AdvertisingAge recently posted that Facebook and other social networks are lowing the CPM of ads across the Internet. Does it matter?
Advertising is about effectively engaging the right audience. If you advertise on Facebook then you are really putting your business image at risk just by engaging in semi-targeted advertising. I can’t say it’s non-targeted because Facebook does allow you to select demographics for your ads. For instance, you can target your ads to women between the ages of 18-25. But will your ads only be shown to that demographic?
There is some question as to whether Facebook ads are targeted properly, but it may not be Facebook’s fault. Perhaps the advertisers are not targeting their ads properly and that is causing the results of Facebook ads to move toward the south. In that case, if Facebook cannot demonstrate to potential future advertisers that current advertisers are getting results then they can’t justify raising their ad prices. Then advertisers would be forced to pay garage sale prices for advertising no matter what kind of results they are getting.
This is a conundrum for Facebook. On the one hand, Facebook gives advertisers the ability to target their advertising to some degree. That should make those ads more valuable. However, the high number of advertisers who flock to Facebook just so they can take advantage of the traffic potential but do not use the targeting features offered through the social network cause the advertising to be less effective. That lowers the value to other potential advertisers.
If Facebook is to brings its ad prices in line with the rest of the Internet then it needs to learn from Google how to optimize advertising based on user interest and that means taking away some of the control over targeting preferences to the advertisers.
What do you think? Is that feasible?