Facebook can generate enormous quantities of ad impressions, by sticking 4, 5, 7, and up to 9 ads per page. Doing social media does not mean sticking ads on Facebook.
1. Facebook Ad Scam
ad scam
CPMs Are For Suckers
Dr. Augustine Fou @acfou
http://linkedin.com/in/augustinefou
Marketing Science Consulting Group, Inc.
2. S-1: 6th Amendment, May 9, 2012
“We do not currently directly generate any meaningful
revenue from the use of Facebook mobile products, and our
ability to do so successfully is unproven. We believe this increased
usage of Facebook on mobile devices has contributed to the recent trend
of our daily active users (DAUs) increasing more rapidly than the
increase in the number of ads delivered. If users increasingly
access Facebook mobile products as a substitute for
access through personal computers, and if we are unable to
successfully implement monetization strategies for our mobile users, or
if we incur excessive expenses in this effort, our financial
performance and ability to grow revenue would be
negatively affected.”
Source: SEC.gov May 9, 2012
July 31, 2012 2
3. How does Facebook continue
to garnish revenues? …
… when key metrics have
been in decline for 2 years?
April 11, 2012 3
4. Facebook site metrics…
Visitors
158 million /mo
peak
* Visits/Person
Jan 2011
20/mo
-33% from peak
… more visitors but less visits/user.
July 31, 2012 4
5. Facebook key metrics…
peak
* Visits
Jan 2011
3.1 billion /mo
-28% from peak
peak
* Pages/Visit
Aug 2010
20/mo
-34% from peak
… have been in decline for 2 years.
July 31, 2012 5
6. Facebook key metrics…
peak
* Pageviews
Sep 2010
62 billion
-46% from peak
peak
* Average Stay
Jan 2011
18 mins/mo
-36% from peak
… have been in decline for 2 years.
July 31, 2012 6
7. Facebook’s revenues …
85% of Facebook’s revenue
still driven by display ads
sold mostly on CPM basis
Source: Facebook S-1 Feb 2012
CPM ad revenue is driven by
visits to the site and
pageviews generated per visit
Decline in total pageviews
exerts downward pressure on
this form of revenue.
… are driven by users’ pageviews.
July 31, 2012 7
8. Facebook robs advertisers...
2012
1
2011
2
2010 3
4
5
6
7
4 8
Source: Facebook Display Ads | go-Digital Blog
9
…by increasing number of ads per pageview.
April 11, 2012 8
9. But display ads simply
don’t work…
… if the ads are not seen, even the
“branding” argument falls apart.
Check out another great first-hand analysis by Freddy J. Nager, Prof. of
Integrated Marketing, UCLA and Robert Kennedy College of Zurich,
Switzerland. http://atomictango.com/2012/04/20/myspace-facebook-continued/
April 11, 2012 9
10. Click Through Rates Suck
Facebook’s click
through rates are
LOWER than that of
BLANK banner ads,
which got 0.08%
CTRs.
0.03% - 0.04% Source: AdAge, July 23, 2012
Source: TBG Digital July 2012
July 31, 2012 10
11. But costs are going up …
Source: TBG Digital July 2012
July 31, 2012 11
13. TechCrunch Reports Massive
Facebook Click Fraud (2009)
“Tracking 202 is telling me
11 clicks….Facebook is
telling me 145. That’s way
off .”
“FB click fraud update:
ratio is now EXACTLY
10:1. 10 clicks reported on
“Tested on 3 different servers at 3 FB, 1 click on prosper.”
different DCs (not a network issue).”
Source: http://techcrunch.com/2009/06/21/facebook-click-fraud-enraging-advertisers/
April 11, 2012 13
14. BBC Reports Significant
“Like” Fraud
“These [fake accounts] all
seemed to have an
enormous number of
Likes, with many totaling
more than 10,000 and at a
“Liking” rate of more
than 500 a month.”
Source: Search Engine Journal July 2012
July 31, 2012 14
15. So what?
“Doing social media does not mean
sticking display ads on Facebook. Instead,
brands should engage with and have
meaningful conversations with customer.”
- Dr. Augustine Fou
Instead of display ads, see how other companies are doing social media right:
http://www.slideshare.net/augustinefou/social-media-marketing-done-right-by-augustine-fou
April 11, 2012 15
16. Dr. Augustine Fou – Chief Digital Strategist
Dr. Augustine Fou is an industry-recognized thought
leader in digital strategy, search and social media
marketing and former Group Chief Digital Officer of
Omnicom's Healthcare Consultancy Group. Dr. Fou has
over 16 years of management consulting and digital
strategy consulting experience, advising CMOs,
marketing executives, and global brands.
He helps clients make the transition from “traditional”
advertising to marketing that is optimized for the new
digital world.
MCKINSEY CONSULTANT
CLIENT SIDE / AGENCY SIDE EXPERIENCE
PROFESSOR AND COLUMNIST
ENTREPRENEUR / SMALL BUSINESS OWNER
PHD MATERIALS SCIENCE (MIT '95) AT AGE 23
ClickZ Articles: http://www.slideshare.net/augustinefou
LinkedIn: http://www.linkedin.com/in/augustinefou
April 11, 2012 16
acfou@mktsci.com
18. Facebook Sales Declining
Sales declining
Growth negative now
Source: SEC Filings
April 11, 2012 18
19. Facebook CPMs/CPCs falling
Average CPC:
$0.40 and falling
Average CPM:
$0.25 and falling
Source: AdParlor's data is based on a sampling of 1 billion daily ad impressions served on Facebook since January 2011.
Read more: http://www.businessinsider.com/why-facebook-ad-prices-collapsed-in-q1-2012-2012-4?op=1#ixzz1syq0arCJ
April 11, 2012 19
20. Estimated eCPMs from S-1
2009 2010 2011
$0.19 $0.39 $0.68
Source: Facebook Ad Benchmarks, 2009 | go-Digital Blog
April 11, 2012 20
21. Facebook (old from Oct 2009)
Peak: 7/2009
100B pageviews /mo
Peak: 7/2009
16:40 min avg /mo
Peak: 1/2009
68 pages/visit
Source: go-Digital Oct 2009
April 11, 2012 21
22. Calculations
Traffic Data from Compete.com
Ads per page increased from 4
ads in 2010 to 7 ads in 2012
Ad impressions are pageviews
times number of ads per page
eCPM is annual Facebook total
ad revenue divided by
annualized ad impressions *
1,000
April 16, 2012. 22