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Is Facebook Advertising Like Burning Money?

Written by - 17 Comments
Categories: Advertising, Facebook Advertising, Social Media, Social Media Statistics

Advertising has  evolved rapidly over the last century.Is Facebook Advertising Like Burning Money?

Before the advent of radio and television all you had was the printed advertisement. Ads appeared in newspapers and magazines. Direct mail emerged and many companies leveraged their brand with brochures and leaflets dropped straight into the letterboxes of houses across cities and suburbs.

The madmen of Madison avenue became more creative when television allowed them to beam ideas and images into mullions of homes via a 30 second ad spot.

Today television advertising is still strong but  print advertising is rapidly shrinking and has now been surpassed by digital. It is estimated that digital online advertising could reach 30-50% of all advertising spend in the next ten years.

With so much of our media consumption being conducted via computers, tablets and smart phones, that may even be a conservative number.

Facebook Ads are the New Kid on the Block

Digital Advertising has for the past 15 years been dominated by the the ever present display banner ads. Flashing, twirling and in your face ads. It is estimated that several hundred billion of these appear every month on computer screens. The “Google Display Network” is one of the big kids on this global block.

In the last few years the new kid on the block has arrived and their name is “Facebook”.

Facebook advertising started cheaply and low key. In recent times the costs have increased significantly by 40% plus and the number of ads that crowd the page have  increased significantly. Facebook is attempting to  monetize its 1 billion users.

It now needs to keep its public shareholders happy.

Is the Google Ad Network More Effective?

Google earns 95% of its money from advertising. The Google Display Network” is 20% of this income mix.  Facebook also generates most of its revenue from advertising, but does “new” mean “better”?

A recent study by Wordstream had a close look at the reach and effectiveness of each and the results were surprising.

  • Facebook has a huge reach of nearly 1 billion users with 1 trillion page views per month
  • Facebook reaches 51% of the world’s internet users
  • Google reaches 90% of all internet users with its online assets including YouTube, Blogger and Gmail
  • Google serves up 180 billion “Ad” impressions per month
  • Facebook revenues in Q1, 2012 were $1.06 billion
  • Google’s Display Network generated $2.9 billion

The study revealed though that there was huge difference in effectiveness.

  • Facebook  ads receive a “Click Through Rate” (CTR) of 0.051% in the USA
  • CTR for Google ads is an average of 0.4%

This is almost 10 times higher than a Facebook ad!

Below in the infographic are many other measurements that look at key elements such as targeting options, formats, mobile and the life of an ad on Facebook.

Facebook vs. Google Display Advertising - Comparing the value of the world's largest advertising venues. [INFOGRAPHIC]

Infographic Source: © WordStream

What About You?

Which has been effective for your advertising campaigns? Have you tried Facebook ads?

Have you been advertising on the Google Display network? Did it work for you? Would you do it again?

Look forward to hearing your stories.

 

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Image by Bigstockphoto



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  • Mark Tillison

    Hey Jeff

    We advertise on both Google Display and Facebook for select clients.

    We’ve had our run of successes and a couple of failures, though I would argue that the failures weren’t total disasters. It’s really been a case of picking the tool or platform to achieve realistic objectives.

    We’ve run successful, small budget lead gen using Facebook PPC, but they don’t always scale well. We’re still running a campaign to increase fan count which is going absolutely magnificently thank you very much! For the latter, we already have data which demonstrates the ROI on a Facebook fan, so we know it’s a win.

    Would I recommend Facebook PPC for direct action on eComm stores? Hell, no. Not enough evidence to justify that. But make a connect ion which can be nurtured and produce medium and long term revenue? Sure. Absolutely.

    Google Display is much the same; use it for the right project and realistic outcomes and it too can be a huge asset. The release of View Through Conversion Tracking really sealed the deal for us on Display. Until then, it was incredibly difficult to justify spend without being able to attribute return.

    Overall, and this is a generalisation, use Search for direct action, Google Display to create awareness and build trust, but use Facebook to gain and nurture an audience.

    • http://jeffbullas.com Jeff Bullas

      Thanks Mark for that insight into your experience. It certainly sounds like you are using social where appropriate, to engage with your fans and followers.

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  • Pegi Anton

    This is great information! Do you have any breakdown of market segments?

  • http://www.hypedsound.com jonathanjaeger

    If you have the right funnel going on Facebook and you know your goal — for example e-commerce or lead generation sites know their cost per acquisition goals and hopefully the lifetime value of a customer. Then it’s just a matter of mastering the Facebook ad process. Many don’t know how to optimize properly for front-end hooks, imagery, and landing pages. Some do and Facebook advertising works great. Many (or most) don’t know.

    Other brands are going for more of an awareness angle, rather than strict performance based marketing. Really it depends on your goals and if you have the expertise in running an effective Facebook ad campaign. For many Google is just prohibitively expensive and won’t reach their target audience (and the same holds true the other way around.

  • http://jeffbullas.com Jeff Bullas

    The use of images on Facebook is vital as they are the type of media that is most shared and commented on so a visual marketing tactic is vital especially on Facebook (and don’t forget Pinterest as well)

  • http://twitter.com/liordegani Lior Degani

    Very nice post – but would like to hear more specific data.
    CTR by sectors – e-commerce comparing to internet services or SaaS for ex.
    how it affect conversion, etc.
    I guess there is a better platform to advertise (out of the two) for a specific goal.

  • Nigel Apperley

    Using Facebook ads for sales is not a good use of budget, I don’t know anyone who has made that work.

    Facebook ads are a great way to acquire ‘likes’, you then need to excel at engaging with your audience (see the eConsultancy article on EdgeRank) for conversion.

    • http://twitter.com/Tillison Mark Tillison

      *Generally* speaking, Display ads aren’t great for direct action, I agree. If your objective is to gain fans and nurture them so that they become customers, your chance of success is much greater.

      Of course, if you’re giving something away for free, or have an earth-shattering, last minute, not-to-be missed-opportunity, that could work too with the right targeting, ads and landing pages.

  • American_PhD_Scientist

    The problem with social media these days is that you can never really trust who wrote the article. Just as big pharma has writers who sing their praises to the American public, I’m sure Google, now that it’s losing a piece of the pie, has writers badmouthing Facebook.

    Facebook does some questionable things, however so does Google.

  • http://twitter.com/shanna0908 sgualtieri

    Thank you for this, I’m loving the infographic. I think as research is proving over again the measurement tools and lack of differentiation in adverts leaves it to be more of an acquisition tool rather than a member conversion or a way to gain brand advocates. Good for likes, lacking for LOVE.

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  • VBetter

    A CTR of .4% for Google? Was that reported by, oh, Google Analytics who claim no accuracy/responsibility in their reporting numbers? That seems MIGHTY generous.

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  • http://twitter.com/Thatvideomag Thatvideomagazine

    Intent is the factor that differentiates Google from Facebook.

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