In our last exciting episode, we decided that Facebook's business strategy is a pig's breakfast. They reach a billion people but all they can do is sell crappy little ads to divorce lawyers for $1.50.
We described this problem in esoteric marketing terms (well, esoteric for a dumb-ass blogger, anyway) as one of confusing the "demand creation" model with the "demand fulfillment" model (please don't make me explain that again. Just read this.)
So where does this lead us? It leads us to the conclusion that Facebook is in the wrong business.
First, let's start with a little media theory. Of all the overblown ideas being hustled by the online ad industry the biggest, by far, is "targeting."
Media science baloney notwithstanding, reach is way more important to big marketers than targeting. To paraphrase a former colleague of mine when asked by a cola maker who their target should be, he replied, "Any asshole with a mouth."
Big brands need big reach, not the diminishing returns of finer and finer targeting.
The "precision targeting" of online advertising is supposed to make it far more efficient and effective. Not even close. Not even close to close.
In fact, online advertising's record of motivating consumers is alarmingly terrible. With all their clouds full of data, Facebook ads attract 5 clicks for every 10,000 views. This is mindblowingly ineffective.
In fact, in a recent experiment a blank display ad -- blank! --with no copy, no art, no nothing, just empty space -- had a higher click rate than the average "precisely targeted" Facebook ad. The whole online targeting/effectiveness thing has so far proven to be a complete and utter joke.
Of course advertisers -- being dumber than stumps -- don't realize that "targeting" means absolutely nothing without impact. Who cares how many left-handed Episcopalian cheese-makers you can reach if they don't notice the ad? As a certain Mr. Bernbach once said, "If no one notices your advertising everything else is academic."
Secondly, why would a company that can reach a billion people even want to sell targeting? They should be selling anti-targeting. They should be selling reach. They are the only media property in the solar system that reaches a billion people and they are trading on their ability to reach falafel lovers in Yonkers.
Facebook has taken precision targeting bullshit to its logical absurdity. They're sitting on a gold mine, but they're throwing away the gold and selling the dirt.
So, you might ask, why is Facebook pursuing this strategy?
The answer is that they have to. They refuse to allow advertisers to use Facebook to create ads with any degree of impact. Consequently, they have nothing of value to sell to substantial advertisers. All they have is negligible little junk space for weight-loss hustlers.
Now we get to the speculative part of this exposition. Demurrals notwithstanding, I think the creepy Zuckerberg kid doesn't really want to be in the ad business. Like all these rich web phonies, he sees himself as some kind of high-minded visionary. Advertising just doesn't fit his smug idea of who he is and what he stands for. Just look at this ridiculous spot he produced to celebrate himself.
To him, advertising is a crass affair, unbecoming his noble purpose. Which is why it is relegated to invisible little postage stamps on a part of the page no one looks at.
In short, he's embarrassed about being in the ad business. To be honest here, so am I. But I don't have investors.
Here's what Facebook needs to do:
- They need to forget about "precision targeting." It's bullshit and it's not working. And it's not the business they should be in anyway.
- They need to sell reach. They have tried. But as currently configured it is a pathetic joke. Reach and frequency are irrelevant if the ad units have no impact. See Mr. B above.
- The platform doesn't matter. Mobile or immobile, advertising that is invisible is worthless. Period. Exclamation point. All this hyperventilating about Facebook's mobile strategy is a red herring.
- They need to offer big-time advertisers something of real value, not the crap they are currently selling.