Ad Nauseam: The MySpacification of Facebook (Continued)

by Freddy Tran Nager, Founder of Atomic Tango + Former Facebook Advertiser…

[intlink id=”5021″ type=”post” target=”_blank”]In part one of this series[/intlink], I talked about the aesthetic MySpacification of Facebook: how the popular social network’s design went from clean to pure cornea gumbo.

Now let’s talk advertising on Facebook.

I used to buy Facebook ads because I was enamored by the targeting capabilities. For example, when promoting a local theatrical production, I could easily target the zip code and even a surrounding area, the right age group, actors and directors and other theatre types, fans of the playwright, and people who might like the play’s subject matter. In addition, I could easily test ads and make changes, and switch payment from cost-per-thousand views (CPM) to cost-per-click (CPC) at the touch of a virtual button. The tracking data showed me what was working and what was not. This seemed like the perfect ad platform.

Then I noticed that “not” was becoming more common than “working.”
And I’m not alone in this discovery…

The Great Disappearing Clicks of Facebook

Click-through-rates on Facebook have plummeted to 0.01%–0.05%. For those who don’t like percentages, 0.01% means that you get 1 click for every 10,000 views. And according to researcher Dr. Augustine Fou, that 0.01% may just be rounding, since Facebook doesn’t go beyond two decimal points in reporting rates. In other words, the actual number may be 0. As in zip, nada, the big empty.

But what about those 10,000 views? Those have to be worth something, right? That’s branding and awareness! At least, that’s what Facebook’s own sales reps are now saying. ([intlink id=”4318″ type=”post” target=”_blank”]Something I ridiculed in a previous post.[/intlink]) But like most advertising, “views” are more theoretical than actual. Yes, the ads appear on a user’s page, but with all the clutter and distracting content, we web users have developed ad blindness. The ads are there — we just tune them out.

That’s nothing new: long ago it happened to banner ads on other sites, such as MySpace. Indeed, we consumers became so blind to ads that, in order to get our attention, [intlink id=”19″ type=”post” target=”_blank”]ads became annoying[/intlink]: flashing, jumping, telling you that you had won a free iPod. Marketing stupidity in full effect. Facebook’s ads haven’t made that suicidal leap to annoying… yet. But wait till that IPO goes through, and the shareholder demand for quarterly growth kicks in.

Also — and this is key to remember — unlike a magazine ad, those 10,000 views on Facebook do not mean 10,000 people. I complained to Facebook when I saw that my ads were being shown to the same people 17 times. While some ad repetition is necessary to register with consumers, anything more than 3 usually crosses the line from “Alright, I see you” to “WTF is your problem?! I hate you and will never buy your product again!”

Facebook wouldn’t let me limit the frequency of exposures. Why? Because when you’re buying an ad, Facebook entices you with a large number that counts all the people in your target market. But that number reflects registered users, not active users. The actual number of active users is much smaller, so in order to charge you for thousands of views within the timeframe of your ad campaign, Facebook jacks up the frequency of exposures to a single active user.

And that number of active users on Facebook? Oh, they’re declining, too.
(Did I mention that Facebook is becoming MySpace?)

While the number of registered Facebook users is quickly approaching 1 billion, they’re like visitors to the Grand Canyon: some stay and hike around; others get out of the car and say, “OK. I see it,” then get back into the car and drive away.

According to Dr. Fou, more people on Facebook are driving away:

“From Compete data, we can see that pageviews are down 54 percent at 48 billion, from a high of 100 billion pageviews in August 2010. Average stay is down 35 percent at 17 minutes from a high of 26 minutes in January 2011. Visits per person is down 34 percent at 20 per month from a high of 29 per month in January 2011. And pages per visit is off 60 percent at 15 pages from a high of 35 in February 2010. These declines have been in nearly a straight line and have been consistent over many months, not a temporary glitch.” (from “Facebook’s Achilles’ Heel” on DigiDay.com)

Abandon ship! Or at least shop around…

In my earlier post, I mentioned that we Facebook users are the product, not the customers, so we have to just take whatever Facebook imposes upon us. Of course, we do have a choice, and that’s to stop using Facebook. And many are making the choice.

We may not outright delete our accounts — it took a long time to accumulate all those friends and post all those photos, and we don’t want to completely drop out of the world’s largest social network — but we are exploring options.

Many have found Twitter’s simplicity more appealing (though Twitter is regularly adding more Facebook-like features). Others, primarily women, have flocked to Pinterest because of its more authentic and aesthetically pleasing experience (though marketers have already begun their invasion by bribing top Pinterest users into becoming their tools). Yes, MySpacification is happening to those platforms as well.

But regardless of the merits of competing social options, the writing is on the Facebook wall: it’s no longer the promised land for either consumers or advertisers. With Facebook’s IPO around the corner, Zuckerberg blew $1 billion on Instagram, which has no revenue. (How Web 1.0.) He saw the writing, too, and needs to show activity and growth and vision before unloading Facebook to suckers investors.

The impending Facebook IPO is being seen as the mother of all Web 2.0 IPO’s. It’s anticipated to be valued at over $100 billion. Certainly nothing to sneeze at. And even after the IPO, I suspect that Facebook will keep going for years, perhaps decades to come…

Just like AOL.

In fact, maybe my comparison to MySpace is wrong: rather, Facebook is becoming AOL. At one point, AOL was valued at $226 billion and seemed unstoppable from both a consumer and advertiser perspective. AOL keywords for brands were just as common as branded Facebook pages are now. And unlike Facebook, millions of consumers willingly paid about $20/month to use it; some still even have an AOL email address.

But by trying to be all things to all people, by trying to replicate the Web instead of complementing it, by focusing on quantity of features instead of quality of features, AOL rapidly became just another platform. And the competitors kept coming. Sound familiar?

AOL. MySpace. Facebook. Web 2.0 looks at lot like Web 1.0 – call it a comedy of eras.

Update 5/16/12: Apparently GM also finds Facebook ads to be worthless.

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Read the first part of this series: [intlink id=”5021″ type=”post”]MySpace, Part Deux (And Yes, I’m Talking About Facebook)[/intlink]

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Dr. Augustine Fou’s “Facebook Ad Scam”