Is advertising via Facebook as effective as Google Adwords?

In my experience the problem with the facebook advertising platform is that it doesn’t effectively allow for different types of advertisers to compete on an even playing field.

You could make the argument that since they allow for all different types of interest/demographic bidding, that there are many micro playing fields for different types of advertisers to compete on, but this analysis fails to capture the one most important vector that drives internet advertising, which is intent.

The beauty of Google’s adwords platform is that for any given keyword, a one-man custom boot making shop in Texas can profitably compete against internet retail giants such as Amazon because for certain keywords the intent of the searcher is more aligned with their product offering than Amazon’s.

In a generalized second-price auction such as Adwords, since advertisers are attempting to maximize their ROI on a per-keyword basis, they are not perversely incented to maximize their CTR at the expense of receiving lower CPC’s and an increase in less qualified traffic.

On the other hand, on the facebook advertising platform, different types of advertisers who will have wildly different costs for customer acquisition are competing for impressions and clicks head-to-head. This in turn causes two kinds of major distortions in the marketplace:

1) Advertisers with the highest customer acquisition value will eventually rise to the top, crowding out the smaller guys. e.g: you will see more ads for attorneys and real estate agents then you will for restaurants and dry cleaners.

2) Ad Copy / Images will trend towards becoming more and more attention grabbing in a never-ending arms race towards a higher CTR = lower CPC.

In the long run, neither of these two attributes is conducive to a robust and sustainable advertising platform for facebook.

My answer on Quora to: Is advertising via Facebook as effective as Google Ads? http://qr.ae/4GYA

Why can’t I re-target competitors visitors?

With the recent announcement from google about opening up re-targeting through adwords and plenty of venture money flowing into re-targeting companies, there is little doubt that ad re-targeting works.

“The conversion rate is similar to paid search,” he says of Criteo’s retargeted display ads. Retargeted ads are typically clicked on four times more than a traditional run-of-site banner ad, he estimates.

This is all well and good, but when I going to be able to re-target the visitors to my competition?

e.g If I am Target.com, I can re-target visitors across the web who have visited BestBuy.com and offer them a competing offer on a product they have viewed at BestBuy.com or a coupon for $$ off their order.

Best Buy will not be pleased that the data they are sharing to power their own re-targeting campaign is being used against them, but the end user benefits with a better price, and net sales are increased as a result, creating a win for both the merchant (who makes the sale, the user and the advertising network).

Facebook Ads Part 2: The Economics of Intent

In my previous post on testing market demand with facebook ads, I extolled the virtues of the Facebook self-serve ad platform for testing feature/product concepts with live ammunition.

After further experimentation with the platform, I can state confidently that while there are some interesting opportunities for locally oriented products and service owner’s to take advantage of the city-level targeting, there are some fundamental flaws with the way that the Facebook ad auction functions.

The problem lies in the way that the auction for ad impressions/clicks functions. While Advertiser’s bid on a particular keyword in search advertising platforms such as Google’s Adsense, on Facebook, Advertisers bid on a certain demographic segment.
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Flogs

Flog: Fake Blog

I was clicking through ads as i’ll often do when i’m bored and feel like costing spammers money when I stumbled across this out of control Flog advertising a get rich quick with twitter scheme.

The irony is that if you look at the “comments” at the bottom of the page, all of which are blatantly fake endorsements, there is a message saying “Comments Closed Due To Spam (back soon)”

Well done floggers…please die and go to hell now.