Why did Facebook go public ... because they couldn’t work out how to use their privacy settings either

So it’s finally happened Facebook has floated their shares on the stock market. While many people will be keen to see how this develops others will roll their eyes at the phone number figures and the circus surrounding it.

Meanwhile, back in the real world what could this mean for advertisers? These huge figures will create significant financial pressure on Facebook to live up to the floatation hype and start to provide its manifold shareholders with some returns and quickly, but how can they make this happen? One school of thought is that with so many users (over 900 million worldwide) Facebook only needs to make pennies from each one to be profitable, but will the process of extracting these pennies make the site experience unusable, unbearable and most importantly unpopular? Simply put, to make more profit Facebook will need to sell and create more ad space which means more on site ads which is something users will find hard to swallow. One element in its favour is that the rapidly looming cookie laws should have little impact on their business due to its opt in model. This might mean that a large number of advertisers migrate to this cookie equivalent of Switzerland to enable them to attract precious users as the rest of the internet becomes some kind of no man’s land, in the short term at least.

However, the waters around Facebook seem to be getting muddier by the day; on one hand we have reports that General Motors is to cease their significant ad spend (est. $10 million) on the network due to the advertising being ineffective, saying it "had little impact on consumers' car purchases,". This is in stark contrast to the Ford Motor Company who has stated that they have had success integrating paid advertising and content together on Facebook and that "It's all about the execution. Our Facebook ads are effective when strategically combined with engaging content & innovation."

So how do we, the Facebook advertiser, see the wood for the socially interactive trees? Ignoring the recent spat between the two car giants a recent Associated Press-CNBC poll showed that more than half of all Facebook users never click on sponsored ads and only 12 percent said they felt comfortable buying anything over Facebook. Critics have also shown that metrics such as click-through rate are not where they need to be to make the advertising work. A recent Webtrends report puts Facebook CTR’s at 0.05%, which is lower than an averagely performing advertising network (CTR -c. 0.07%)and a league away from one of their main competitors Google at 0.4% on like for like display advertising. These figures are even more alarming given the platform’s market dominance and raise serious advertiser concerns as clicks are currency.

Whilst it’s clear that Facebook is here to stay I feel its very much a medium suited to relatively few advertisers and these few are fully committed to the medium, not to mention fully committed to the budget required to ensure success. Advertisers cannot just jump on board for some short term profit, they have to be prepared to test and refine just as you would with your search marketing. Not all campaign elements will work first time, but if you have something interesting to say, an interesting way of saying it and you can offer something to the user, be it content or other benefit, the chances of Facebook working for you are much improved. Even if the campaign is not a complete success a well constructed campaign with a clear objective will generate a multitude of usable learnings to ensure your next Facebook campaign’s success. On the other hand if your motivation for getting involved is that ‘everyone else is doing it why don’t we’ then chances are you could end up a social outcast!

I leave you with this helpful koan to see you right - If a tree falls in the forest and it's not on Facebook, does it make a sound?

Bodhi Morrison
Head of Digital