I've said this repeatedly: Facebook is a high-risk proposition, particularly as an investment (disclaimer: I work for Google). "Intent" as other commenters have noted is a big part of the story but it's not the only story.
Search can broadly be broken up into at least two categories:
1. Navigational eg typing "b and h" into the browser; and
2. Informational eg "cheap flights to jamaica".
I don't know what the make up is of (1) vs (2) but I expect for normal users (1) is pretty huge. I would guess that ads are have lower clickthroughs for (1) than (2).
(2) is where you have the intent. The user obviously wants something. They may find it with an ad. They may find it with organic search results. Either way, the goal with search is to get the user the best result.
With Facebook you tend to be just looking at friends' updates, posting your own updates, posting photos and the like. You don't go to Facebook to find things. So it doesn't really matter how much targeting information Facebook has if you don't have that intent.
Many will say "but what if you do start going to Facebook to find things". That's a massive "what if". What if the Sun expands tomorrow and swallows the Earth?
Facebook has (IMHO) a number of strategic problems:
1. It has no control over mobile. Both Google and Apple have mobile OSs;
2. It has no search engine (which is how it could monetize its user information); and
3. Users of community-driven sites are notoriously fickle. There is nothing preventing Facebook from being the next Myspace when something newer, cooler and hipper comes along and the users move on.
Early founders, employees and investors have obviously done spectacularly well and there's a lot that Facebook has done right (all the more surprising considering the length of time and the age of Zuckerberg). It's also created an engineering environment that attracts and maintains top talent (although we'll see if that last once the stock plateaus, which is simply a matter of time). But would I be buying in the IPO? Not a chance in hell.
This isn't about predicting imminent doom. Facebook will be around for years to come. It's about the upside reward vs the downside risk. Facebook somehow is still considered a "growth" company and values as such (with extraordinary P/Es). This will at some point change (as it did for Google some ~5 years ago).
You make it sound like search is the be all and end all reason why people use the Internet. It's not.
It's obvious that a Google employee would believe this, and believe me, I think Google ads are amazingly effective when used with Google search. I've just started using Adwords and it's great.
But Facebook is entirely different from Google search, and there is no reason why their monetization techniques need to be the same way that Google monetizes their users.
Facebook is more akin to TV in that people use it to browse content based on what their friends are doing. They aren't searching for things, they are browsing, which is different. So Google search and the techniques you use to monetize your users are completely orthogonal to how Facebook should monetize their users.
Facebook is more akin to a TV station, and if I had to make a choice, I would go for things like "sponsoring" of ads or items in the newsfeed. And the way Facebook could analyze the users is completely different. You could probably do an analysis on the types of articles or links that a user it clicking on, and then sponsoring items in the user's newsfeed that they might be interested in. "This news article was brought to you by the Ford Fusion" or "Your friend Janet went to Jamaica, there's a flight leaving for Mexico next Friday for $500 for 4 days, all inclusive, brought to you by Travelocity".
Right now, they are making something like $4/user/year in revenues, based on really terribly performing ads. I know this personally because I tried using it and it was terrible, even worse than Bing ad CTRs. In order to get to GOOG's revenues, they'll need to bring that up to $40/user/year. Depending on the growth rate, that would make FB worth even more than GOOG, so I don't think it's necessarily a bad investment at all. It all depends on how effectively and how quickly they can ramp up the monetization of their users.
"I've said this repeatedly: Facebook is a high-risk proposition, particularly as an investment (disclaimer: I work for Google). "Intent" as other commenters have noted is a big part of the story but it's not the only story."
As a Google employee, what do you think of Google as an investment? If you look forward 5+ years, everyone is doing much of their internetting via their phone (certainly some or all of that will be web vs. apps-- who knows?). Google gains some extra data with searches, like location. So "pizza" searches get a LOT more targeted. But many searches do not.
The rub is that Google has near-zero ad inventory on mobile. You can't show 6 adwords ads, you can show 1. Additionally, consumer's bar for tapping an ad is MUCH higher (given the relative speeds of mobile browsing). As searching moves mobile, how does Google's revenue shake out?
Display advertising has actually overtaken search advertising in revenue, and it is continuing to grow at a faster rate. This is why Google bought Doubleclick.
The US online ad market today is $32B. Growing at 8-12% per year (some estimate 25%) this year.
What is happening is old display advertising dollars are moving online, and it is happening a lot quicker than anybody thought it would. Online will overtake print this year (print will continue to shrink 8-10% p.a). TV is worth about $60B per year. Local ad spending is being hurt the most and is also the largest, bringing in around $140-160B per year.
So the trends are old advertising money moving into online. Online making up 20% of all ad spending last year to forecast ~35% next year. Print and local shrinking, and within online advertising display advertising is now larger and growing quicker than search advertising.
Knowing these trends, adapt this back to working out the companies that stand to gain. Facebook currently has the most time spent online for any website. It will be the largest display advertising inventory pool. People are no longer reading magazines, or newspapers or flicking through the Yellow Pages but rather they are spending a lot more time on the web. Spending a lot more time on the web for most average people, at the moment, means spending time on Facebook.
Being bullish on Facebook, i'd much rather that they be in the position of dominating user time and having a shitty ad product, than having a great ad product and losing user time.
Search advertising may be a lot more efficient and profitable, but display advertising is still king. It is a lot easier to create display advertising inventory than it is for search. Google moving into display advertising is all you need to know.
Facebook can fix the ad product and experiment with it over time, finding a way to best adapt those offline dollars to online display advertising. Building a site with a bilion users and a pretty good moat is a lot more difficult.
"There is nothing preventing Facebook from being the next Myspace when something newer, cooler and hipper comes along and the users move on."
I would argue that things like the massive photo collections people have made provide a large level of lock-in. I also suspect that Timeline is the first play in a "all your history, here" move that would make moving to another service very difficult.
Of course Facebook could acquire / lease Bing (or build perhaps?) and plumb that into Facebook.
A user searches within Facebook and the platform can display the results, apply highly targeted adverts and offer links to comments / endorsements (likes) by friends, Facebook exclusive material from advertisers. From within that platform Facebook could also leverage some commerce / shopping too?
I think you have left out the brand advertising, advertising that needs to hit the customer much before he is looking for something and do so repeatedly. That is the segment where Facebook seems to have a clear edge.
Google can get into action when the intention finally surfaces in form of a search. Facebook can help you to create the association between a brand and that intent in the stage before that manifestation. For example, when you are thinking of buying a smart phone, you will search for the "cheap smart phone" and restrict yourself to 4-5 top brands in your head. Or how when looking for "cheap flights", I have preference for certain airlines. Brand Advertising can help you get into that top group in people's head.
If that pie of the advertising is big enough, I have no idea.
Facebook "could" go the way of Myspace, but I'm guessing that their talent is significantly better than what Myspace had. By all accounts their engineering talent is on a similar level to Google. They're almost certainly not as good a buy as the Google IPO in 2004, where the search advertising market was still in its infancy, but look at Apple. All it takes is one amazing product that helps to spawn a brand new market and they can double their market cap. I'd guess that Facebook has as good a chance at doing that as Apple, Google, or anyone else. That said, I agree that until they actually are able to pull that off their stock is overpriced. It will probably also stay overpriced for a few years no matter what happens.
I agree with that you've said, which is why I think Google should stop listening to "expert bloggers" that Facebook and social will kill their business, and have a more thoughtful approach about social in their search engine - if they even have to use it at all.
"Hey, they had income for 3 years in a row. One billion last year. This is a sure winner."
They refuse to look at what Facebook actually does.
People will probably read your post and think you're biased because you work for Google. But there's a huge difference in what Google Plus can accomplish. You guys have the search engine data (intent) to combine with the social data.
So why doesn't Microsoft let Facebook combine with Bing? Then they would have a search engine. Or are they planning to do that already?
Is the problem with GM's ads or FB's platform? Ie - What's Ford, Toyota or Hyundai doing with their ad spend on FB? We might be jumping to conclusions a little too quickly here.
"There is nothing preventing Facebook from being the next Myspace"
You could make a similar argument about Google becoming the next Yahoo! when someone devises a better search algorithm/interface.
Most technology stocks are high risk propositions, with the exceptions of huge multinationals like IBM (their size and government contracts make them harder to challenge).
that is why Orkut and Google+ have changed the world and have movies about them. There were social media sites before Facebook and so far they have found an effective formula, this could easily change.
Not exactly your main point but I have to agree that there's nothing stopping Facebook from being the next MySpace. Seriously. Not a thing. I think at this point the massive user base and their investment (their friends, photos, life in general) is about the only thing keeping them from switching. But even that can be overcome by others simply by making the switch easier by importing that information (think using Facebook's downloadable data on you as a means to do that). I can see ads getting lots of Likes because others friends like Movie or Brand X but beyond those kinds of ads people on Facebook aren't likely to leave the site. In fact the whole site is designed to keep you there do ads are kind of useless. Likes are meaningless. They don't generate dollars. Brand awareness is about the best thing you can get from Facebook.
You're right. Intent is seriously important. People use Google search as a means to get to another source of information regardless of whether their intent is navigational or informational. People on Facebook simply stay on Facebook until they're ready to either get offline or go search google.
The terrible misfortune of web / mobile based display advertising is that you can actually track it. If you could intimately track the performance of television ads, it'd be a disaster for that segment (ditto radio).
Facebook's root problem is intent. Users who are googling something and seeing AdWords ads are looking for something and often the thing they're looking for shows up as an ad so they - suprise! - click the ad and often become a conversion once on the site.
With Facebook there is zero helpful intent. The only intent when you're on Facebook is to use Facebook. And if you do click an ad, you're less likely to become a conversion because your intent is still to get back to Facebook as soon as possible and see the rest of Dave's party photos or whatever.
Intent is huge. I've never been one to click on Google Ads except in real rare instances. Only once I observed my mom using Google did I realize the full value of intent and google ads while searching.
She wanted to watch an episode of The Good Wife that she had missed so she searched in the Safari omnibar for "watch The Good Wife" and the first div under the search bar is an ad to some site that was not CBS that had the Good Wife available to watch via streaming video. To you and I, it's obvious that this "first result" is ad and we would skip over it to the first result. But to my mom, she thinks it's a search result and clicks on it. When she arrives on the site she thinks she's on the CBS site because they naively assumes like many consumers that the site showing the content would be CBS. She doesn't even think twice about the identity. When you are used to TV, you blindly trust that the site/channel showing the content is the correct one.
The only reason I discovered this was because she asked me to pull up The Good Wife to watch on CBS. I, being a savvier internet user, just navigated straight to cbs.com to search there. I got to their Good Wife site and lo and behold, there is no streaming video available on CBS, only teasers and behind the scenes content. I told my mom that "No, CBS doesn't have it on their site" and she was like "Yeah they do. I watch it all the time". I then asked her to show me exactly how she found it on CBS and that was when she showed me that she in fact was clicking on the ad in Google Search between the search box and the search results thinking it was in fact the first result. That's the power of intent and Facebook doesn't have that.
> With Facebook there is zero helpful intent. The only intent when you're on Facebook is to use Facebook.
It isn't about intent - it is about interest.
> And if you do click an ad, you're less likely to become a conversion because your intent is still to get back to Facebook as soon as possible and see the rest of Dave's party photos or whatever.
Not necessarily. I'm working with a customer right now where I have a 24% conversion rate on movie tickets. They routinely shell out $7-$21 a pop with this conversion rate; the catch is, I have to be very careful about who I target.
This kind of trend goes across the entire industry of FB ads - target well, optimize and approach based on interest and the money will follow.
When watching TV the intent is to watch TV, not purchase soap, a car, or a soft drink. It might be that Facebook's ads are simply the wrong type/style for the kind of interaction people use it for. It does seem like Facebook ads feel like Google search ads.
For brand advertisers like GM, intent is supposed to matter less. The lack of intent was always a known factor, but I personally expected big brands to be comfortable with Facebook's lower click through rates. The fact that they're not is a huge red flag.
I wouldn't say Facebook has a huge problem here - users spend much more time on Facebook than on Google (by design) and even if they don't intend to do anything other than "use Facebook", the ads are effective as a result of their high exposure.
That said, however, a very large group of users are there to play social games. With social game companies competing for ad space (for these often highly-profitable users), they're driving up the price of ads and making it less economical for other industries to advertise on Facebook.
>With Facebook there is zero helpful intent. The only intent when you're on Facebook is to use Facebook.
This might be the case right now, but what about in the future? I think that's what Google et al. are scared about. If users spend 90% of their internet time on Facebook, and Facebook figures out how to serve users with "What they are looking for" 5 years down the road, then users will have a very low barrier to trying out the Facebook "look-up" service.
Right now, my use of the internet is (1) sites I already know exist, or (2) Google, in order to find things.
What if this becomes (1.1) Facebook, to look at things served from other sites that I like, and (1.2) Facebook, to find things that I don't know about?
That's scary for companies counting on the status quo. Sites' share of user time is important not for how they are now, but how things might become in the future. It's a huge about of leverage.
Interesting side point: the WSJ article was on HN first (http://news.ycombinator.com/item?id=3978537) but Forbes's rewrite of it got all the upvotes because the WSJ article is behind a paywall.
I work at a online advertising firm in DC specializing in political and non-profit work - mostly email list building, soliciting volunteers, awareness, etc campaign activities. We work with AOL, Yahoo, Google and Facebook, among many others.
I'm not a fan of FB's policies in general, but... We've found FB to be very effective - on a cost per acquisition basis, much more so than search advertising and on par with other vehicles.
Obviously, test to see what's effective for your needs, but I wouldn't rule out Facebook based on GM's experience. Cars are an unusually high involvement purchase, unlike most things people would be advertising.
> GM spends about $40 million a year on Facebook marketing, according to the Wall Street Journal, about $10 million of which is for paid advertisements. It will continue to post relevant content about the company and its brands on GM’s Facebook pages.
The best marketing on Facebook doesn't make Facebook any money.
It really depends on what you are trying to sell. It's pretty obvious that car ads would work better on Google: when you are in the market for a new car, you'll definitely google review sites. A perfect hint to start showing car ads.
I don't think Facebook has the data yet to detect that you are about to buy a car. If you start liking car reviews, maybe, but that's not a typical behavior.
For other products (especially the ones you didn't know you needed), Facebook beats Google hands down. So don't pass judgment one way or another too quickly.
I certainly didn't have a $10MM spend, but I also had dismal results for my B2B campaign. My takeaway is FB is purely a social place where people unwind and don't want to do any 'work' -- whether that is considering a product for their job, or the effort involved in considering a large purchase as rio517 mentions.
I agree with you. Me and anyone that I know that uses Facebook already got used to ignoring the right column by default. Slowly but surely it gets to the point that it doesnt really matter what you advertise. I challenge you, if facebook approves it, to put and add "giving money for free" with landing page and see a click rate. It will be similar to advertising anything else, because users are getting smarter (thats good) nowadays and "sounds too good" offers will steer them away.
edit: for that reason, I think Facebook advertising does not work. Or at least, does not work for the _most_ of advertisers. Its just that Facebook is still new and here and there I hear my friends being exciting about "advertising to millions of customers" and they do give it a shoot with a poor results at the end. The point is you have so many people that havent tried that yet that they still bringing cash to FB. But unless FB does something for the ads to work (change its core product?), the $ numbers will only fall.
I wasn't under the impression that advertising (for a company like GM) was supposed to "work" in any easily measurable way. Especially not $10million of a budget which, though undefined, is clearly large if they are trying to cut $2 billion from it.
I think that to measure the efficacy of a GM ad based on the same measurable activity that you'd measure an ad for (say) a T shirt company is probably a bit misinformed. No one is checking to see if anyone clicked on GM and subsequently bought a Cadillac.
A lot of the comments on the original article seem similarly misguided. ("I NEVER CLICK ON THE ADS I HARDLY EVER NOTICE THEM.") The McDonalds logo on the back fence of a baseball field isn't to convince you to walk over to it and do something. It's so that later when you drive by McDonalds you "decide" to stop.
The thing I don't understand is how can they say facebook ads don't work and even be sure of this, given that, as others have pointed out, they aren't going for a "conversion" as the purpose of the ads is branding, so that people think of their brand and eventually may buy a car made by them. They do other forms of advertising for branding, including TV ads, radio, billboards, etc so I don't know how its possible to pinpoint one channel of advertising (facebook) and say its not helping them with branding.
My guess is that they have an expectation of having more user feedback and involvement from this form of branding (people clicking the ad, filling out some bullshit form so they can bombard them with marketing material, etc), however the nature of the product may preclude itself from this sort of consumer behavior because people don't buy cars very often they may not feel compelled to engage with the brand, however seeing the ads on facebook could potentially have the same "branding" effectiveness as TV ads yet they really have no way of measuring this.
I've actually been interested in a handful of things I've seen as Facebook ads. They are generally things that I didn't know existed, wasn't actively shopping for, and sure as heck wasn't searching for. Example: http://www.mushroomnetworks.com
If anyone is going to get any sort of value out of the wealth of information I've given away about myself, it's going to be the person who opens my eyes to something new and awesome that speaks to my... unique tastes.
GM can't really be new or awesome anymore, and that's OK.
That's a $10m account of money wasted by unimaginative people.
You can go nuts with FB ads, you just simply have to get past the notion that it works the same way as every other medium. Unlike AdWords, where you bid on someone searching for "Cadillac SRX" in San Jose, FB is all about inception of interest.
The goal is to create intent in people through innovative ways; the people that spend the millions and keep doing so are the ones who actually, you know, come up with something new.
This is the same story as Google AdWords back in the day.
My limited experience is that Facebook ads, for whatever reason, don't end up costing that much, whereas it's easy to piss tons of money away with Adsense. So I'm happier with the former.
The real value of Facebook will be when they release their ad network to compete with Adsense/Adwords. Facebook is more valuable as a vehicle for collecting user data than displaying ads.
We (a quickly growing clothing company) see an amazing ROI from FB ads. We also have around 350k Likes. We advertise to friends of friends, and target similar companies, fashion companies etc.
I am betting they simply haven't found the best tactic.
There is no such thing as a surefire ad so saying Facebook ads don't work as a broad statement is misleading. Facebook ads don't work for GM the way they thought it would to accomplish their goals but they certainly work for many other companies. The problem GM has as well as most marketers is that they are comparing it to their traditional marketing channels and using those metrics to judge Facebook ads.
You also shouldn't use the number of followers as the addressable audience for the brand, the whole point of social is that messages are amplified through the network effect out towards a much larger reach of users. One user who likes one of your posts or comments on it may mean hundreds of friends seeing it show up in their subsequent feeds like "YCombinator reader just liked GM's Blah Blah".
Everyone's right below that if you're using it as a direct marketing channel, you'll most likely see failure because people want to stay on Facebook. Think of it as a way to stay engaged with your audience and as a one time investment for the ability to message to them again and again in the future. Facebook ads also work much better when you tie them to your Facebook presence vs. trying to send someone off Facebook to your site. GM should have thought of more creative ways to leverage the Facebook app platform to promote on-Facebook activities that drive brand value and help promote their new cars/trucks. For example, how about a contest on Facebook using an interactive car designer to design a GM that also allows you to upload custom patterns for the paint job. If it's two things people like on Facebook it's self-expression and contests.
[+] [-] cletus|14 years ago|reply
Search can broadly be broken up into at least two categories:
1. Navigational eg typing "b and h" into the browser; and
2. Informational eg "cheap flights to jamaica".
I don't know what the make up is of (1) vs (2) but I expect for normal users (1) is pretty huge. I would guess that ads are have lower clickthroughs for (1) than (2).
(2) is where you have the intent. The user obviously wants something. They may find it with an ad. They may find it with organic search results. Either way, the goal with search is to get the user the best result.
With Facebook you tend to be just looking at friends' updates, posting your own updates, posting photos and the like. You don't go to Facebook to find things. So it doesn't really matter how much targeting information Facebook has if you don't have that intent.
Many will say "but what if you do start going to Facebook to find things". That's a massive "what if". What if the Sun expands tomorrow and swallows the Earth?
Facebook has (IMHO) a number of strategic problems:
1. It has no control over mobile. Both Google and Apple have mobile OSs;
2. It has no search engine (which is how it could monetize its user information); and
3. Users of community-driven sites are notoriously fickle. There is nothing preventing Facebook from being the next Myspace when something newer, cooler and hipper comes along and the users move on.
Early founders, employees and investors have obviously done spectacularly well and there's a lot that Facebook has done right (all the more surprising considering the length of time and the age of Zuckerberg). It's also created an engineering environment that attracts and maintains top talent (although we'll see if that last once the stock plateaus, which is simply a matter of time). But would I be buying in the IPO? Not a chance in hell.
This isn't about predicting imminent doom. Facebook will be around for years to come. It's about the upside reward vs the downside risk. Facebook somehow is still considered a "growth" company and values as such (with extraordinary P/Es). This will at some point change (as it did for Google some ~5 years ago).
[+] [-] steve8918|14 years ago|reply
It's obvious that a Google employee would believe this, and believe me, I think Google ads are amazingly effective when used with Google search. I've just started using Adwords and it's great.
But Facebook is entirely different from Google search, and there is no reason why their monetization techniques need to be the same way that Google monetizes their users.
Facebook is more akin to TV in that people use it to browse content based on what their friends are doing. They aren't searching for things, they are browsing, which is different. So Google search and the techniques you use to monetize your users are completely orthogonal to how Facebook should monetize their users.
Facebook is more akin to a TV station, and if I had to make a choice, I would go for things like "sponsoring" of ads or items in the newsfeed. And the way Facebook could analyze the users is completely different. You could probably do an analysis on the types of articles or links that a user it clicking on, and then sponsoring items in the user's newsfeed that they might be interested in. "This news article was brought to you by the Ford Fusion" or "Your friend Janet went to Jamaica, there's a flight leaving for Mexico next Friday for $500 for 4 days, all inclusive, brought to you by Travelocity".
Right now, they are making something like $4/user/year in revenues, based on really terribly performing ads. I know this personally because I tried using it and it was terrible, even worse than Bing ad CTRs. In order to get to GOOG's revenues, they'll need to bring that up to $40/user/year. Depending on the growth rate, that would make FB worth even more than GOOG, so I don't think it's necessarily a bad investment at all. It all depends on how effectively and how quickly they can ramp up the monetization of their users.
[+] [-] webwright|14 years ago|reply
As a Google employee, what do you think of Google as an investment? If you look forward 5+ years, everyone is doing much of their internetting via their phone (certainly some or all of that will be web vs. apps-- who knows?). Google gains some extra data with searches, like location. So "pizza" searches get a LOT more targeted. But many searches do not.
The rub is that Google has near-zero ad inventory on mobile. You can't show 6 adwords ads, you can show 1. Additionally, consumer's bar for tapping an ad is MUCH higher (given the relative speeds of mobile browsing). As searching moves mobile, how does Google's revenue shake out?
[+] [-] nikcub|14 years ago|reply
The US online ad market today is $32B. Growing at 8-12% per year (some estimate 25%) this year.
What is happening is old display advertising dollars are moving online, and it is happening a lot quicker than anybody thought it would. Online will overtake print this year (print will continue to shrink 8-10% p.a). TV is worth about $60B per year. Local ad spending is being hurt the most and is also the largest, bringing in around $140-160B per year.
So the trends are old advertising money moving into online. Online making up 20% of all ad spending last year to forecast ~35% next year. Print and local shrinking, and within online advertising display advertising is now larger and growing quicker than search advertising.
Knowing these trends, adapt this back to working out the companies that stand to gain. Facebook currently has the most time spent online for any website. It will be the largest display advertising inventory pool. People are no longer reading magazines, or newspapers or flicking through the Yellow Pages but rather they are spending a lot more time on the web. Spending a lot more time on the web for most average people, at the moment, means spending time on Facebook.
Being bullish on Facebook, i'd much rather that they be in the position of dominating user time and having a shitty ad product, than having a great ad product and losing user time.
Search advertising may be a lot more efficient and profitable, but display advertising is still king. It is a lot easier to create display advertising inventory than it is for search. Google moving into display advertising is all you need to know.
Facebook can fix the ad product and experiment with it over time, finding a way to best adapt those offline dollars to online display advertising. Building a site with a bilion users and a pretty good moat is a lot more difficult.
[+] [-] untog|14 years ago|reply
I would argue that things like the massive photo collections people have made provide a large level of lock-in. I also suspect that Timeline is the first play in a "all your history, here" move that would make moving to another service very difficult.
[+] [-] eblackburn|14 years ago|reply
A user searches within Facebook and the platform can display the results, apply highly targeted adverts and offer links to comments / endorsements (likes) by friends, Facebook exclusive material from advertisers. From within that platform Facebook could also leverage some commerce / shopping too?
[+] [-] abhaga|14 years ago|reply
Google can get into action when the intention finally surfaces in form of a search. Facebook can help you to create the association between a brand and that intent in the stage before that manifestation. For example, when you are thinking of buying a smart phone, you will search for the "cheap smart phone" and restrict yourself to 4-5 top brands in your head. Or how when looking for "cheap flights", I have preference for certain airlines. Brand Advertising can help you get into that top group in people's head.
If that pie of the advertising is big enough, I have no idea.
[+] [-] Bikepump|14 years ago|reply
[+] [-] nextparadigms|14 years ago|reply
[+] [-] throwaway63-90|14 years ago|reply
Some people are just in a kind of Facebook daze.
"Hey, they had income for 3 years in a row. One billion last year. This is a sure winner."
They refuse to look at what Facebook actually does.
People will probably read your post and think you're biased because you work for Google. But there's a huge difference in what Google Plus can accomplish. You guys have the search engine data (intent) to combine with the social data.
So why doesn't Microsoft let Facebook combine with Bing? Then they would have a search engine. Or are they planning to do that already?
[+] [-] jusben1369|14 years ago|reply
[+] [-] sparknlaunch12|14 years ago|reply
There were rumours Facebook were sitting on very powerful search capabilities they were looking to release post IPO.
Given the personal data held and time users spend on their platform, the potential is quite high.
They may not have much control on mobile but their apps hold your contacts and messaging functionality.
[+] [-] pwaring|14 years ago|reply
You could make a similar argument about Google becoming the next Yahoo! when someone devises a better search algorithm/interface.
Most technology stocks are high risk propositions, with the exceptions of huge multinationals like IBM (their size and government contracts make them harder to challenge).
[+] [-] randomStuff|14 years ago|reply
[+] [-] billpatrianakos|14 years ago|reply
You're right. Intent is seriously important. People use Google search as a means to get to another source of information regardless of whether their intent is navigational or informational. People on Facebook simply stay on Facebook until they're ready to either get offline or go search google.
[+] [-] adventureful|14 years ago|reply
[+] [-] mmaunder|14 years ago|reply
With Facebook there is zero helpful intent. The only intent when you're on Facebook is to use Facebook. And if you do click an ad, you're less likely to become a conversion because your intent is still to get back to Facebook as soon as possible and see the rest of Dave's party photos or whatever.
[+] [-] malandrew|14 years ago|reply
She wanted to watch an episode of The Good Wife that she had missed so she searched in the Safari omnibar for "watch The Good Wife" and the first div under the search bar is an ad to some site that was not CBS that had the Good Wife available to watch via streaming video. To you and I, it's obvious that this "first result" is ad and we would skip over it to the first result. But to my mom, she thinks it's a search result and clicks on it. When she arrives on the site she thinks she's on the CBS site because they naively assumes like many consumers that the site showing the content would be CBS. She doesn't even think twice about the identity. When you are used to TV, you blindly trust that the site/channel showing the content is the correct one.
The only reason I discovered this was because she asked me to pull up The Good Wife to watch on CBS. I, being a savvier internet user, just navigated straight to cbs.com to search there. I got to their Good Wife site and lo and behold, there is no streaming video available on CBS, only teasers and behind the scenes content. I told my mom that "No, CBS doesn't have it on their site" and she was like "Yeah they do. I watch it all the time". I then asked her to show me exactly how she found it on CBS and that was when she showed me that she in fact was clicking on the ad in Google Search between the search box and the search results thinking it was in fact the first result. That's the power of intent and Facebook doesn't have that.
[+] [-] kposehn|14 years ago|reply
It isn't about intent - it is about interest.
> And if you do click an ad, you're less likely to become a conversion because your intent is still to get back to Facebook as soon as possible and see the rest of Dave's party photos or whatever.
Not necessarily. I'm working with a customer right now where I have a 24% conversion rate on movie tickets. They routinely shell out $7-$21 a pop with this conversion rate; the catch is, I have to be very careful about who I target.
This kind of trend goes across the entire industry of FB ads - target well, optimize and approach based on interest and the money will follow.
[+] [-] wvenable|14 years ago|reply
[+] [-] natrius|14 years ago|reply
[+] [-] fragsworth|14 years ago|reply
That said, however, a very large group of users are there to play social games. With social game companies competing for ad space (for these often highly-profitable users), they're driving up the price of ads and making it less economical for other industries to advertise on Facebook.
[+] [-] hkmurakami|14 years ago|reply
This might be the case right now, but what about in the future? I think that's what Google et al. are scared about. If users spend 90% of their internet time on Facebook, and Facebook figures out how to serve users with "What they are looking for" 5 years down the road, then users will have a very low barrier to trying out the Facebook "look-up" service.
Right now, my use of the internet is (1) sites I already know exist, or (2) Google, in order to find things.
What if this becomes (1.1) Facebook, to look at things served from other sites that I like, and (1.2) Facebook, to find things that I don't know about?
That's scary for companies counting on the status quo. Sites' share of user time is important not for how they are now, but how things might become in the future. It's a huge about of leverage.
[+] [-] veverkap|14 years ago|reply
:)
This is very true. I only go to Facebook to use Facebook.
[+] [-] ericax|14 years ago|reply
[+] [-] pg|14 years ago|reply
[+] [-] jacquesm|14 years ago|reply
[+] [-] bradgessler|14 years ago|reply
[+] [-] duxup|14 years ago|reply
Lower price? Oh hey maybe we will try again!
[+] [-] dotBen|14 years ago|reply
[+] [-] CamperBob2|14 years ago|reply
There is no way for GM to pull this kind of maneuver at this time without looking suspicious.
[+] [-] rio517|14 years ago|reply
I work at a online advertising firm in DC specializing in political and non-profit work - mostly email list building, soliciting volunteers, awareness, etc campaign activities. We work with AOL, Yahoo, Google and Facebook, among many others.
I'm not a fan of FB's policies in general, but... We've found FB to be very effective - on a cost per acquisition basis, much more so than search advertising and on par with other vehicles.
Obviously, test to see what's effective for your needs, but I wouldn't rule out Facebook based on GM's experience. Cars are an unusually high involvement purchase, unlike most things people would be advertising.
[+] [-] jonknee|14 years ago|reply
The best marketing on Facebook doesn't make Facebook any money.
[+] [-] ticks|14 years ago|reply
[+] [-] alain94040|14 years ago|reply
I don't think Facebook has the data yet to detect that you are about to buy a car. If you start liking car reviews, maybe, but that's not a typical behavior.
For other products (especially the ones you didn't know you needed), Facebook beats Google hands down. So don't pass judgment one way or another too quickly.
[+] [-] dneb7|14 years ago|reply
[+] [-] joering2|14 years ago|reply
edit: for that reason, I think Facebook advertising does not work. Or at least, does not work for the _most_ of advertisers. Its just that Facebook is still new and here and there I hear my friends being exciting about "advertising to millions of customers" and they do give it a shoot with a poor results at the end. The point is you have so many people that havent tried that yet that they still bringing cash to FB. But unless FB does something for the ads to work (change its core product?), the $ numbers will only fall.
[+] [-] mindcrime|14 years ago|reply
[+] [-] unknown|14 years ago|reply
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[+] [-] philmcc|14 years ago|reply
I think that to measure the efficacy of a GM ad based on the same measurable activity that you'd measure an ad for (say) a T shirt company is probably a bit misinformed. No one is checking to see if anyone clicked on GM and subsequently bought a Cadillac.
A lot of the comments on the original article seem similarly misguided. ("I NEVER CLICK ON THE ADS I HARDLY EVER NOTICE THEM.") The McDonalds logo on the back fence of a baseball field isn't to convince you to walk over to it and do something. It's so that later when you drive by McDonalds you "decide" to stop.
[+] [-] devs1010|14 years ago|reply
My guess is that they have an expectation of having more user feedback and involvement from this form of branding (people clicking the ad, filling out some bullshit form so they can bombard them with marketing material, etc), however the nature of the product may preclude itself from this sort of consumer behavior because people don't buy cars very often they may not feel compelled to engage with the brand, however seeing the ads on facebook could potentially have the same "branding" effectiveness as TV ads yet they really have no way of measuring this.
[+] [-] scribblemacher|14 years ago|reply
[+] [-] MartinCron|14 years ago|reply
If anyone is going to get any sort of value out of the wealth of information I've given away about myself, it's going to be the person who opens my eyes to something new and awesome that speaks to my... unique tastes.
GM can't really be new or awesome anymore, and that's OK.
[+] [-] kposehn|14 years ago|reply
You can go nuts with FB ads, you just simply have to get past the notion that it works the same way as every other medium. Unlike AdWords, where you bid on someone searching for "Cadillac SRX" in San Jose, FB is all about inception of interest.
The goal is to create intent in people through innovative ways; the people that spend the millions and keep doing so are the ones who actually, you know, come up with something new.
This is the same story as Google AdWords back in the day.
[+] [-] TY|14 years ago|reply
[+] [-] davidw|14 years ago|reply
[+] [-] jasondc|14 years ago|reply
[+] [-] savories|14 years ago|reply
Or their customer is difficult to target on FB.
We (a quickly growing clothing company) see an amazing ROI from FB ads. We also have around 350k Likes. We advertise to friends of friends, and target similar companies, fashion companies etc.
I am betting they simply haven't found the best tactic.
[+] [-] goodbyehello|14 years ago|reply
Why?
Because the auto industry was one of the earliest and remains one of the heaviest users on online advertising.
If any industry knows a thing or two about online advertising, and has been willing to experiment, it's the auto industry.
Facebook is in big trouble, as a "business".
[+] [-] calbear81|14 years ago|reply
You also shouldn't use the number of followers as the addressable audience for the brand, the whole point of social is that messages are amplified through the network effect out towards a much larger reach of users. One user who likes one of your posts or comments on it may mean hundreds of friends seeing it show up in their subsequent feeds like "YCombinator reader just liked GM's Blah Blah".
Everyone's right below that if you're using it as a direct marketing channel, you'll most likely see failure because people want to stay on Facebook. Think of it as a way to stay engaged with your audience and as a one time investment for the ability to message to them again and again in the future. Facebook ads also work much better when you tie them to your Facebook presence vs. trying to send someone off Facebook to your site. GM should have thought of more creative ways to leverage the Facebook app platform to promote on-Facebook activities that drive brand value and help promote their new cars/trucks. For example, how about a contest on Facebook using an interactive car designer to design a GM that also allows you to upload custom patterns for the paint job. If it's two things people like on Facebook it's self-expression and contests.