Comment by netcan | Hacker News Reader

Comment by netcan | Hacker News Reader

I think Facebook is making mistakes.

Adwords grew explosively, but relative to the expectations of Facebook, Google looks patient. Adwords didn't start off with ten million customers with endless budgets. They started off letting people buy $20 worth of ads at 5¢-50¢ per click. Some people figured out ways of selling ebooks or whatnot at a profit and figured out things like split testing, conversion tracking and such. They were then qualified to be consultants and go door to door to electricians or removalists who got a good ROI and eventually allowed the consultants to spend an extra $350 per month. Then they hired an in house 'PPC Specialist' who spend their week figuring out new ways to profitably send Google more money. A lot of the campaigns set up 5 years ago are still active. I worked as a consultant back in 2007 and most of the campaigns I set up are still running.

It took some time to figure out that Adwords works for dentists but not for burgers or detergents. That wasn't immediately obvious. Burgers and detergents were the big spenders of the advertising world and a platform that didn't work for them was a toy.

There were a lot of ultimately stupid campaigns started. Half the initial customers tried to get a better CPM (cost per 1000 impressions) by optimizing for a low click through rate, benefiting no one. Google killed this off by creating adrank. The other stupid advertisers were eventually outcompeted by those who could turn their click into revenue more efficiently.

My point here is that Google put a tool out there. It took time before users (advertisers) were good enough at using it to put pressure on the bids and bring up prices. Someone figured out how to sell car insurance. Comparison sites were created. They signed deals with insurance companies. Ecosystems developed.

Facebook ads aren't useless. They just work for some stuff. The advertisers just need time to figure out what works. If you are having a town fete and want parents with small children to know you have a petting zoo, Facebook ads will get you customers physically driving to you for cents. Incredible value.

Facebook is just impatient. They keep moving the posts in an attempt to find a formula rather than making good tools, leaving them out there and letting advertisers find the formulas.

The mistakes that FB are making have more to do with them going back on their word and constantly moving the goalposts.

First, you could easily get likes and share with them. Then, you had to essentially buy likes to speak to everyone. Now, you have to buy likes and then buy the right to speak to everyone.

It's not right, and it's a horrible experience, both as a user and an advertiser. When I like a page, it means I want to see everything they send me unless I click to hide it or content like it.

As an advertiser, the double taxation is brutally distasteful. Stock might be up, but I'm with the OP.

I think the problem is that by encouraging likes they changed the meaning of likes, and both the user and the advertiser ended up getting stiffed. The number of likes a page has is meaningless. They are just crappy and FB needs to move to something else.

But I agree with you. They encouraged advertisers to get likes by advertising and let them believe that is valuable. Then they devalued the likes (this happened almost naturally, people like too many things). So, they did screw their customers around.

"The keep moving the posts in an attempt to find a formula rather than making good tools."

I disagree. They have been rapidly improving their tools (which in the past were absolutely useless). The improvements are the main thing driving the change, and they are using what they hear from advertisers to inform their changes. The difference between Facebook and Google is that the intent piece of Google made building an ads product that is essentially native and noninvasive to the users much simpler than Facebook. The WSJ piece from recently spelled it out, but the leadership of Facebook only recently started thinking about putting its best people on the ads product.

Overall, it's a sinking ship. People don't go checking out someone's profile looking to buy car insurance, people don't check the news status looking to read more about plumbing in the local hood. Hardly on Google's level imho. Facebook is used like a yearbook you check everyday but only a couple of pages in your interest. Unless they start watermarking profiles with ads it's hardly going to even get most people's attention even if it was plastered all over the page.

It's only a matter of time before they realize they can't beat google and the sad reality hits, they can't monetize. There's no way to monetize hundred millions of people around the world who don't have wallet or credit card. Likes is a good example of this. Even if people who use facebook have a credit card they are probably not in the buying mood. Friend tells me a product is good, one still uses Google to verify, unless he's a real bro and I trust his tastes. Likes is a good example of people 'paying' their useless attention which has no price. It's free anyone can give out 'likes' as many or as senselessly as they want. Instead of credit card, you get people's clicking action that supposedly builds you street cred but like this article highlights, it's mostly comprised of no significant value to the advertiser.

People don't watch television to watch commercials.

People don't drive on the freeway to see billboards.

This argument that advertising must be like google "advertise people looking for things" is not the value Facebook is offering advertisers. It's offering something significantly different and in many ways bigger. "Advertise people when not looking for things"

I've discussed this a few times with people and I think I disagree, sort of. People don't watch television to watch commercials but strange as it seems that ad for fairy dishwashing liquid is very natural to what TV does. TV makes culture, especially low brow culture. It decides what is popular, trend, famous, etc.

The laundry detergent on TV is the famous laundry detergent, just like the actor on TV is the famous one. Branding is really trying to turn the thing you're selling into a cultural icon.

The examples to counter this are beyond just television.. people don't goto airports to get advertised with IBM or barracuda advertising.

People don't goto football games to watch the Goodyear blimp.

People never ask to be advertised to but..,

Where people go in mass, advertisers want to reach them.

There is no place people go consistently more than Facebook and they have the best mechanism for targeting so many niche sets of users.

And to argue facebook isn't culturally relevant vs TV. I'm a little bit lost with that one. Memes and videos everyone must watch are a cultural phenomenon heavily driven by Facebook.

The fact that Facebook advertising targets you so well (or not) is something that is a common conversation just like talking about the annoying (or not) commercials that exist on TV.

>It's offering something significantly different and in many ways bigger.

I think that is debatable. Sure, BMW could target young Asian kids with rich parents on facebook, but there's already a rather big demographic targetting with the likes of Youtube and Google's data on a user. Google's reach of your demographic and browsing history paints a far more clearer picture for a potential advertiser, as you are more likely to notice an ad campaign when it's displayed before a youtube video or a blog you read. Facebook would be great for someone showing off their purchase not necessarily for buying products through poorly placed ads that your brain is trained to ignore.

"People don't watch television to watch commercials."

The Super Bowl is a notable exception.

First there is a business model to be had trying to sell car insurance to people while they're checking out someone's profile. Rather, there is a business model to be had trying to slowly change people's association with the brand trying to sell them insurance. It's not high CPC/CPM but Facebook have a lot of inventory and potentially good "demographic" data.

Second, a big part of being native is letting the right advertisers find you. This is what I mean about being patient. It may be hard to picture now, 10 years later but Google initially had the same problem. The real advertising budgets were looking to replace/augment their TV & poster campaigns. Advertisers were FMCGs (detergents, coca cola), cars, movies, etc. Local pilates instructors & 2 man shop insurance resellers didn't have advertising budgets. No one was searching for "what is the most refreshing drink?" so any ad for coca cola would be "non-ative" (BTW I really like this description here - thanks the_watcher).

BTW, buying is not a huge part of adwords. In fact, it's pretty hard to get a positive ROI on a "product" purchase campaign.

To give you an example, if you want to run a one off event that's good for parents with kids, Facebook is awesome. It would probably also work well for showing film trailers, showing stand up or theatre "trailers." etc.

>> BTW, buying is not a huge part of adwords. In fact, it's pretty hard to get a positive ROI on a "product" purchase campaign.

Great point.

If I understand you correctly you are talking about how adwords link to marketing landing pages that _give away_ something valuable to the user like an ebook in exchange for your email address. In this way they convert you by slowly giving away more value, building trust, and upselling premium offerings, etc.

I agree with a lot of this, and sure no one goes out looking for a plumber on Facebook but Faceboook advertising really does work. Tons of case studies show that it is extremely effective especially with CPCs < $.10 and such.

They can't monetize? They already are. I think your sentiment might apply, though. Due to the context of facebook, they probably won't be able to monetize at a Google-like scale.

The Facebook data is worth a lot, though. Google knows what you're looking for, and Facebook knows what you're already into. For best results, an advertising network would have both pieces of data.

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