8 Comments

Show me the money

Hard to believe that Jerry Maguire was showing in theaters way back in 1996. Kind of makes you feel old, doesn’t it? But given that the film is now 16 years old, it’s not so surprising that the refrain “Show me the money” has entered our society’s every day lexicon. Who could have ever predicted that Facebook would be in the category of companies and/or people shouting out this refrain, however?

In addition to Facebook’s continuing IPO slide, Advertising Age recently reported, “To Facebook’s chagrin, time spent online doesn’t equal money.” The gist of the article is simple – in 2011 people spent 13% of their time on Facebook – that’s in comparison to 11% on Google (including YouTube) and only 7.9% for Yahoo. Given that, it would be easy to hypothesize that Facebook advertising would be the most successful. The more time people spend on a platform the more ads they are likely to see, and statistically, this would seem to indicate that more people would be likely to click on an ad and create revenue for everybody.

Oddly, however, just the opposite is happening. According to the Advertising Age article, Facebook made $3.1 billion in 2011, a paltry figure when compared to Google’s $36 billion.

So what’s going on here? According to the article, it may be misleading to try to draw a straight line  between attention (or time) and advertising success. However, there may be another facet to this story. According to Ryan Holliday, who actually tried to find success using Facebook ads,

People go to Facebook to interact with their friends. It is fundamentally different from the ad platform that is Google. People go to Google to find something they need, possibly ready to buy, which a good percentage of the time can in fact be solved by someone’s ad. Facebook ads, on the other hand, annoy users. They yield no real value, and thus no profits.

Holliday goes on to suggest that unless you are selling an app, your ad program is probably not going to work.

Back to Branding

The Advertising Age article suggests that eventually, brands will start using Facebook ads for branding rather than for direct response. This is the same path that online banner ads have taken. Click rates have become negligible, and the success of the campaign is based more on faith that people seeing your brand in the right place at the right time will ultimately impact sales long term. The problem is that Facebook is not the best environment for most companies. People go to Facebook to talk with their friends. People go to publication websites or industry websites to learn about products or services relevant to their jobs. Does this mean we no longer think having a Facebook presence is a good idea? No. Our position has not changed – having a presence on Facebook, when integrated with other marketing tactics – can still be highly effective and remain two very different things.

Will Facebook ever be able to bridge this gap? Advertising Age seems confident they will. We’re not so sure. What do you think?

Image Credit: http://www.flickr.com/photos/59937401@N07/5929474535/ via Creative Commons

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8 comments on “Show me the money

  1. Back in 1996 I actually thought Tom Cruise was a normal guy; THAT is more incredible to me that the development of Facebook.

    This post reminds me of a conversation I had with @SamFiorella about banner ads and how some of the most visited sites fail because people go there to READ the articles, not be sold to.

    I’m sure it’s difficult to advertise on Facebook but I know that it works because I personally have been drawn to “Like” a Brand because of their ads. Now that’s a “Like,” not a purchase. It’s up to them to convince me to do that via their page activity.

    • Yeah, time does make an impact on a person I guess. He wasn’t even jumping on couches yet 🙂

      That’s interesting that you have gotten enticed by some ads on Facebook – I never have really, that I can think of. As you say, too, liking is not the issue – it’s revenue-an actual sale, that seems to be the problem.

  2. I don’t remember the source, but another writer has likened advertising on Facebook to interrupting a group of friends at the bar to try and sell them something. That just isn’t why they’re there. Nonetheless, I have a hard time regarding three billion in annual revenue as a complete and total failure. What failed was expectation management… but that’s only IMHO, of course. Thanks for another thought- and discussion-provoking piece, Marjorie.

    • Well, right, money and failure are relative parts of life, huh? 🙂

      Expectation management is I think a huge problem in marketing today, whether offline or online. People are not strategizing and thus either think everything they do will go viral or that everything they’re doing isn’t working. It’s a real shame.

      Thanks for your kind words!

      • Agreed, managing client expectations is vitally important… We once had a client tell us that according to their friend’s son out in Los Angeles — he should know, he lives in L.A., right? — ALL we had to do was make them a viral video and they’d be huge. After changing into my Boromir costume, I had to break the news to them that one does not simply… make viral videos on demand.

  3. […] time, as we mentioned here on this blog, there has been a lot of conversation about whether or not Facebook advertising works. If you are new to marketing and/or advertising, you’re probably feeling a little […]

  4. […] indicating that even though people are spending increasingly long amounts of time on Facebook, ad clicks are not increasing, much to Facebook’s chagrin. There are many potential reasons for this discrepancy between […]

  5. […] indicating that even though people are spending increasingly long amounts of time on Facebook, ad clicks are not increasing, much to Facebook’s chagrin. There are many potential reasons for this discrepancy between time […]

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