Nick at allfacebook.com raises some interesting issues about the poor click-through rates for Facebook’s new advertising system. I subscribe to Nick’s blog and had meant to write about this, but appreciate Jeremiah Owyang making Nick’s post part of his weekly digest so it brought it to mind again.
I’m not sure why a low click-though rate on Facebook ads should matter to advertisers, if they are only paying for the clicks.
For instance, I ran a brief campaign in a major metropolitan area and was able to target to a specific age group and communities. For less than $20 I got more than 137,000 impressions and 39 clicks, or a click-through rate of about .03 percent.
But why does that low rate matter? Could I have bought even one 30-second radio ad in a top-ten market for under $20. Not a chance, unless it was a low-power obscure station with 1,000 listeners.
How about a newspaper classified ad? Not likely to get much for a pair of Hamiltons in newsprint, either. I certainly wouldn’t have been able to include a picture.
It’s doubtful I could get a single ad on any TV station, even in a bottom-10 market, for that price.
And if your potential “customers” are not concentrated in a geographic area, obviously national mass media are prohibitively expensive.
For radio and TV there also would be creative costs for ad production, whereas Facebook ads are do-it-yourself.
Which is why I think the advertising that will be successful on Facebook will be more like eBay and less like NBC. It won’t be the huge brands dumping their tens of millions of dollars into buying push advertising. It will be mom-and-pop shops targeting ads to people most likely to need their products and services. And it will be about two-way dialogue, not pushing out messages to amass eyeball counts.
Low click-throughs may not be great news in the short term for Facebook, though, because it only gets paid when someone clicks. But the Facebook management is walking a tightrope in trying to avoid the garishness of the MySpace experience for its users. This leads them to disapprove some ads for the simple offense of one capitalized word in the text.
The new Social Ads system is only a couple of weeks old. I think it’s too early to tell whether big corporations will find ways to use Facebook effectively. They’ll need to invest more in people (staff) to engage with the community and listen to customers, and spend less on just pumping out the mass-media messages.
But for smaller businesses, non-profits and others that haven’t had opportunities for widespread advertising reach based on demographics, I believe Facebook will be a great medium. For organizations that have loyal members or customers, it will be an excellent way to spread word-of-mouth as people become Fans.