Facebook wasting advertiser dollars?
How Facebook (FB) is wasting advertiser dollars. Advertisers getting more bang for the buck with Google (GOOG).
Advertisers want targeted advertising. Ads that will be displayed to users, that will find the advertisements to be relevant based on the users interests.
Facebook (FB) displays ads at to users that the advertiser selects based on demographics such as location, age, and selected keywords for topics. However, Facebook advertising contributes to potentially wasted advertising dollars. Here is an example.
Example: XYZ pest control company, runs a Facebook advertisement for free home inspections. It gets displayed to users 18+ years old, located within 15 miles of Orlando Florida, using keywords pest control. That is how the ad runs. Here is where the potential waste of advertising dollars happens. A user posts on his timeline that he has a bug problem in his house, then multiple other users comment on his post "Sorry to hear about your bug problem." or something similar. Just because a user comments on another users timeline "Sorry to hear about your bug problem." doesn't make pest control an interest or relevant to the commenting users. And when Facebook displays the pest control advertisement to the users commenting "Sorry to hear about your bug problem." advertising dollars are probably being wasted.
XYZ pest control company, runs a Google (GOOG) advertisement for free home inspections. It gets displayed to users who are actively searching the web expressing a current and relevant interest for pest control and any related searches, located within 15 miles of Orlando Florida.
This is why Google advertising model is superior to Facebook.
It's hard enough as an advertiser to grab a users attention on Google, where a relevant ad is being displayed based on the users search topic. Facebook is social networking. It is even harder to grab a users attention that is "socializing"
Until Facebook can implement an advertisement delivery system to increase an advertisements relevance based on the users interest, FB can't deliver the same "bang for buck" that Google can.
I am sure this has something to do with why GM pulled it's FB advertising campaign. That money is better spent with GOOG.
Not to mention, the erosion of revenues that mobile advertising is already causing, as no one appears to have successfully monetized the mobile landscape with advertising.
I am patiently awaiting Facebook stock to take a turn for the worse such as it's counter part Zynga(ZNGA). Until the following issues are resolved.
1. Facebook advertisement delivery system needs to be improved to reduce potentially wasted advertiser dollars.
2. Facebook needs to find a way to monetize it's 900+ million users, which it is currently failing miserably to do. Facebook will never have as many advertisers as it does users. Facebook needs to get money out of users pockets to become a real winner.
3. How much value is there in Facebook? Facebook currently has a value of "zero" to it's users, as Facebook is free. If Facebook wanted to charge it's users a monthly fee to use the service it would probably cause a mass exodus. Which means Facebook has little to no monetize-able value to users becuase users wouldn't be willing to use it if they had to pay for it.
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Page Updated Last on: Jul 25, 2012