Is Facebook really a strong ad platform?

This week I was interviewed by Martin Giles of the Economist for his excellent article about the Facebook IPO.

This subject is by no means small beans for online marketers because the reality is that Facebook is indeed one of the most powerful platforms for consumer marketing that exists today. Why do I think this?

Well, firstly a Facebook page is uniquely an environment where the content has been written specifically by, or for, the individual user who owns that page. It’s highly personal and therefore some of the most powerfully engaging content a user will experience on the web. Placing an advertising message in such highly prized content almost guarantees it gets noticed (provided it’s made relevant, which is sadly still a problem advertisers have not solved in most cases on Facebook)

Secondly, the home page, unlike many web pages, has relatively little ad clutter. Facebook needs to watch this because I see a worrying trend of more and more ads on my page, but generally speaking only a very small percentage of ad page real estate is dedicated to ad messages.

Thirdly, the user profiling for advertisers will only get better. Already users voluntarily give up a ton of personal data to Facebook that can be used to target ads. The audience segmentation is vast and so it’s really quite easy to develop ad messages that are relevant to the consumer… it’s just that most advertisers are too lazy to do it.

With all this said there are still issues. Firstly, the Facebook model is having trouble scaling. Minimum serviced media buys start at $50K. If you have less than that you must buy through a self service online model. There are lots of potential advertisers who will not want to spend that amount.

Performance data is harder to come by with Facebook campaigns and that will undoubtedly slow growth with agencies and clients that use data for modelling.

As per Martins article the mobile platform is also a challenge since growth in traffic there if not monetized will leave big dollars on the table.

Facebook really needs more advertiser tools, so it’s future may depend upon companies like Wildfire Interactive who have the ability to help craft and build Facebook campaigns and pages that ultimately grow user engagement.  Many brands are adopting such tools and as they see campaign work the growth in commitment to this Facebook audience will grow, as will revenues.

Finally the biggest question of all… will Facebook still be huge in 5 years time? Valid question if you recall MySpace and it’s fall from grace. I know a lot of Facebookers and the ones who were most active several years ago hardly post at all now. However, new users and the younger generation are still really quite active and it’s still a massive global audience on offer. Personally, I don’t see it going anywhere for a while. Even with new social competitors the reality is Facebook has captured a large slice of pie and users will need something compelling to just up and leave. I don’t see any clamor for example from my network to move wholesale to Google+.

So yes Facebook is a powerful ad platform but it will only grow with better servicing of the advertising community and a continuation of it’s ability to micro target users. Sadly this may take more time than the street now gives it time for and I expect dissapointing results to hurt Facebook before they get the ad model right.

Dick Reed
Just Media, Inc.


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