only so many items that can be put into a persons feed before it loses any value to that person. True, but it's reasonable to expect that users might've simply dialed down the noise by "un-liking" whatever pages with which they no longer wanted to be engaged. So, I don't think it was at all unreasonable for a company to assume that it would have to compete on interest and thus ensure that its content was more compelling/engaging. That versus simply being forced to pay, else reach only 1% of the people they worked so hard to gain as "fans". Further, if FB's direction should have been obvious to companies, as you say, then FB should certainly have known. So, while encouraging pages/likes/etc., why not telegraph to the businesses that their reach would eventually be so heavily gated behind a paywall? You're being far too "forgiving" of FB and far too harsh on the companies that were, effectively, on the receiving end of a bait-and-switch.
  - shostack 12y ago
    The harsh words here are unnecessary and don't do anything for your argument. There were actually plenty of people using the channel when advertisers still had the ability to reach their entire fanbase. There was a long period of time when this was simply the way it worked. Thus, I think it is reasonable for companies to be forgiven for thinking that they would continue to be able to reach this audience in the same manner once they invested in acquiring them. Now, I have always thought email had more value just because of what you can do with it, but if you tell me to invest in your ad platform to drive people to signup for me to contact them on a page on your platform, and let me reach them for free after the initial investment, I think it is perfectly reasonable to feel extremely cheated when you change the terms of the deal to suddenly double-dip. There is a reason a large part of the ad industry has erupted at FB over this and why anyone spending serious money on social these days is driving all that traffic offsite to places they control, and/or using their own audience data through a DSP with FB simply serving as a "dumb" placement.
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michaelbuckbee 12y ago

An important distinction: the waste in this case is on "organic" non-paid interactions with users on the social networks. For Facebook, this means getting "Likes" on your dedicated Facebook Page (aka https://facebook.com/your_brand_name https://facebook.com/your_brand_name) for Twitter I'm presuming it's followers of @brandname. This is separate from the actual paid advertising that the platforms offer - which is likely far more effective, targeted and profitable than say a magazine or newspaper ad. Running a nail salon and want to reach women 18-45 who live in your city? Facebook lets you target that exactly and clicks to the ads just go to your website.

unclebucknasty 12y ago
>the waste in this case is on "organic" non-paid interactions with users True, but the two seem inextricably linked. Hard to imagine that the perception of value on one front won't impact the perception on the other. >Facebook lets you target that exactly and clicks to the ads just go to your website. This has always been the theory and it sounds really compelling--even intuitive. But, in reality, click-rates on FB ads tend to be abysmally low. We have experimented quite a bit and FB ads are consistently outperformed by Adwords campaigns. This has been the case across different products/services with different demos. Our experience seems to be common. Interestingly, the thing we found most effective on FB was promoting our page through FB ads. But, of course, the value of the fans we acquired is relatively low, as is the point of the article. I think this is in part due to the core problem that people are on FB to socialize and "do" FB. So, they will click a like button, but they don't want to leave FB. But, it is ironic that the thing FB ads do best actually creates more value for FB.
- shostack 12y ago
  Out of curiosity, when you say that FB ads were consistently outperformed by AdWords, can you clarify on the metrics you were using? Also, can you clarify on whether you were looking at it from a cross-channel attribution perspective? In many cases, a successful conversion might require multiple touch points, and Facebook can actually be a pretty effective tool for building awareness and peaking initial interest. There are many marketers out there who will tell you they have social networks as a high-volume first (or early) touch point, and then it takes several organic clicks, display impressions, maybe some email, paid search, etc. before someone actually converts. Each of those touch points ads some value. Calculating exactly how much they actually add is at the bleeding edge of problems the ad tech industry is trying to solve as it is a staggeringly difficult puzzle to solve with any degree of accuracy. But with the right analytics in place, it is currently pretty easy to see where certain channels tend to impact the funnel, and if you can control for it enough in your tests, you can try to measure the lift they contribute. Heck, you can start looking in the multi-channel and attribution reports in the free version of GA to get a sense. Of course the data-driven dynamic attribution modeling capabilities are reserved for GA Premium (or companies like Adometry, VisualIQ, Convertro, etc. which have all been acquired by Google, AOL, etc.).

snowwrestler 12y ago

The idea of a "social relationship" with a brand was always pretty silly, I think. But Twitter is a good tool for PR (because every blogger and reporter uses it), and Facebook can be an efficient content distribution channel. I think brands have a hard time on social media when they have nothing interesting to say. "Like my page" or "download my app" or "tell us how much you love your toilet paper" are not interesting, and Facebook is doing the right thing to hide that crap from more feeds. But if you can create good content, you can spend money very efficiently on social media. You just need to boost it a bit over the noise floor, and then folks will share and comment to spread it farther.

com2kid 12y ago
> The idea of a "social relationship" with a brand was always pretty silly, I think. I think this depends heavily on the size of the brand. Facebooks recent actions annoy me as a consumer, there are local small companies that I want to keep up with! Yes I do want to know when my local chocolate shop has a sale on, yes I do want to know about my local farmer's market.
- snowwrestler 12y ago
  Isn't there a setting on FB where you can ask to see all the updates from a particular person or page? There used to be.
blumkvist 12y ago
> The idea of a "social relationship" with a brand was always pretty silly, I think. You are not a marketer, are you?
williamcotton 12y ago
You know how people want to interact with products? By using them. Not "engaging" with them as an abstract concept on Twitter. They don't give a crap about having a conversation with a Mt Dew representative. They do give a crap about a YouTube video of a guy jumping out of a plane with a wing-suit and if it happens to be covered with Mt Dew logos, it might just help move some product. You know what all this "social relationship" and "engagement" talk reminds me of? Telemarketing. New buzzwords for what seems to be about as effective as calling up someone while they're eating dinner and trying to talk about their favorite brand of dish soap.

PublicEnemy111 12y ago

Facebook blew away earnings this summer citing "mobile ads" as the reason for growth. Instagram had its first ad ever a few weeks prior to the earnings release, which had hundreds of thousands of comments. I can't help but feel Facebook was being misleading when they cited "mobile ads" for the revenue spike. Merchants had renewed faith in the platform thus resulting in a positive feedback cycle(merchants come back/signup -> more revenue -> revenue jumps again -> repeat). I think a break down of their mobile ad revenue would tell a much different story than the one they were trying to promote

jhulla 12y ago
How much of mobile ad revenue is VC money recycled by startups through facebook seeking installs of their apps? Is there a breakdown of this somewhere?
- mbesto 12y ago
  In the same breadth - how many startups doing B2B today exist purely because of SV affinity? (not expecting a response honestly, just pondering) I could probably name a few...quite a few actually.
- unclebucknasty 12y ago
  Interesting question. Makes me wonder about the breakdown of those astronomical numbers in general. Is it longer tail, with tons of smaller buys, or fewer large companies with massive buys that are generating the bulk of it?
  - blumkvist 12y ago
    It's always 80/20.
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kumarm 12y ago

Facebook mobile ads are pure crap. Here is a proof if anyone needs one: http://forums.makingmoneywithandroid.com/income-reports/16351-expense-report-wordsearch-hero-5.html#post91053 http://forums.makingmoneywithandroid.com/income-reports/1635... Most installs from Facebook Mobile ads never even open the app once (Yes even Once). If you read the post from the same guy, you will notice he actually targeted to People who play word games on mobile.

shostack 12y ago
I would caution against making broad sweeping generalizations (most installs from FB mobile ads never even open the app once) from one incident where this one person had an issue. Companies like King and others have VERY competent teams of digital media and analytics experts, as well as the engineering resources to implement VERY advanced tracking. They would most definitely not be spending the large sums they are if they were not very confident in the return it gave them.
- vsloo 12y ago
  I agree. Targeting on fb ads seems to be improving. Real ROI comes from expert ad buying teams that know exactly what they're doing.
- hagbardgroup 12y ago
  The reason why these guys are getting cleaned up is because the teams at companies like King set it up so that they will choke out their possible competitors with sky-high rates. Working as intended.
  - shostack 12y ago
    Right, but the entire point is that companies like King are continuing to do it because it is profitable.
jsonne 12y ago
I'm going to disagree. My agency helped take one of our clients to #1 grossing in education off the back of mostly facebook and twitter mobile install ads. We had an average of $0.60 to $0.80 downloads with an over 10% conversion to our $30 paid version. I've also tried some things that don't really work on facebook at all. I think as marketers, we need to be nimble and quickly figure out if a given platform is where our audience lives. Iterate quickly and do statistically relevant test sizes before you commit a massive budget to anything.

walterbell 12y ago

http://stratechery.com/2014/dependent-digital-whales/ http://stratechery.com/2014/dependent-digital-whales/ "These ad units are largely purchased by free-to-play game publishers such as King (maker of Candy Crush Saga) and Big Fish Games, which leverage Facebook’s incredible demographic data to target the small percentage of players who will spend hundreds of dollars on in-app purchases.” .. So to recount, Facebook is going gangbusters because of ads for free-to-play games, developers are excited about the chance to cash in via Facebook ads, Google and Twitter are trying to mimic Facebook’s success, and Google and especially Apple are hanging their app store hats on the amount of revenue generated by in-app purchases. In other words, billions of dollars in cold hard cash, and 20x that in valuations are ultimately dependent on a relatively small number of people who just can’t stop playing Candy Crush Saga." Many of whom are women, their purchases leveraged up into Valley value. How is that for irony?

ivanca 12y ago
Not much, because the ones in the valley are the wives (or daughters, or mothers) of the men working in the valley. And you could label such users as anything you want based on your political agenda, I would have labeled them "remote addiction targets".
tomp 12y ago
I don't see how you reached your conclusion, and why would it be ironic if true.
- walterbell 12y ago
  The demographic information has been stated by King, maker of Candy Crush. I'll let someone else explain the irony :)
  - spindritf 12y ago
    I still don't get it. Is there something in the name, a pun?

_almosnow 12y ago

I found out this very early, a few years ago when their ad platform was barely launching for everyone. I had a digital magazine and overall it seemed like a good deal, send me people interested in music from these countries at very low CPCs, nice. In total, I may have spent around $1200 USD over a month for a little more than 100 subscribers; needless to say I felt scammed. When trying to figure out what happened (w/ Google Analytics, my own event tracking code and even a few apache logs) I found out very interesting stuff, like that 99% of those clicks were people who didn't stay for more than a second on my webpage, like in: they didn't even wait for the page to load completely... weird. Just for the record, my ads were not clickbaity and were targeted fine, and my magazine didn't suck (IMO at least heh), so if someone clicked on my ad I would pretty much expect it to stay in the page and have at least a look at the cover of the current issue. Why did I burn $1200 if the ads weren't working from the start? I wish I had figured that out earlier and spend that money on a fancy chair or whatever instead... The thing is that I was only looking at my daily visitors and believed that everything was fine, it was until the end of the month (where I always made some kind of audit thing to see if I was growing or not) where I noticed that the number of new subscribers had remained the same even though FB ads were active all time. Since then, the only advice I give to friends and clients is "stay away from Facebook ads, it's not what you think they are". And on a small side note, I tried a lot of advertisers at that time and the best experience I had was with StumbleUpon, their referrals converted to subscribers at an incredible ratio (like >50%!!!) and on top of that they drove some extra organic growth even a few months after then campaign was finished, respect for them.

walterbell 12y ago
There are a few bots & bot hunters out there, http://online.wsj.com/articles/SB10001424052702304026304579453253860786362 http://online.wsj.com/articles/SB100014240527023040263045794...
brainflake 12y ago
This article is not about the ad platform... It talks about reach from the normal page posts of brands.
seanp2k2 12y ago

forrestthewoods 12y ago

Every mobile game dev that I know claims Facebook ads are, by far, the best for acquiring users. <shrug> Take that data point as you will.

Romdeau 12y ago
This is more specifically talking about maintaining your facebook company page and trying to engage with your userbase/followers. After Facebook introduced the promoted posts concept if you were a brand you saw your engagement rapidly die off unless you were spending the money on it. Purchased adds still work well if not better when targeted properly.

devindotcom 12y ago

Sure. If you think you're reaching half a billion people, you're deceiving yourself (and/or falling for Facebook's deceptions, which, as an advertiser, you ought to know better than to have done) — it's a great place to put your information publicly and communicate with interested people instantly and directly. Wonderful tool for that purpose and used well by savvy brands that way today. But for actual advertising? Good god! A hole for money.

coenhyde 12y ago

We were successfully running retargeting ads on Facebook by uploading our customers email addresses. We were getting lots of conversions cheaply. Initially CPM was $1.70, then a few months later it was $4, now 6 months later it's $9. At this point it became unviable. I spoke to our account manager at Facebook and he confirmed my suspicions. Every time one of our customers converts though our ads, Facebook assigns a high value to that user, since that user purchased something through a FB ad. So now I have more competition to get in front of our existing customer from our competition who our customer is not interested in. FUCK THAT. Moral of the story DO NOT tell Facebook about conversions from your existing customers. Keep that info to yourself.

spacefight 12y ago
Maybe also don't leak your customers email addresses to FB at all.
- tonyedgecombe 12y ago
  Yes, if I was a customer I'd be a bit miffed if a supplier sent my email address to Facebook.
- nodata 12y ago
  yeah wtf is going on here: a company is bulk uploading all customer e-mail addresses to facebook?
  - blumkvist 12y ago
    To you and the others: yes you can. You can also upload phone #s. They are hashed.
    - robzyb 12y ago
      > They are hashed So what if they are hashed? Facebook has the solution to all the hashes.

rebootthesystem 12y ago

We stopped advertising on Facebook. The whole thing is a big scam. Not only do I have to pay to get people to my pages, I have to pay again and again and again every time I need to reach those who liked my pages. I have no way to reach all of my page members without paying FB dearly for every single post. Then there's the issue of FB ratcheting up your cost for those who actually respond to your message. And, of course, then there's the lovely fake/unresponsive likes problem. Nah, it's a big mess. Don't need them. I'll wait until they hire some grown-ups who can relate to real people and understand how honest and serious people do business in the real world.

mirko90 12y ago
Thats because the like button is not the same as permission to spam. I see tons of websites hiding content before you "Like" the page or nagging users to "Like" the brand, even the big ones. People hated Facebook previous year because there was tons "spam". Basically every shitty page owner or marketer was thinking this is great, i can send my marketing or "spam" message to everyone dump enough to "Like" for no cost. Also i don't know why people thing that facebook is worse then google adwords. In adwords you pay for every click, and lets say it converts. The next time that same user searches for something on google you will again pay for that click, And if you want to re market to that same user, you can do that but you have to pay. At least with facebook you get some of that reach for free after people liked you page. Im not going into is it worth the money people pay, and facebook sure is pleased that people keep poring money into its platform thinking it is something its not.
- rebootthesystem 12y ago
  I think you are wrong on many points. First, if someone likes a page and later does not like the content they can unlike it. They are not hostages of bad pages. When a page owner publishes a post FB uses a very limited distribution (2% or less) to pretty much force page owners to pay to boost the post. So, you already spent thousands to get people to your page and now you have to pay again to communicate with them. Sorry for saying it this way: That is bullshit. With AdWords the model is simple: Drive traffic to your site, get registrations and then communicate with your audience on your own terms. That is precisely what the article says brands are doing once they understand facebook's problems. Sure, you could use the same model with FB. Within limits. They are very aware of the exodus they face and seem to be making moves towards limiting your ability to take the same kind of approach you might with AdWords. My position is simple: People who sign-up to my page/group are MY audience. I ought to be able to communicate with 100% of my page/group members at no additional cost. Give users their own moderation tools. Let them decide, not FB. They already have the ability to unlike. That's easy. Next would be a throttling control. Let them choose what percentage of posts they want to see and maybe even set a schedule. So, on Mondays I want 2% of my page/group content to come from the Tesla page; on Tuesday's I want 10% from the Richard Dawkins page and 10% from the America's Cup page, etc. In other words, no rulings from an immature totalitarian regime. Mimic the freedom of choice that exists on the net. If someone is hell-bent for the Underwater Pumpkin Carving page and don't want to miss a single post it ought to be THEIR CHOICE, not Facebook's. Note that, as an advertiser, I am not advocating shoving my page's content to all my members. I want to deliver value and have THEM decide if what I am saying is worth their while.

elvis635 12y ago

Do you know if there is a way to access that report? I'd be interested to read it, but $500 is way out of my personal budget

Eye_of_Mordor 12y ago

Don't think Facebook offers relationships at all - just an endless stream of adverts and selfies. Like watching TV with all the programmes removed. Anyway, it's all going to be totally different with smartwatches...

romain_dardour 12y ago

Interested to hear the Hacker community's take on this. We've been forecasting this for 2 years and agree with Nate Elliott : "As a result, marketers hoping to interact with consumers online might be better off investing in social features that exist on their own websites, or in smaller, more niche social networks, Mr. Elliott said." That's why we built Hull in the first place. Now this subject is this 15min's subject. What does the Hacker community think of this specific idea?

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billwilliams 12y ago

For the record, when people talk about "Brands" on Facebook, we're not talking about janky startups. We're talking about big old companies that blow >10 Million dollars in ad buys.

websitescenes 12y ago

Our company successfully manages multiple Facebook and Twitter campaigns. Not only do we post on social media, but we also pull that content into website feeds with api's. This ensures visitors to the site see the latest social media posts. This, in conjunction with paid and targeted ads, produces a high level of customer interaction. Just posting on Facebook/Twitter without purchasing ads and leveraging the content off/network won't produce favorable results.

photorized 12y ago

That's because those companies are doing it wrong. They view social as yet another mass marketing channel, one where you spam, convert, etc, and the use the same Google Analytics/Google Ads type of approach to CPM and 'conversion'. What they are missing entirely is that, unlike the traditional web marketing world of clicks and IP addresses, social media gives you an opportunity to understand your target audience, see what interests them, what influences them - and lets you interact with them. Once you truly know the audience, it opens up whole new opportunities for marketing (subtle product placement, indirect promotion via influencers etc) - which almost nobody is doing effectively right now. What we see instead is the same tired web banner concept, clumsily applied to FB or Twitter, and we're getting inundated by ads (that annoying DOMO 'are you still using Excel for your data?' ad comes to mind) - no wonder they are not seeing any ROI.

hagbardgroup 12y ago
Which their ad platform is mostly OK at doing. This is about using the social channels as a business like an ordinary user. Which is overall not a good move to make. >Once you truly know the audience, it opens up whole new opportunities for marketing (subtle product placement, indirect promotion via influencers etc) - which almost nobody is doing effectively right now. 'Subtle' is actually illegal, but that doesn't stop a whole lot of people... these kinds of arrangements will deplete the trust of social channels, which I don't care about, because I expect it to happen, but some of you people might. >What we see instead is the same tired web banner concept, clumsily applied to FB or Twitter, and we're getting inundated by ads (that annoying DOMO 'are you still using Excel for your data?' ad comes to mind) - no wonder they are not seeing any ROI. Domo probably sees ROI, even though I agree their product is dumb. Most banners are mediocre formats because of the way that the human eye tracks the page. These are increasingly being replaced by in-stream or semi randomized formats that mimic print tradition more than banner methods. The in-stream formats used by the social networks are not like banners because a( they're randomized b( they're within the typical user's eye-path Those two points go after the banner blindness issue. I think the bigger problem is that social networking is a fad that may not be capable of really supporting advertising, just because of the value that users expect from using them. For the same reasons we hate unsolicited marketing that comes in by phone, many people dislike advertising that comes in by social networking. Girls clip out the ads in Seventeen magazine to save for later. Almost none of them save-as the ads they see on social networks. I would not care, as an advertiser, if all the social networks popped out of existence tomorrow and banned advertising. I would adapt. It really doesn't matter to me whether these companies live or die.

icedchai 12y ago

well, they're also wasting money on Forrester...

anon4 12y ago

By twitter, do they mean promoted comments? Because each time I see a promoted comment on my twitter, I block the sender and report it as spam.