Facebook Needs to Prove ROI in Order to Attract Big Name Advertisers
By Karla Robinson
August 22, 2012
August 22, 2012
- In Q2, Facebook grew its ad revenue 14 percent from the previous quarter, a 28 percent rise from a year ago. While this may seem promising, it’s a far throw from the 87 percent year-over-year growth seen in 2011.
- CFO David Ebersman says the lackluster increases are in part caused by the 9 percent increase in ad rates, but the larger issue at hand is the inability for advertisers to measure return on investment.
- During the last earnings call, COO Sheryl Sandberg said Facebook is working on quantifying the benefits their ads provide. “Though nearly all top advertisers spent money on Facebook ads in the last quarter, she conceded that the total was only a small percentage of the advertisers’ digital ad budgets. She characterized the shortfall as an ‘imbalance’ and a ‘substantial opportunity,'” reports the Wall Street Journal.
- Facebook’s online ad rivals such as Google and Yahoo are able to measure results by clicks. “But for many brands, ads on Facebook don’t consist of an offer to directly buy something. They are more akin to TV ads, which marketers study to see how brand exposure might lead to offline sales,” explains WSJ.
- Facebook is working with big brands to create customized ad measurements based on each company. Unfortunately, one big hurdle stands in Facebook’s way: privacy.
- “One disadvantage to marketers is the fact that Facebook doesn’t offer them access to the conversations that the social network’s 950 million users are having among friends,” notes the article. “The company hides those discussions for consumer-privacy reasons. In lieu of such data, marketers have had to use other metrics, such as how many people ‘like’ a brand’s Facebook page.”
- In May, the site lost $10 million in ads from General Motors and it stands to lose more if it can’t find a way to prove ROI.
No Comments Yet
You can be the first to comment!
Leave a comment
You must be logged in to post a comment.