A couple of weeks ago (that's 2 for anyone working at Panera's and handing out scones), I made a post about Facebook ads in response to Bob's post over at The Challenge Dividend.
Bob was kind enough to come over here and comment on the post. It pretty much backed up his original assertion that Facebook ads don't work. At least not nearly as effectively as you would think given the hype around social networking sites.
My post was one of two experiments. The experiments dealt with placing a text-ad on Facebook that pointed to an online Guitar Hero type game. It was just a small add that talked about a new version of a cool game. The kind of pass-the-time thing you would expect a majority of Facebook users to like.
In the first experiment, I ran the ad for a week and got 154,565 impressions among people who had expressed an interest in Guitar Hero in their Facebook profile. Of everyone it was served up to, 70 people clicked on it. A click-through-rate (CTR) of 0.05%. Summarized here:
In the second experiment, I dropped the requirement to have an interest in Guitar Hero to test how well a non-targeted ad performed. Results:
The CTR more than halved. This is exactly what you would expect. But it is different to Bob's original post where targeting didn't seem to have any effect on the CTR.
Bob's ad may have been a one-off. Maybe he got lucky on the CTR for the non-targeted audience? I'm not too sure. But targeting on Facebook does work. Which was my original bone of contention with Bob's conclusions.
However, the CTRs are still BAD, very bad. Targeting doubled the performance of the ad (0.02% to 0.05% CTR) - but that is like going from very crap to crap. Even average banner campaigns get to 0.1%.
Based on the cost per click, if I was selling anything on my website (assuming a below 5% conversion ratio) I would need to absorb around $20 per item sold on customer acquisition costs. Fine for some things, horrendously expensive for others.
The low CTR's on Facebook are a problem. They confirm that advertising really is the last thing you want to pay attention to when you're on the site. Maybe even less so than usual.
Like so many other things Web 2.0, it's an idea in search of a business model (Twitter anyone?).
Media was always bought on 'attention'. The new currency is 'intention'. Facebook needs to find 'intentions', or derive them in some way. Its current targeting is not cutting it.
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