Just as a test, last month I did a targeted ad campaign on Facebook for my 99 cent book. The results were practically zero–very few clickthroughs and no sales. Nor did I hear from anyone who saw the ads themselves.
Of course, one small test doesn’t mean anything in a grand scale. But now, Ad Age is taking a closer look at how Facebook’s revenue from advertising is doing:
Like a lot of ad businesses, Facebook sales slowed from the fourth quarter of last year — which includes holiday season-ad spending — and the first quarter of 2012, a period when a lot of marketers pull back spending.
Sales came in at $1.06 billion in the first quarter, a 45% increase from $731 million in 2011, but a slight decline from fourth-quarter sales of $1.13 billion reported in February. Facebook also grew faster in the fourth quarter, up 55% from $731 million in sales for the same period last year. Net income fell 12% to $205 million from $233 million.
I’m not a Facebook basher at all. I’m on there several times a day and it’s allowed me to keep up with friends and family even as I’ve moved 2500 miles away from most of them. Still, it seems to be a tricky recommendation to make as an advertising vehicle. Brands, of course, can have a different sort of presence on the site, but if Facebook wants to keep revenue climbing, it’s going to have to figure out how to convince its users to buy products, not just be social. And it’s going to get harder as the mobile use of the site increases, which leaves less room for advertising.
Have you done any Facebook efforts for your clients? Do you even pay attention to the ads you see on the sides of FB pages?
FB’s $100 billion valuation is about 33 times its advertising revenue, compared with 5.5 times for Google. That’s a problem for investors (and advertisers).