mattmaroon.com - Latest Comments in How Advertising Works, and Why It Won’t For Facebook

Re: How Advertising Works, and Why It Won’t For Facebook

mattmaroon — Sat, 10 May 2008 20:05:03 -0000

Doesnt myspace sorta do this? I mean, wilcos myspace friends might be other bands. It hasnt netted them any decent cpms.

Re: How Advertising Works, and Why It Won’t For Facebook

Evan Hamilton — Sat, 10 May 2008 19:51:42 -0000

Fair enough, John. But what if they showed me bands like Wilco that I might like, and pointed me to their Facebook page where I could hear songs, buy music, and make myself a fan? That is using the network, not just using my graph to point me to a store..

Re: How Advertising Works, and Why It Won’t For Facebook

Robert Einspruch — Sat, 10 May 2008 17:43:14 -0000

Based on my experience advertising my online tutoring platform, ziizoo.com, the following quote is 100% accurate.

"But I think reality is slowly setting in. Because what we’re finding is that when people want something specific, they go to Google. When they want to kill time or just communicate with friends, they go to Facebook. And that isn’t changing."

When someone needs help in math, they search Google. Even though that same person may have seen my ad on Facebook, they don't react to it. They are simply in a different mindset. That may change over time, but right Matt is right.

Re: How Advertising Works, and Why It Won’t For Facebook

bubu — Sat, 10 May 2008 10:28:00 -0000

恩,我真希望我的英文能足够好到能看懂你的文章

Re: How Advertising Works, and Why It Won’t For Facebook

Brent — Fri, 09 May 2008 22:54:16 -0000

Succinct, intelligent and eloquent. I could not agree with you more.

Re: How Advertising Works, and Why It Won’t For Facebook

John — Fri, 09 May 2008 20:41:18 -0000

"Is your one dollar better spent targeting a specific demographic or better spent on a generic search engine?"

There isn't a more specific demographic than people who type your product into a search engine. The alternative is basic brand advertising and a proprietary social network is just never going to compete with broadcast.

Re: How Advertising Works, and Why It Won’t For Facebook

John — Fri, 09 May 2008 20:38:47 -0000

"Users are on Facebook to see what their friends are doing, so they should be interested to hear about the things their friends are buying."

Sure - from their friends. From a snooping third party? Not so much. Think about what Facebook is for and why people use it. It won't be long until people start asking of advertisers, "Dude, who let THAT guy into the party?"

Re: How Advertising Works, and Why It Won’t For Facebook

John — Fri, 09 May 2008 20:33:40 -0000

"If I have listed Wilco in my musical interests, I become a fan of Wilco's Facebook Page, and my last.fm app lists Wilco as a frequent play, they should show me ads for Wilco stuff!"

On the other hand, all of those factors mark you out as someone who is already going to buy Wilco stuff anyway - and most likely someone who is already clued in to what's coming out and where to find it. It's back to the equivalent of a search ad, and changes are (just based on sheer numbers) that Wilco dollar is more effectively spent on Wilco search results than a social network display.

Re: How Advertising Works, and Why It Won’t For Facebook

John — Fri, 09 May 2008 20:31:14 -0000

I think we can assume that marketers know their business better than we do, and the simple fact is that they find search a far more compelling proposition than social networks. What do you know that an entire industry doesn't?

Re: How Advertising Works, and Why It Won’t For Facebook

John — Fri, 09 May 2008 20:28:31 -0000

So how would you do it? Lay out a scenario.

Re: How Advertising Works, and Why It Won’t For Facebook

Dane — Fri, 09 May 2008 18:20:24 -0000

I agree, the current ad revenue model for Facebook and other social networking sites is pretty bogus. Facebook tried to break some new ground with Beacon but failed because it was too invasive. They didn't even think through the major difference between an opt-in and opt-out program. The privacy advocates went on a rampage, and they had to pull the plug. Too bad for them, since Beacon would have been the missing link for the 'focus' issue that you mentioned. Users are on Facebook to see what their friends are doing, so they should be interested to hear about the things their friends are buying.

FriendFeed seems to be fairing well with this model using their social network feeds from sites like Amazon and Netflix, and I suspect this revenue stream will continue to grow for them. The funny part is that there's a Facebook app for FriendFeed.

Re: How Advertising Works, and Why It Won’t For Facebook

SomeNametoPost — Fri, 09 May 2008 17:27:45 -0000

Well, I don't believe Im contradicting myself.

1. I didn't say ALL google ads were "wasted".

2. I have been suggesting "wasted" from a relative perspective not an independant perspective. ie. Is your one dollar better spent targeting a specific demographic or better spent on a generic search engine? If you believe the first then the latter is a "wasted" dollar, relatively, not completely and indpendantly. I say this because I think google uses a brute force model and many adveristing dollars are thus wasted (relatively). I do beleive this has been expressed in my earlier posts.

3. If you go back and read, you'll notice my comments are also relative to "The future of advertising is in social network sites"....not based upon todays advertising earned dollars.

Re: How Advertising Works, and Why It Won’t For Facebook

SomeNametoPost — Fri, 09 May 2008 16:33:24 -0000

I did say "half of the google ads are wasted" - I did not say all.

Simply put. Facebook is not taking "ad"vantage (terrible Joke I know) of it's inherent ability. When they do, I believe they will become successfull.

Re: How Advertising Works, and Why It Won’t For Facebook

Evan Hamilton — Fri, 09 May 2008 16:12:22 -0000

Great post. I largely agree, though I also think that Facebook has been smart enough thus far that they won't only stick to their current focus. They'll find new ways to innovate while MySpace will continue to make a mint exploiting their community until it's gone.

It does surprise me that Facebook hasn't gotten smarter with "social graph"-based advertising. I frequently see ads on Facebook for same-sex dating sites. I am (and have set on my Facebook profile) heterosexual and in a relationship. These ads don't offend me, but why am I seeing them? That is a truly wasted ad.

I think what Facebook *could* have over Google is a sense of what is most important to a person. Google knows what you want RIGHT NOW, but Facebook *should* be able to figure out is what I like most. If I have listed Wilco in my musical interests, I become a fan of Wilco's Facebook Page, and my last.fm app lists Wilco as a frequent play, they should show me ads for Wilco stuff! This seems rather straightforward...if they just pay attention to what I like MOST, they will get my attention.

Re: How Advertising Works, and Why It Won’t For Facebook

mattmaroon — Fri, 09 May 2008 15:13:04 -0000

Who uses msn? Its just too easy to open a new tab and google search for that to be relevant.

Re: How Advertising Works, and Why It Won’t For Facebook

James — Fri, 09 May 2008 15:10:15 -0000

facebook + MSN live search = social + intent

Re: How Advertising Works, and Why It Won’t For Facebook

Pundit — Fri, 09 May 2008 14:40:19 -0000

"This also neglects to understand the complex dynamics of advertising. If a user searches for “buy Ford Focus” in google, what has google done here for ford?"

You can test this yourself. Type "buy Ford Focus" into Google and examine what the sponsored links. I just did it and Ford is only one of 11 advertisers to pay for ad space tied to that request.

Re: How Advertising Works, and Why It Won’t For Facebook

Pundit — Fri, 09 May 2008 14:37:44 -0000

"You're right that's it all about staying in touch and communicating with friends. The consequence of this is that people are paying attention to other people, not to the ads floating around their page."

Another excellent point.

Re: How Advertising Works, and Why It Won’t For Facebook

Anders Conbere — Fri, 09 May 2008 14:19:30 -0000

But if you look at the research, /that/ kind of advertising doesn't end up being particularly effective. Nowhere near as effective as recommendation based ads, associative advertising or brand affinity.

I'm not denying that Google has some massive advertising might, and that it's very effective at linking users to places to buy products. I'm simply arguing that our current methods of measuring the effectiveness of advertising give enormous bias to search providers because of the prevalence of last click wins.

Re: How Advertising Works, and Why It Won’t For Facebook

Pundit — Fri, 09 May 2008 14:11:09 -0000

You contradict yourself. If I am not committed to buying a Focus, the advertising is not wasted because it can persuade me to do so (hence Toyota counter programming). If I have already decided to buy, the vast majority of ad results are based around actually making the purchase (regional dealers, online brokerages and the like). In either case the ad dollars are more wisely spent with a better likelihood of return than a "hope" that using the words "Ford" and "Focus" in a social network post mean I have any interest whatsoever in learning more about the Ford Focus or where to buy one. You seem to overlook the fact that Ford is not the only advertiser in a search return and the impact of this is not to be underestimated - Google has made $42 billion over the last five years on advertising, because its model works, and works effectively for advertisers. Facebook and its peers are struggling to monetize because their platforms are not remotely as effective for advertising.

Social network advertising is really just poor man's broadcast advertising. The best it can hope for is an enforcement of brand awareness, whereas search advertising can lead directly to a sale. But it gets worse, because "focused" social network advertising can actually repel potential customers in a way search ads never will. Again I refer you to the Beacon debacle, which also puts paid to your assertion that Internet audiences treat the medium as indistinguishable from broadcast or cinema.

Time has already told the tale. News Corp is taking a hit on MySpace after discovering it's a relative failure as an ad platform. Google appears to be reaching the saturation point for its model, but a simple revenue comparison tells us all we need to know. The industry is growing increasingly worried social networks will not prove the ad jackpot some have envisioned, although if you are an "outsider" of course you wouldn't know that. Don't assume all guesses are equal, or that everyone who posts to this blog has access to the same information.

Meanwhile, the next time I ignore a Google search ad return at least I know it will have some bearing on my actual point of interest. Whereas if I ignore a hypothetical "conversation scan" ad display based on the content of this post I could get anything from a Ford Focus ad to a plea to buy "The Outsiders" on DVD to a shill for the Beacon restaurant in New York City - none of which have any bearing on the real point of this discussion.

I'm sure you can see the problem.

Re: How Advertising Works, and Why It Won’t For Facebook

mattmaroon — Fri, 09 May 2008 14:09:21 -0000

How is it wasted for a local ford dealership to advertise to people in its area who Google for "buy Ford Focus"? I mean, I don't run a Ford dealership, but I would think that's pretty ideal.

Also, the person to which you are replying is not me, but I think he's totally correct.

Re: How Advertising Works, and Why It Won’t For Facebook

mattmaroon — Fri, 09 May 2008 14:07:44 -0000

Totally agree with all of this.

Re: How Advertising Works, and Why It Won’t For Facebook

mattmaroon — Fri, 09 May 2008 14:04:04 -0000

That particular search doesnât do much for Ford, but it does a lot for local Ford dealerships. Google for that and thatâs what you see.

Ford might do a better job advertising on keywords that are competitive. Google for Chevy Cobalt (I'm just guessing that's a competitor since I know little about American cars) and that might be a great opportunity.

Re: How Advertising Works, and Why It Won’t For Facebook

mattmaroon — Fri, 09 May 2008 13:59:04 -0000

The market says thatâs untrue, at least currently. It proves I'm correct for now. Otherwise Facebooks (and MySpaces) effective CPM wouldnât be some tiny fraction of Google's.

Re: How Advertising Works, and Why It Won’t For Facebook

mattmaroon — Fri, 09 May 2008 13:57:03 -0000

Everyone says this, convinced that it's a potential oil field just because it exists. I just don't get why.