Out of curiosity, when you say that FB ads were consistently outperformed by AdWords, can you clarify on the metrics you were using? Also, can you clarify on whether you were looking at it from a cross-channel attribution perspective?
In many cases, a successful conversion might require multiple touch points, and Facebook can actually be a pretty effective tool for building awareness and peaking initial interest. There are many marketers out there who will tell you they have social networks as a high-volume first (or early) touch point, and then it takes several organic clicks, display impressions, maybe some email, paid search, etc. before someone actually converts.
Each of those touch points ads some value. Calculating exactly how much they actually add is at the bleeding edge of problems the ad tech industry is trying to solve as it is a staggeringly difficult puzzle to solve with any degree of accuracy. But with the right analytics in place, it is currently pretty easy to see where certain channels tend to impact the funnel, and if you can control for it enough in your tests, you can try to measure the lift they contribute. Heck, you can start looking in the multi-channel and attribution reports in the free version of GA to get a sense. Of course the data-driven dynamic attribution modeling capabilities are reserved for GA Premium (or companies like Adometry, VisualIQ, Convertro, etc. which have all been acquired by Google, AOL, etc.).
Each of those touch points adds some value. Calculating exactly how much they actually add is at the bleeding edge of problems
And that may be a big part of the problem: short of direct engagement (i.e. clicks), it can be very difficult to determine whether FB or any competitive channel is helping you to "build awareness". I think the relevant and objective metric of effectiveness, then, has to be the CTR (with conversions secondarily providing a measure of traffic quality).
That is, if you know you're getting, say, a 3X click-through rate from Adwords and the same conversion rate on both, then you don't have to guess as to whether FB has the near-impossible-to-measure quality of "building more awareness". Of course, Adwords could also be building that awareness, in addition to the very real value that you can easily quantify.
So, perhaps at some future point FB will be able to quantify this more elusive "awareness" metric and additionally prove its value over Adwords in that department. But, it's a tough hill to climb and the value of the awareness also has to supersede the very real and tangible value of the additional click-thrus realized through other channels.
Until that day, I can't see the value of continuing to invest in Facebook. There's just no discernible ROI.
Well, simple click-through rates were the starting point of engagement, and there was much fall-off there. Conversion rates, once on our site, were effectively constant across channels.
I think it's a sheer problem of visibility and intentionality while people are on FB.
Facebook can actually be a pretty effective tool for building awareness and peaking initial interest...
I'm not sure about this, or at least from a cost-benefit perspective. I think FB ads are much more likely to be completely ignored, so you need many more impressions to build that awareness. And, you know, it's not a pure CPC model, so you're paying even when people aren't engaging.
I think the ads simply drown in the content that people are actually there to consume. FB tacitly acknowledged the issue by attempting to make its ad format more prominent and news feed ads certainly help, however, our experience has been that people are still more likely to ignore (or at least not engage with) a FB ad vs. a search result ad.
If a business makes spark plugs and sells them to stores it knows exactly how much it costs to make the product and how much the stores are willing to pay. These direct connections between inputs and outputs allow for effective price discovery.
However with Facebook and Twitter there is no pricing mechanism between what a user is worth and how much a user costs.
This is a general issue for any business that subsidizes operation costs with advertisements. Television and radio rely on outside ratings firms and market research companies to operate efficiently. TV and radio are passive experiences and advertisements are generally effective for certain kinds of products. The TV and radio stations are incentivized to make great content for both their audience and their advertisers.
Google AdSense has a fully functional marketplace where advertisers bid for keywords. This works because people use search engines to, well, search for things. A lot of the time they're searching for things they want to buy. The better the search results, the better the value for both the advertiser and the user.
People don't go to Facebook or Twitter to search or to buy things. They go there to communicate, to reference, publish and browse media, and to establish an identity.
They're fighting their users at every step. Their only course of action is to own their customers data and control their actions and identity. They cannot offer privacy to their users because they need to sell that information to marketers. They can't let 3rd parties have equal access to their users data and identity. They've got to control and restrict 3rd party clients. They rely on artificial scarcity.
This hurts both users and advertisers. These inefficiencies and misaligned incentives are passed on to both parties. It makes for a less effective marketing platform. It also makes for a worse product for users by interfering and adding noise to their communications.
The majority of Twitter's product was developed by outsiders. Retweets and hash tags are the result of a community of users and developers in control of their own evolution.
However, since the only way for Twitter to make money was to "just slap some ads on it", they had to have asymmetric read and write privileges.
That means they have to try and replicate the same kind of evolutionary product but with a limited number of internal and very expensive designers and developers. And again they're not incentivized to provide value for their users. They're incentivized to extract value.
Neither Facebook nor Twitter make content. They just provide the service of storing and organizing an ungodly amount of information. This is definitely a very valuable service. The problem is that it is a service much like how electricity is a service. It makes about as much sense to give out free energy and then "just slap some ads on it" as it does for these companies to give out free communication channels and then fill them with noise.
The store that sells spark plugs has customers. The spark plug manufacturer has customers. Their suppliers have customers. They know who wants what, how much they're willing to pay, and how to advertise to them.
Facebook and Twitter have users. The only customers in the equation are the advertisers. They have no idea how much their users are willing to pay and they have no idea how much their users are worth. They price ads based on what must amount to voodoo projections of their operation costs and a blind balancing act of signal-to-noise.
"Facebook and Twitter have users. The only customers in the equation are the advertisers. They have no idea how much their users are willing to pay and they have no idea how much their users are worth. They price ads based on what must amount to voodoo projections of their operation costs and a blind balancing act of signal-to-noise."
Are you referring to advertisers or the social networks with your comment about "voodoo projections"? For many advertisers, yes, it is very hard to pin down a proper value for acquisition through any digital channel except in certain direct response cases. With advanced attribution technology though, it is increasingly possible to dial in the proper mix of channels needed to maximize certain targets (conversion volume, revenue, efficiency, profit, etc.).
The fact that marketers also struggle to pin down a value means that there is literally no price discovery mechanism for these social media products. What a nightmare...
Comments
Out of curiosity, when you say that FB ads were consistently outperformed by AdWords, can you clarify on the metrics you were using? Also, can you clarify on whether you were looking at it from a cross-channel attribution perspective?
In many cases, a successful conversion might require multiple touch points, and Facebook can actually be a pretty effective tool for building awareness and peaking initial interest. There are many marketers out there who will tell you they have social networks as a high-volume first (or early) touch point, and then it takes several organic clicks, display impressions, maybe some email, paid search, etc. before someone actually converts.
Each of those touch points ads some value. Calculating exactly how much they actually add is at the bleeding edge of problems the ad tech industry is trying to solve as it is a staggeringly difficult puzzle to solve with any degree of accuracy. But with the right analytics in place, it is currently pretty easy to see where certain channels tend to impact the funnel, and if you can control for it enough in your tests, you can try to measure the lift they contribute. Heck, you can start looking in the multi-channel and attribution reports in the free version of GA to get a sense. Of course the data-driven dynamic attribution modeling capabilities are reserved for GA Premium (or companies like Adometry, VisualIQ, Convertro, etc. which have all been acquired by Google, AOL, etc.).
And that may be a big part of the problem: short of direct engagement (i.e. clicks), it can be very difficult to determine whether FB or any competitive channel is helping you to "build awareness". I think the relevant and objective metric of effectiveness, then, has to be the CTR (with conversions secondarily providing a measure of traffic quality).
That is, if you know you're getting, say, a 3X click-through rate from Adwords and the same conversion rate on both, then you don't have to guess as to whether FB has the near-impossible-to-measure quality of "building more awareness". Of course, Adwords could also be building that awareness, in addition to the very real value that you can easily quantify.
So, perhaps at some future point FB will be able to quantify this more elusive "awareness" metric and additionally prove its value over Adwords in that department. But, it's a tough hill to climb and the value of the awareness also has to supersede the very real and tangible value of the additional click-thrus realized through other channels.
Until that day, I can't see the value of continuing to invest in Facebook. There's just no discernible ROI.
Well, simple click-through rates were the starting point of engagement, and there was much fall-off there. Conversion rates, once on our site, were effectively constant across channels.
I think it's a sheer problem of visibility and intentionality while people are on FB.
I'm not sure about this, or at least from a cost-benefit perspective. I think FB ads are much more likely to be completely ignored, so you need many more impressions to build that awareness. And, you know, it's not a pure CPC model, so you're paying even when people aren't engaging.
I think the ads simply drown in the content that people are actually there to consume. FB tacitly acknowledged the issue by attempting to make its ad format more prominent and news feed ads certainly help, however, our experience has been that people are still more likely to ignore (or at least not engage with) a FB ad vs. a search result ad.
If a business makes spark plugs and sells them to stores it knows exactly how much it costs to make the product and how much the stores are willing to pay. These direct connections between inputs and outputs allow for effective price discovery.
However with Facebook and Twitter there is no pricing mechanism between what a user is worth and how much a user costs.
This is a general issue for any business that subsidizes operation costs with advertisements. Television and radio rely on outside ratings firms and market research companies to operate efficiently. TV and radio are passive experiences and advertisements are generally effective for certain kinds of products. The TV and radio stations are incentivized to make great content for both their audience and their advertisers.
Google AdSense has a fully functional marketplace where advertisers bid for keywords. This works because people use search engines to, well, search for things. A lot of the time they're searching for things they want to buy. The better the search results, the better the value for both the advertiser and the user.
People don't go to Facebook or Twitter to search or to buy things. They go there to communicate, to reference, publish and browse media, and to establish an identity.
They're fighting their users at every step. Their only course of action is to own their customers data and control their actions and identity. They cannot offer privacy to their users because they need to sell that information to marketers. They can't let 3rd parties have equal access to their users data and identity. They've got to control and restrict 3rd party clients. They rely on artificial scarcity.
This hurts both users and advertisers. These inefficiencies and misaligned incentives are passed on to both parties. It makes for a less effective marketing platform. It also makes for a worse product for users by interfering and adding noise to their communications.
The majority of Twitter's product was developed by outsiders. Retweets and hash tags are the result of a community of users and developers in control of their own evolution.
However, since the only way for Twitter to make money was to "just slap some ads on it", they had to have asymmetric read and write privileges.
That means they have to try and replicate the same kind of evolutionary product but with a limited number of internal and very expensive designers and developers. And again they're not incentivized to provide value for their users. They're incentivized to extract value.
Neither Facebook nor Twitter make content. They just provide the service of storing and organizing an ungodly amount of information. This is definitely a very valuable service. The problem is that it is a service much like how electricity is a service. It makes about as much sense to give out free energy and then "just slap some ads on it" as it does for these companies to give out free communication channels and then fill them with noise.
The store that sells spark plugs has customers. The spark plug manufacturer has customers. Their suppliers have customers. They know who wants what, how much they're willing to pay, and how to advertise to them.
Facebook and Twitter have users. The only customers in the equation are the advertisers. They have no idea how much their users are willing to pay and they have no idea how much their users are worth. They price ads based on what must amount to voodoo projections of their operation costs and a blind balancing act of signal-to-noise.
Are you referring to advertisers or the social networks with your comment about "voodoo projections"? For many advertisers, yes, it is very hard to pin down a proper value for acquisition through any digital channel except in certain direct response cases. With advanced attribution technology though, it is increasingly possible to dial in the proper mix of channels needed to maximize certain targets (conversion volume, revenue, efficiency, profit, etc.).
I was referring to the social networks.
The fact that marketers also struggle to pin down a value means that there is literally no price discovery mechanism for these social media products. What a nightmare...