Saturday, June 29, 2013

Huge Facebook (Advertising) Improvement

Notoriously, Facebook has had terrible advertising conversion results compared to search or even other normal websites.  In search, a customer is actively looking to go somewhere else, so an advertisement is perfect.  On normal websites, the customer may just be reading or browsing, so can be easily swayed to change course and click on an advertisement.  However, on Facebook, the user is at his final destination and is engaging with friends, and thus has historically been very unlikely to click an advertisement and leave his facebook page behind.

However, a new study is claiming that is about to change.  Facebook is now bombarding users with targeted advertisements in their newsfeeds.  Often, the ads say "XXX supports" or "likes" a product.  According to THIS ARTICLE, (thanks professor), news feed ads have 49x the click through rate of of Facebook's right side ads and "have a massive 21 times higher click-through rates than standard web retargeting ads"

If true, it will revolutionize Facebook and make it as desirable a place to advertise as the search engines. Currently, advertising on Facebook, because if its poor click through rate, has been much cheaper than other media. If that changes, FB may become the giant everyone thought it would be 2 years ago.

Personally, I'm not sure I believe these statistics. Facebook is now inundating users with ads, especially on mobile (If you haven't noticed, there is a newsfeed ad as the second thing in a newsfeed every time you open facebook or the facebook ap).  Considering on mobile, the screen takes 3-5 seconds to refresh and moves around as its refreshing, I'd be many clicks are accidental hits (I know I've done it a few times).

Anyway, it will be interesting to see how monitizable this all is (and how the stock reacts to this news).

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