November 12, 2010

The Facebook Enigma

An online article from The Wall Street Journal yesterday called "Valuing Facebook's Ads" reinforces the nagging doubts I have about the value of advertising on Facebook.

Amazingly, Facebook has a 24 share of all display advertising on the web. This is more than twice the share of its next rival.

The problem, though, is that it only has a 9.5 share of display advertising dollars.

In other words, advertisers want to be on Facebook, but they don't want to pay much for it. In fact, they are only willing to pay less than half of what they pay for an "average" display ad.
"...Several agencies put the average price of an ad on Facebook in the U.S. in the $2 to $8 range for a thousand views... The price is lower than the average $15 that other premium media sites can charge." 
One thing we know for sure is that Facebook is enormously popular. What we don't know, however, is its value as an advertising medium.
"...some marketers continue to question whether consumers pay attention to ads on social-networking sites, and wonder how effective they are in getting people to, say, buy cars."
The idiot wing of the ad business just naturally assumes that because Facebook has 50 zillion members it must be a good advertising medium. People with brains say, it's nice that you have all these members, but is it any good for advertising?

If, like me, you have serious doubts about Facebook as an ad medium, the numbers from the WSJ article only deepen your skepticism.

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