Posts tagged ‘Mark Zuckerberg’

Unpacking The Horrific Math of Facebook Advertising

Adweek is reporting on a study by Webtrends that shows that the performance of advertising on Facebook, which was astonishingly bad in 2009, has gotten worse in 2010. The average click-through rate has fallen from .063% to .051%.

Let’s think about what that means. To get a single person to click on a Facebook ad, 2,000 people must be exposed to it. If all 500 million people on Facebook were exposed to an ad, it would net just 250,000 clicks. Put another way, if your ad were seen by a group of people the size of the combined population of the United States and Brazil, it would be clicked on by a group the size of the population of Chandler, Arizona.

Webtrends’ study covered 11,000 ad campaigns and 4.5 billion impressions. All together, 4.5 billion impressions generates a total of only 2.25 million clicks. That’s not much to spread around among all the brands clamoring to advertise on Facebook. In fact, when you divide this number up among the 11,000 ad campaigns, each one averages an embarrassing 205 clicks. I don’t know of too many brands–or for that matter too many corner dry cleaners–for whom this type of performance is acceptable.

Yes, yes, of course, Mark Zuckerberg and his pals will protest that click-throughs aren’t important on Facebook. They’ll tell you brands benefit from Facebook’s “social value,” not its ability to drive traffic. I give them full marks for this, if only because it must be extraordinarily difficult to say such things without giggling when they know that ad spending on Facebook is projected at $2.19 billion in 2011.

Don’t misunderstand me. I’m not saying Facebook is completely without value for brands, but I am saying advertising on Facebook is damned close to it. Agencies that want to deliver value to their clients have an obligation to go beyond ads. They have to think harder and invent ways to be genuinely engaging. Forsman & Bodenfors in Gothenburg, Sweden did it brilliantly for IKEA, leveraging the basic photo tagging feature of Facebook in a way no one had ever thought of before. Presumably, clients who can do small amounts of math will demand comparable thinking.

Photograph © Jason McELweenie

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February 2, 2011 at 2:22 am Leave a comment

Facebook app developers are getting rich and you’re not. Neither is Facebook.

You may have seen it reported yesterday that the pallid, painfully thin man-boys developing Facebook apps in their mildewed geek caves may very well make more money than Facebook itself in 2009. $500 million is a figure that has been bandied about. That this is even possible is yet another testament to the fact that Mark Zuckerberg cannot manage his way out of a wet paper bag. But let us not expend our energies kicking Mr. Zuckerberg in the stomach. Plenty of time for that later. Instead, let’s take a look at exactly what sort of Facebook apps we’re talking about.

TechCrunch has posted a story and lovely video that explains all.  Examine them and then tear at your flesh with your bare hands in anguish that you did not come up with the ideas first.

May 21, 2009 at 4:21 am Leave a comment

In the online world, the money isn’t always where you think it’s going to be.

Consider Ebay. It belongs among the giants of the online space. Yet if you believe what Jeff Segal says at breakingviews.com, (and I do) the real value in Ebay going forward is going to be its Paypal subsidiary. Ebay’s auction business is going nowhere; growth was at just 1% last year and lagged the online commerce industry as a whole. Paypal grew at a 26% clip in 2008. By 2011, Paypal will in all likelihood be worth more than its parent company (if you use the same earnings multiples as a competitor, Visa, though it is arguably worth of a higher multiplier). 

Think about Steve Jobs. He fouled out, struck out, and was caught looking at quite a few called third strikes before he got on a product development hot streak that lifted the company out of the doldrums. I think we can all agree that the Lisa and the Newton came up a little short.

Maybe it will work out the same way for Facebook. Mark Zuckerberg had better hope so, anyway. His company is struggling mightily to find a profitable business model. Yet as we speak, some tiny shops are clearing $700,000 a month based on the Facebook apps they have created. Maybe one of them will be the magic bullet. Or perhaps, before he figures out what the magic bullet is, Zuckerberg will quit and run against Meg Whitman for governor of California. Stranger things have happened. Look who the governor is now.

March 13, 2009 at 12:01 am Leave a comment

Note to Mark Zuckerberg: Provoking 175 million people is a bad idea.

Mark Zuckerberg should count himself lucky that people don’t pay to use Facebook. If they did, the company would already be in ruins. The brazenness of the digital rights grab it recently tried to effect with a new terms of service agreement was worthy of Hugo Chavez. Ham-fisted, short-sighted and stupid. 

Facebook, which has 175 million users, should consider itself blessed not to be held to the standards of a real company that generates enough revenue to justify its market valuation, which for reasons that are unclear is in the billions of dollars.* As a result, most users will probably give it a second chance.

But how many second chances will Zuckerberg get? This is not the first example of bumbling management in Facebook’s short history. The introduction of Beacon, to name one example, sparked enormous protests about privacy concerns.

All Zuckerberg needs to do is look over his shoulder at MySpace, which is hemorrhaging users, to see that the leadership position in the social network space can be evanescent. Every cock-up sends more people to Beebo, more people to Orkut, more people to dozens of other sites whose owners are breathing hard at the prospect of overtaking Facebook.

Perhaps the most significant lesson Zuckerberg can learn is contained in the very name of MySpace. It beautifully stated the purpose and promise of the site and indeed the whole social networking phenomenon. The worst mistake he can make with Facebook–and he seems intent on making it again and again–is to treat it like HisSpace.

* I don’t want to veer off into a blood-and-guts discussion of the market value of Facebook, but I am willing to bet it will wind up being a good deal less than its current investors would hope. This is largely because any monetization strategy will introduce a level of brand presence into the site that will cause users to flee for “purer” social networking alternatives.

February 19, 2009 at 2:37 am 2 comments


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