An Open Letter To Mark Zuckerberg

Mr. Zuckerberg:

Facebook is failing marketers.

I know this statement sounds remarkable, perhaps even unbelievable. After all, you offer marketers access to the largest audience in media history and you know a remarkable amount about each of your users. As a result nearly every large company now markets on Facebook. Last year your company collected more than $4 billion in advertising revenues.

But while lots of marketers spend lots of money on Facebook today, relatively few find success. In August, Forrester surveyed 395 marketers and eBusiness executives at large companies across the US, Canada and the UK — and these executives told us that Facebook creates less business value than any other digital marketing opportunity.

 

Marketers say Facebook creates less business value than any other digital marketing opportunity

Why are business leaders less satisfied with Facebook than with any other digital tool? We believe there are two reasons.

First, your company focuses too little on the thing marketers want most: driving genuine engagement between companies and their customers. Your sales materials tease marketers with the promise that you’ll help them create such connections. But in reality, you rarely do. Everyone who clicks the like button on a brand’s Facebook page volunteers to receive that brand’s messages — but on average, you only show each brand’s posts to 16% of its fans. And while your company upgrades its advertising tools and offerings monthly or more, you’ve done little in the past 18 months to improve your unloved branded page format or the tools that marketers use to manage and measure those pages.

Second, your company isn’t good enough at the pure advertising business onto which you’ve shifted your focus. We estimate your site now delivers tens of billions of display ads every day. But fewer than 15% of those ads leverage your ever-growing cache of social data to target relevant audiences. And your site’s static-image ad units offer marketers less impact per impression than they could achieve with the ad units other sites offer. The result? The executives we surveyed said Facebook’s display ads were significantly less effective than the display ads they buy elsewhere online. They also reported that Facebook ads were less valuable than any other marketing tactic they could use on your site.

I believe there’s still time for Facebook to refocus its efforts and realize its enormous potential. To do that, you’ll need to once again build bridges between companies and their customers, you'll need to fully leverage social affinity data within your ad targeting products, and you'll need to better listen to the marketers who drive your company’s financial success. But you must act quickly, before more marketers act on their growing dissatisfaction and start earmarking an increasingly smaller budget share to your company. I hope our research convinces you and your team to change course.

Nate Elliott, Vice President and Principal Analyst, Forrester

Comments

Anti-social offering on a Social platform

Hi Nate

The fundamental issue here is - people go to facebook for user based content/interactions but Facebook now parachutes companines into this ecosystem. Will companies get positive results, no, how about negative views because of landing in the wrong place - perhaps yes. Its an anti-social offering on a social platform! And Facebook is playing a balancing act...

Companies have to move away from the traditional mindset of 'capture & communicate' to 'influence & interact' through influencers, which is not easy for companies as they have to give away control and its not easy for facebook because of monetisation issues.

Very well said Ramesh! Asking

Very well said Ramesh!

Asking companies on their perceived success with Facebook doesn't mean much unless you're correlating against what they were doing in the first place. I still see plenty of organizations relying their broadcasts, DR ads and tracking it all on click-paths alone. Sorry, that's just not going to do it for social platforms of any sort.

Similarly, if you're going to talk about the visibility averages, lets be sure to explain how we get there... the gap between brands and their fans. Countless brands that never reply, only post offers / polished materials, run contests attracting volumes of irrelevant connections, etc. People like pages for many reasons, give 100% visibility to 0% engagement and you'll end up with a lot less followers.

And let's not forget all the things happening behind the gate. Twitter is open. Reviews, open. There's no link required to share, no report that tells you what you can't see being said.

I'm not suggesting Facebook is doing it all right by any means, or that their systems are where they should be (the ad center remains pretty terrible, post exposure should have details like a quality score) but perfect that all and companies will still find success difficult if they try and follow the traditional media game plan.

"Companies have to move away

"Companies have to move away from the traditional mindset of 'capture & communicate' to 'influence & interact' through influencers"...nicely put Ramesh

Enough Blame To Go Around

Good topic Nate. I agree with Ramesh. As is often the case with great opportunities, in the haste to take advantage of them, proper preparation gets hotwired or bypassed. Ad space, digital or print, costs the same regardless of what fills it. Crappy content and no inbound strategy aren't the media's fault but they will own the failure too so should be concerned. How FB corrects an advertiser's flawed messaging and CTA's, that's not really FB's job but FB could likely do a better job educating advertisers on the topic as well as better defining those FB advertisers that derive the most benefit and how they do that. But media revenue goals some how get in the way.
A broader underlying issue are companies that cling to the notion that marketing is easy-peezy. I'd be very interested to know how many of these same companies surveyed are using personas and social affinity data or even know the term. I'm going to venture less than 25%. Social media ROI is only as good as the people applying it to a well conceived content marketing plan within a sound inbound marketing program.

Powershift

The unprecedented reach, data access and targeting capabilities of Facebook is a game changer for advertisers and marketers. If it is not working, don't shoot the messenger - fire your ad agency, resign as a marketer - or better still, fix it. Look at those who are having success and challenge yourselves to think differently. With $4B spent (and growing fast) success is being had. Guess what, if you are not having it - you are at a serious competitive advantage. I think it is interesting that social media ended up at the bottom of this list in all forms. There are self-imposed limits in many industries (financial services, healthcare, gaming, etc...), so legitimate regulatory concerns, but many are self-imposed handcuffs driven by the fear of the unknown (and the fear of taking a risk and getting fired). Every marketer who answered this way needs to look in the mirror and challenge yourself a little bit harder. Mark seems to be pretty successful in his marketing effort... how much as Facebook spent on advertiser or marketing, and how well known is the brand?

I strongly agree with this

I strongly agree with this comment. for Volvo we see that the reach is actually much higher per post than the 16% on average and with advertising that the people want to see, we reach our objectives!

I agree with this also. Too

I agree with this also. Too many marketers are still determined to hang onto traditional mindsets and methodologies in spite of new technologies demanding new approaches.

Is a 3.54 / 5 score really a "failing" strategy?

So there is a .3 difference between the "business value" derived from FB (3.54) and the top scoring channel/strategy "on-site ratings" (3.84) and you are condemning this as a failure? This seems like a massive overstatement to me. Facebook has reached previously unthinkable global reach and nearly every major brand in the world relies on it as a key channel within its marketing mix. It sounds quite misguided to point out the failings here when none of the channels listed achieved a score of 4/5; just the fact that FB is at the bottom of a very condensed list means that Zuckerberg is doing something wrong strategically? Further, "business value" is ill defined and Facebook as a social channel + massive display inventory means it will be used differently by each brand because it is serving a dual purpose, far different than most of the other channels. Harsh condemnation for a media entity that is still growing up...

FB marketing value

It seems to me that the most obvious "miss" here is that FB ads do not always show up where they are wanted, nor do they always present an offer that is germane to the topics on screen. When this happens it either interrupts the user or it irritates them, or both. However it happens, the "miss" simply translates into an under performing ad.
Isn't to goal of outbound campaigns to go to existing interest? To be present at the point of inquiry?

Until they can deliver that my money is on traditional display.

Facebook as an advertising

Facebook as an advertising platform has already proven to be a failure by just comparing basic numbers. Let's see its global reach is over a billion users parallel to Google's reach yet Google is monetizing over 50 billion in annual revenue from those users vs Facebook's measly 4 billion. Social media has already matured and Facebook with all its targeting data should have been closer in revenues to Google as of yesterday. Obviously it is not happening and the situation is far worse than the above graph shows.

What Facebook and Google sell

What Facebook and Google sell are worlds apart...

Google has the benefit of being primarily intent based (you're looking for something in particular) and thus a good deal of traffic flows right down the funnel.

Facebook on the other hand sells the visibility as an opportunity to create interest and does it in a place where people are generally not looking to leave the site.

Fundamentally, there's a finite amount of people looking for anything (it can be a high number but it is always limited), thus Google has their own plays in visibility.

And let's not forget, you have the simple age of the network and sales efforts; ads on Google were available years before Facebook even launched.

Actually they are not worlds

Actually they are not worlds apart from a business monetization perspective but I have heard that argument numerous times repeated by lazy thinkers and usability developers..

On Google there is intent to find something while on FB there is intent to like/follow something. Obviously not all of these intents can be monetized in the real world but a solid percentage can. In Google's case its roughly 20%, in FB's case considerably less and that is with considerable targeting data FB has available and does not know how to leverage.

Therefore FB as an advertising platform is a FAIL. If you think they will catch up eventually, you are kidding yourself. Its over for them, the new generation of users is increasingly moving on to other networks and the rest of the world (the other 2 billion users outside the US) is wary of NSA privacy leaks.

Less Shakespeare, more math

You are embarrassingly, and laughably making classic inference mistakes with your "data". And I use the word "data" loosely, in your honor.

You need to look up: standard deviation, and confidence interval.

When you pontificate with so much hyperbole, on such a lame, pitiful dataset, you come across as a muckracking fool, either out for marketing mentions, or just dumb. Either way, not a good position.

What would have been ACTUALLY useful is if you had a 'then and now' comparison. Maybe show how facebook ranked (with a legitimate dataset) two years ago vs today.

p.s. your visualizations in the post are garbage.

Cheers.

Nice to Hear From MP

Hi! Thanks for the if-only-it-were-true post from Menlo Park!

Facebook was a first iteration of social media...

Nate, nice talking points. Facebook is a 1.0, a giant emotional swap meet that wasn't designed to be the fountain of revenue streams. The next iteration will hybrid Groupon, Facebook, with a fully functional and esecure ewallet that will require a new entity. Call Entity X "Playpay" a leisure oriented moneymaker with deep mobile personalization and built in marketing a la Emily's List and Craigslist made from affinity marketing elements plus a Twitter like service to Tout rather than merely tweet. Free ideas are the ultimate Open Source, and the organic never-ending scope creep of technology demands imagination/innovation from a crowdsource to develop future iterations.

Failure is in the eye of the beholder

Nate, et al.,

I have to admit I too am surprised by the tone and content of this post and the report. I’ve never seen Forrester make such broad claims. It's odd frankly.

At its core is the suggestion that marketers should abandon Facebook. However, for most of us, this is a terrible idea. Here are a few reasons why,

1. Our consumers have spoken. They've chosen Facebook
2. 80% of daily US Facebook users are on mobile devices. Facebook is the market share leader in mobile advertising.

We no longer have the option to ignore our social mobile consumers. For now, that means we must try to reach and convert them through Facebook. While many of us (I'm a life-long digital marketer) feel frustratingly beholden to massive corporations such as Facebook, Google, Amazon, etc., rarely do we give-up because it’s difficult or because we don’t agree with the actions of the giants. This is what it means to be a digital marketer, to constantly test, learn and optimize. To adapt.

To Craig's point, there seems to be an underlying feeling from both surveyed brands and Forrester that Facebook owes marketers something and that results should come easy. Does Facebook owe you free reach into your fan communities? You paid to get those fans, right? You paid to fill your email database and you pay to send them email, don't you? There are no free lunches. We've all been getting less data about our organic traffic from Google -- on purpose -- forcing us to limit our SEO efforts and traffic. Google manipulates its algorithms constantly to increase revenue. Infuriating? Sure. Give-up? Never.

Facebook is sitting on a unique opportunity to leverage its vast knowledge of our interests and social connections, but so far, very little beyond mobile news feed photo and link posts drive much engagement or click through. As I shared, this is fine because social is mobile. However, too few marketers have made this strategic transition. If your post-click landing pages aren’t purpose-built for social mobile consumers, you will under-perform, regardless of whether you are posting organically or using media dollars. The answer to social media success is the same as it's always been for digital marketers: use media dollars to reach key audiences, drive engagement and click-through and provide remarkable landing experiences that drive brand and business outcomes. Isn't this digital marketing 101, Forrester? Why are you running scared?

Last, as other commenters have pointed out, the suggestion that "community management" doesn't drive value for marketers applies the wrong metrics to the function. Community management is closer to customer loyalty/influencer marketing and customer service than it is to brand or DR marketing. Do PR and Customer Service have sales goals? Nope and rightfully so. Social media marketing and Facebook specifically is not one monolithic ecosystem like search, for example. This is a rich and dynamic environment where many stakeholders play many roles and drive many outcomes. I'm not a Facebook fan boy per se; I'm most interested in helping marketers find what works, but I have to admit Facebook and more generally social media marketing/advertising is an immensely fascinating marketing opportunity, unlike any we've seen before. The entire ecosystem -- marketers, Facebook and Twitter, Instagram and Tumblr, too -- are all figuring out the best mix of tactics to drive the outcomes we need most. To bury your head in the sand “until Facebook mends its ways” is backwards. Get in there, use your best marketing expertise and instincts and iterate against what works – like you’ve always done.

Marko Z Muellner
VP Marketing | ShopIgniter
@markozm

Marko, you hit the nail on

Marko, you hit the nail on the head in point #1. Critique it, challenge it, throw mud at the idea of social and engagement, if you must... however the world is there and since most marketers want to reach the world (or their slice of it), figuring out how to make it work is not an option.

What Do I Say?

2020 just called. Wants to know what this thing called Facebook was.

irresponsible

I dont know the source of your report, but looking the the kind of options there I can tell its hospitality, and if thats true you forgot to mention Yelp, Facebook is for this generation and next generation the advertising tool, old school still thinking in yellow pages, or ad words, now we thinking already in self marketing trough a specific channel with a specific public, if your report is based in restaurant or hospitality clients it is not complete.

Facebook is not a website anymore facebook is a institution, where people meet for sharing, suggest, and taking decision about this or that, what can better better than that.

Its a a global shopping mall with everything right there, if you not there you not in the mall, and if you there in the mall with the wrong message you not bringing clients

so facebook give you all the tools but you the one who needs to play with it ,

I like a trading website, if you good trader you make from 10K , 10M using the same tool if not not good with you can transform from 10M in 10K.

think about the facebook as the network tool with a huge advantage against google, FACEBOOK has MEMBERS , GOOGLE has VISITORS.

It's good to be provocative, but...

I would have liked to see more evidence in the data. As others have pointed out, the difference between the bottom and top of your list is just .3 points. Was the margin of error in the sampling even higher than that (please tell me you have a statistician that calculated such things) ?

As is, what your data tells me is that...

A) Marketers don't see substantially different results among different channels, which would seem to call for continued experimentation and tweaking across most if not all of them.

B) Marketers give all of their outlets a pretty solid "B+" ranking; not bad on the whole, but also suggests that there is room for improvement across the board.

In any case, thanks to you and Forrester for doing the survey and hosting this debate.

Facebook reiterated

What I think is important to remember is that:

1) There is nothing wrong with being a "broadcast medium".
2) FB comes from a hacker culture and they are proud of it. They change, learn and iterate at a pace that drives many marketers/advertisers crazy, but is absolutely essential to ensure the product(s) they have score positive engagement with as many users as possible. What was "true" for FB in 2007, per the comments of Mark Zuckerberg at the time (coincidentally the year I launched myself on Facebook) is not necessarily true or relevant in 2013.
3) FB is not free if you want to score impact - a misconception many advertisers have/had.

So why is it bad what FB offers today? It works to a degree, serves a purpose for certain strategies and ultimately advertisers and their agencies are the first ones to vote with their wallet. So far the vote seems to be positive when measured in that respect.

Simple, Most folks do not go

Simple, Most folks do not go to Facebook to buy. They go to say Hi and like things. Mindless things that make you feel good.

Dubious analysis

This is a very weak piece of analysis.

1- advertisers never say they are happy with their media and its return or efficiency. True of all media. Don't trust feedback surveys - only a full regression analysis will do.That is what real media analysts do to prove effectiveness.
2 - the scale of difference between the channels is not large and to say its a fail is an overstatement.

3 - the para that says focus on features confuses business value with features and does not articulate how this feature adds value. It's a non sequitur.

4 - The second par about getting more data is erroneous. When the price of a medium is not right despite large audiences it means the price has to be re set. large media like mass newspapers and TV have the same problem in terms of audience yield.

Strangely amateurish analysis

I'll bet a lot of people in here are glad their teachers and professors didn't consider a B+ to be a failure (one commentor stated that the table shows companies gave all channels a B+ grade).

As numerous commentors noted, the tone and content of this are unusual for Forrester and the analysis is sorely lacking substance. Some might question the timing of the release of this "report," as well, as Facebook is reporting earnings after the bell tomorrow. Makes me wonder if someone is shorting ....

So where can we see the full report?

Adding to my previous post

Oh, I'm sorry, I didn't see the link to the full report. Which costs $500. I'll just have to live without it, as I wouldn't pay a nickel for it from what I've seen so far.

This report is fraught with

This report is fraught with ambiguity.

1. Your findings are too general and your sample size is negligible.

Please publish the demographic/career/industry of the surveyees so that we know what kind of people are they, and how credible can their words be.

The feelings of "395 marketers and eBusiness executives at large companies" is not enough to represent the >1 million advertisers on Facebook (statistically that's only 0.000395%)

2. The question is ambiguous.

How would you define this variable, "business value"? Please elaborate.

Obviously social engagement loses out on overall ROI because ROI is not the point: In terms of creating and maintaining that unique connection between your customers and you, that's something that no other media channel can win.

3. The response selections are also ambiguous.

The word "marketing" is extremely broad and includes many things other than simply advertising. Your response selections overlaps with each other and this causes the results to be inaccurate.

Marketing is an integrated communication system that leverages on several channels to produce synergy in how our brand and our products interact with our customers and suppliers. You shouldn't use it so lightly.

4. Your conclusion is misleading.

Finally, even if your sample size and research design is sound, as many others have pointed out, a 0.3 difference from the top ranked item does not point to a failure. In fact, wouldn't 3.54/5 mean that marketers are marginally satisfied? This means that Facebook is a viable marketing option among other marketing means.

Disclaimer

As a mobile app marketer, Facebook Ads for Apps have been phenomenal in driving downloads and this report is entirely unhelpful and misleading.

On your verdict about social engagement: The cruel fact is that most marketers fail in their social strategy because they were only interested in talking about their own company rather than trying to be relevant to customers. Social engagement is much more complicated than just slapping ads on a page. That's no way to place the blame on the channels the 395 execs haven't grasped well. The more relevant you are, the more people interact with you, the more you appear on people's feeds. Do not treat social posts like ads because they are not.

On advertising: Facebook provides one of the most granular ways of targeting the right customer segments. If only 15% of marketers are using FB's targeting options (and I'm not sure where you get this data) like Broad Category or Precise Interests, then the rest are doing it wrong.

Ads On Facebook Mobile News Feed

From the limited budget marketing experience at our start-up Facebook Mobile News Feed Ads gave the best conversion rate for us compared to campaigns on LinkedIn/Google. Though display ads from other channels converted into clicks from random sites but not necessarily into conversion making it look more like click frauds than genuine customers.

Simple

Allow people to tag brands in photos. Heck, you can even allow to tag down to a specific model and add click to buy. Problem solved.

I use Facebook for the marketing of local businesses and you just need to think of advertising on Facebook as an entirely new type of platform.

The Race is Far From Over

Could it be too early to judge?

First the worst score on this chart is only 10% off the best--a pretty tight range--and every category and publisher was well above the midpoint.

Second, the publishers on the bottom rungs--Facebook, Twitter and Google+--were also the youngest. It just makes sense that marketers and their agency partners would be more effective on platforms with which they have had longer to work (e.g., search and rating sites).

But back to the tight banding, the race is far from over.

Marketers that use Networked Insights’ platform to inform their marketing decisions with real-time data are achieving engagement improvements across the board. In their social advertising, they are seeing above 10 percent improvements.

As marketers learn to engage consumers in these new environments, rankings in future Forrester surveys will look quite different.

Brands like American Express enabling social commerce and Samsung delivering digital storytelling are just the beginning.

The smart money is still out there learning new tricks.

Nate has come to this

Nate has come to this conclusion, and Forrester has the media in a hissy fit, based on a 3.5 rating from 395 marketers we know nothing about...is this all that different from a 3.8?

Facebook lost it's way, but not all their fault

Facebook shot themselves in the foot with EdgeRank in an attempt to create an ad platform to make themselves money. (For those not in the know EdgeRank...although not called this anymore...is the algorithm that determines who sees content from a Page based on a historical engagement and near 100k other variables)
Page owners went from robust pages that was seen by most people who "Like" the Page to now only reaching a small portion without paying for Boosted content. Understandable that Facebook needed to monetize, however "hiding" content was not the way to do this.
Couple this now with the fact that MOST marketers are terrible at social overall, and you have a recipe for a degrading experience for both Page owners and users.
Social sometimes gets a bad rap, but in my experience, 75% of those using social for ad/marketing suck at it.

Facebook needs to go back and make business pages social again

The sampling is too small to be really representative but let's face it, Facebook made a wrong turn when they revamp the business page and segregated user posts from company/brand posts.

In doing so they moved away from social back into traditional advertising, not what social media users want.

Facebook thought giving companies/brands more control and visibility over their message in their feed would make them happier but at the same time, they decided to only show (on average 16%) of the posts to their audience as an incentive to buy advertising. That clearly backfired.

Hopefully Facebook will learn that they are supposed to be a social platform and put followers' posts back in the feed to promote interaction and find the fragile balance between social and advertising. that would go a long way towards making both users and companies/brands happy.

I agree 100%. Facebook has

I agree 100%. Facebook has lost its way and is currently a house of cards waiting to collapse. Mark, I don't believe you have any idea of the extent of the fraud you have set up.
My true fans and friends now say they rarely see my posts, so I very target specific advertise on fbook to direct traffic to my website, only to find the vast majority (circa 90%) of hits are coming from the developing countries like the Philippines and Indonesia.
My business is about wines and wine region tours in Australia. But my valuable advertising resources are being blown by hits for people who are Muslim, who's religion prohibits them from enjoying the products and services I am promoting.
You are headed for the dump bin.

Going public - big mistake

Mark Zuckerberg, in a few years you will look back on your career and agree with me that your greatest mistake in life, was to list your business on the US Stock Market.
Public shareholders are never ceasing in their demands for profit and return on investment. Over time some of those shareholders may learn to accept 'modest' is good for longevity, but most will not.
If your company was based in Australia, your company would prosper and have a long life, because you would have to conform with a raft of 'public good' regulations, be subject to government laws and consumer scrutinies which protect the consumer as well as shareholders. And you would be required to have a contactable office for complaints. Your business would have to be transparent and fair.
In my case, where I have spent significant funds advertising with you as a trial, only to find your claims of targeted coverage a farce, and my spend being blown on site hits by people in developing countries I have not targeted...you would be forced to refund my money.

An astounding lack of understanding

This blog exhibits an astounding lack of understanding of the ways in which Facebook presence benefits brands. "Engagement", that mythical sea creature, is the LEAST IMPORTANT, thing marketers should be striving for. What Facebook delivers is tens or even hundreds of millions of impressions per month (depends on the number of fans) that remind users that they like a certain brand which reinforces brand beliefs and winning "easy to win" purchases. Facebook also gives you a window into the values and lifestyles of users that you could not get otherwise and then allows you to target advertising based on this. For a more informed view of how Facebook works in the context of a digital, social, and mobile age see http://www.amazon.com/Brand-Building-Digital-Social-Mobile/dp/1492840424...

Actual Data

Read it and weep, English major (or Marketing major) (or whichever major allowed you to skip stats class)
http://finance.yahoo.com/news/facebook-tops-analyst-revenue-targets-mobi...

You don't read your press, you weigh it.

So by that measure, well done Nate.

What you're forgetting

As the research focuses primarily on ads, I'm assuming this doesn't take into account the millions of dollars spent on custom app development (ie. GE Healthy Share, My Local Walmart)? Or, the thousands of hours of planning, copywriting, design, testing and reporting that go into a FB campaign?

Things are going to get real for Facebook for a couple of reasons:

1. Pilot programs and experiments are over. Marketers are no longer testing the waters. Serious resources (budget lines) are being allocated for social. This means more scrutiny and a greater need to prove ROI.

2. Users are already tiring of ads. We now have page post text, video, photo, and link ads, offer ads, event ads, page like ads, mobile app install ads, apps ads and domain ads.

3. In the last earnings call, CFO David Ebersman admitted FB was losing teens. "We did see a decrease in daily users partly among younger teens" but then added "This is of questionable significance." This is the first time anyone at Facebook has openly admitted a decline in teens, despite media, analysis and research proving otherwise.

To me, going public meant the demise of Facebook. Perhaps not immediately, but inevitably. When you put shareholders' needs before your users', you might as well turn off the lights.

Twitter, are you reading this?

Nice job Nate.

Has anyone involved with this

Has anyone involved with this report ever done any Facebook advertising?

It really doesn't bear any resemblance at all to the truth. It just reports that people who are completely ignorant of Facebook advertising think it has no value

I run a Facebook advertising business, my clients make a lot of money through Facebook. That's a fact

Stephen

The main objective of

The main objective of facebook is to make life of the customers easy and the organizations provide help for the same. so it is a great platform to connect the customers and the business. it is icing on the cake when the solutions are endorsed by the friends or getting socially ranked. Social search will surely change things moving forward though facebook may tactically do a few things in the meantime.

Is the budget Relevant?

Hi there

i can't see the costs! we can't base our deicisions on this data, seriously.

therefore, the business value achieved with "on site ratings and reviews" have an advantage of 0.3 on "Facebook ads", but if the global cost of the first is 150% of our total Facebook ads budget, I do not think we would be inclined to prefer it.

we also have to consider the bonuses offered by the facebook platform, from simple "fans" data to the fact that once acquired and engaged, it costs nothing to contact them again.

In short, facebook costs less, if you want 0.3 more, rise up your FB ADS Budget.

P.s. if the budget is not relevant to your decisions, can i recommend a global free distribution of your product using a fleet of branded airships ?

i will rate that 5/5

(sorry for my english, i'm Italian, all of our english teachers spend their time on facebook)

This study matches the

This study matches the results of our own experiment. We have not seen a single sale from paid advertising on Facebook during our micro test over the last 3 years.

Facebook is definitely not a positive ROI marketing method for business to business companies.

Check out the results of our micro test at our blog. Just search http://www.profitworks.ca/blog/362-facebook-doomed-facebook-ads-found-no...

Misaligned agenda

Very well put and brings to light the important thing that brands tend to oft overlook. Every platform; especially Social networking platforms have an agenda. The reason why advertising is more profitable on google has its obvious reason as compared to why marketers are facing probable challenges in leveraging the platform towards similar ends

As people have already mentioned, my agenda as a user on FB from day 1 has been to connect with my friends and not to purchase from a brand. I will much better prefer a social recommendation / search engine platform / a curated network of deal listings / brand offerings - much of which is rather disintegrated in the current web world.

I may be open to rate a brand - express my alignment to the brand at an individual value / preference level. Chances of me shopping from there - deviating from the original agenda - rather slim.

More so with the evolution of new generation social media behavior; maybe the marketing on FB and targets drawn from them will undergo paradigm change - all for the better end user experience and brand profitability!

Great insights on the blog post.. must read!

Cheers,
Arpita

If you need bullet points, you miss the target

While the intricate apologies and defense of FB rings loud and clear here. Nate's letter is an open forum for improvement. State the patch, not the problems...

Not delivering

One thing that has disappointed me for the past 14 months of advertising is the lack of impression vs what they said they would deliver. This especially now holds true with boosted posts.

When you are told a $30 boost will reach 11k-30k people, and it falls short of 7k, over and over again, and they take your $30 in full every time, you begin to question what is going on.

When I did question it, I was told my business model may be wrong (odd, how do they know my business?), and to read the fine print as the impressions are estimates.

No phone # to call for paying customers, 10 days to respond to an email for customer service (many times), and no solution to why they continue to fail to meet their suggested goals. Just generic canned responses. No apologies or valid suggestions.

I spend $3k on facebook advertising in 2013. This year was getting worse. I would be crazy to spend another dime on facebook advertising.

RE: Not Delivering

Jason, while I don't want to defend their customer service (it personally drives me nuts when companies offer poor service), I do have to point out the irony in your statement.

"I spent $30... to reach 11K-30K people, and it falls short of 7K"

So I am guessing you reached 6.XK people? Think about that for a second. You reached over 6K people for $30. That means it cost you less than one half of one cent per person. What other media can you do that in? It costs you $.49 just for a stamp to send a letter. That does not include the cost of the letter, or the envelope, or the printing, or stuffing. Almost 100X the cost JUST for the stamp.

"I would be crazy to spend another dime on Facebook advertising". Given the math, I would say you would be crazy not too. That dime will buy you reach to more than 20 people. What else can you buy for a dime?

See my comment in this thread earlier called "Powershift". Don't shoot the messenger. Learn to make the medium work for you.

You're impressed that Facebook beats spam?

Sure, Facebook might look like a good deal compared to postal spam. But the fact that you had choose spam to find a channel against which Facebook looks good, speaks volumes.

$30 to reach 7,000 people works out to a $4.29 CPM - still typically more expensive than, say, emailing your own list or buying banners through an exchange or network. And not coincidentally, both email and banner ads rank significantly above Facebook advertising in terms of the business value they deliver for marketers.

The most frustrating part of this conversation has been that some people think "If Facebook is working for me, then anyone who says it's not working must be wrong." The reality is, with more than a million advertisers using Facebook, there will be some who find success and others who don't. What we've been saying all along - and what's being proven over and over again as time goes by - is that for the average marketer, Facebook is significantly less effective than options like email, search, and banners.

Touche

Touche Nate. I'm not saying it will work for everyone, but I think it is way too early to make the assertion it's the worst performing. It's a new media and advertisers and marketers alike need time to understand it and figure it out. Most didn't get a great ROI on any initiative they undertook for the first time. You have to learn to adapt and learn. It's an iterative process. As a "channel" Facebook is only a few years old. The print guys said web advertising was a horrible investment when it first came out too. And for many advertisers, their first web campaigns were terrible. Adapt and grow. As for the CPM comparison, that's not accurate either. Web ads (unless you frequency cap at 1X) represent thousands of impressions, not thousands of unique users). The user indicated he reached almost 7K unique (he did not state with what frequency).

But Facebook advertising isn't new

Facebook's fans keep treating it with kid gloves, claiming it's new ("as a 'channel' it's only a few years old") and that marketers need time to figure it out. Sure, marketers will get better over time. But Facebook's been around for 10 years, and selling ads for I believe 7 years. It's not exactly a new channel. For comparison, when Google had been selling ads for 7 years, it was consistently delivering tons of value for the majority of its marketers. Any way you slice it, Facebook is way behind where it should be in delivering marketing success.

Thanks for jumping in

Nate, love the fact that you're jumping into the fray here. When you say (in your previous comment) that "Facebook is significantly less effective than options like email, search, and banners," that's a pretty broad statement--would you say that FB is a necessarily "evil" of sorts given how much traffic it sees and the fact that social is a mandatory channel on which to advertise? Our firm has seen excellent success on FB, especially with FBX, and we encourage all of our customers to make FB part of their display/social strategy. We don't send emails or run search campaigns, but nearly all marketing teams do--our goal is to enable a cross-channel, complementary set of strategies that will allow for success in some and less success in others. FB may be "less effective," but I still think it warrants investment; the question every marketer must answer is "how much?"

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