Facebook, PPC, and Facebook PPC

I think I would have to tear up my online marketing membership card if I didn’t write something about Facebook this week. There has been no end to the speculation of Facebook’s value after last Friday’s IPO. But, I thought I could contribute something regarding Facebook’s value from an advertiser’s perspective.

There has already been some rumblings about the lack of value that Facebook provides for their advertisers. General Motors recently pulled $10 million in paid advertising from the site. A survey from Greenlight Digital found that 44% of Facebook users will never click on an ad. So if you’re finding that Facebook PPC ads just aren’t working for you, you’re certainly not alone.

I’ve had great results from search-based PPC ads with nearly every company I’ve worked with. But I’ve never seen Facebook ads work fantastically well for anyone. For certain companies, a Facebook ad can kind of work, but for most companies it’s just not a good fit. I know that there are some companies have done really well with Facebook advertising, but I think that success with Facebook PPC is something of an outlier.

Here’s the problem: people go on Facebook to be with their friends. There’s no purchase intent to socializing. Users will see your ads, but they’re far too busy doing things on Facebook (like looking at cat pictures or untagging themselves from photos of last night’s kegger) to suddenly leave the site and go on to complete a conversion on your site. Display ads on other webpages have the same problem. You may get some impressions to build your brand awareness, but getting conversions is always an uphill battle because you’re competing for attention.

However, having a genuine social presence on Facebook does work really, really well. Facebook’s problem is that the services they offer for free (Pages for companies and organizations) work so much better than their paid advertising services. Like I said before, people go on Facebook to be with their friends. If your company can make friends on Facebook first, then market to them after the fact, you’re going to see good results. But if you flip the relationship and market to people before they become friends with you, you’re not going to get very far.

Google and the other search engines had the opposite experience, to their advantage. While SEO is effective and free (as long as you don’t consider the salaries you’re paying your SEO workers/agencies), PPC converts better. Turns out that having a paid advertising product that works better than your free advertising product translates into billions of dollars in profit. Take note, Facebook.

So is this problem insurmountable? Probably not. I am extremely skeptical about Facebook’s PPC platform as of this moment, but I don’t doubt that it can get better. Right now, advertisers are being star-struck by Facebook’s status as the Next New Thing. Once they find out that they’ve wasted the entirety of their experimental budgets, they’ll leave the platform unless Facebook makes some major changes to make their ads more effective. I don’t envy the people who have to work on this problem. You need to appease your advertisers to make money, but you can’t insert so much advertising on your site so that you anger your user base. If Facebook wants to remain a profitable company (and live up to that crazily high valuation), they’re going to have to work out a way to appease both their loyal users and the advertisers that want to make a buck or two off of them.

About Shawn Livengood

Shawn Livengood is a search engine marketing professional based in Austin, Texas. He has extensive experience managing pay-per-click ad campaigns for clients in various industries, from small home-based businesses to large international companies. You can connect with Shawn on Google+.
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One Response to Facebook, PPC, and Facebook PPC

  1. Ozio Media says:

    The biggest challenge that Facebook has to deal with before it can justify the value placed on the company at the IPO is the advertising model that it uses. If 44% of users will never click on an ad, there are still 56% who will, at least once. Facebook has to find a way to leverage those users more effectively.