Posted by & filed under branding, business models, FaceBook.

Description: Facebook has also been working on improving its offerings for advertisers, as it tries to generate enough revenue to justify its alleged $60 billion market value.

Source: www.businessweek.com

Date: Oct 7, 2011

One of the newest moves in this direction is an addition to the Page Insights dashboard, which Facebook provides for brands as a way of seeing all the analytics related to what used to be called their “fan” pages. Along with being able to see the usual “likes” and sharing associated with a page, as well as the demographic and gender breakdown of those who have interacted with it, Facebook now shows something it calls “People Talking About This.” READ REST OF STORY

Questions for discussion:

  1. Why does Facebook not want to use the industry standard metric of “clicks”?

2.  D you feel that Facebook’s claim of their new metric has merit in the advertising industry?

22 Responses to “Can Facebook Persuade Advertisers to Forget About Clicks?”

  1. Joseph Walls

    I’m not really that surprised that Facebook Click through rates are that low, I really don’t ever click on them, although I do notice them all the time. Most of them are for things like Farmville though. This seems like it’s a good idea, this would allow Businesses to directly advertise a special to people who have interacted with their page or with their company on Facebook. It would be a good way for business to increase the amount of people that like their page

  2. Jillian K

    In my opinion, Facebook’s desire to shift from CPC based advertising into a methodology that focuses more on user engagement makes perfect sense. Primarily, by offering a more valuable method Facebook will be able to accumulate more revenue which is what they are currently attempting. But more importantly, as a company they are already quickly rising as one of the top advertising platforms because of their capability for precise targeting, high volume of traffic to their site and costs that are directly related to the number of users clicking on the brand. This new capability would push Facebook over the edge as the most effective advertising medium of our time. As discussed in the article, we have always previously had to pay large lump sum for advertising costs and speculate on what their results would be. Never before have companies been able to interact so thoroughly with the results of their advertising campaigns and the consumers being targeted.

  3. Rayelle D

    I believe that Facebooks new approach will do wonders for them in the advertising department. In my opinion, just by clicking on something doesn’t mean that I am actually interested in something, what if I click on it and its not what I expected it to be or I didn’t even mean to click on it… By using engagement, which is tracked by the discussions, sharing and likes facebook is allowing companies to quantify who actually has a legit interest in them. Also by seeing what people are posting also informs more people about their company and their products as it will most likely appear on their news feed.

  4. Ivette

    I think that although clicks and likes might be useful metrics as they are, more detailed information regarding fan-base interaction with particular business’ pages will be of more relevance and use to advertisers. While the number of clicks might give an idea of how many people like or relate to the product, “People talking about this” will definitely provide advertisers with more tools to better target their audience and probably even offer, based on the information collected, a more customizable version of products. However, the success of this strategy by Facebook is still questionable because advertisers might be reluctant to switch from traditional advertising to something they don’t really know if it’s going to work. I think that in order for Facebook to make this new feature appealing, they will have to prove with real facts and real life hard data that “People talking about this” works for the greater future profitability of companies. The biggest challenge that Facebook has, from my point of view, is to somehow get Facebook users to click trough advertisements in a regular basis and to do that advertisements have to be made more appealing because most of the time they just fade in the background.

  5. Meagan

    Facebook doesn’t want to use metrics of clicks for advertising because it’s not as successful as having a “people talk about this” app. Most people that are on facebook don’t want the ad that pops up when they are doing something else and have it interrupt them. Or have it off to the side being distracting. Whereas if you have a page that members can join the members feel like they are choosing to be a part of the page and can look at it when they want to. Another advantage is that these pages give way more information than just a click ad. Also these ads give you updates on what’s new and you can look at it when you see something you like and want to buy instead of these ads being shoved in their face when members don’t want them. Another reason why click ads aren’t preferred is because most members wont click on them for fear of getting a virus since there are so many ways that hackers can get your information and wreck your computer, while if it’s a page on facebook then members know it’s safer because it’s the same as another page they look at. So they are more likely to prefer an app or page than they are to click on a strange and unknown ad that they just see in a banner.

  6. Ellen H

    I definitely think that Facebook’s claim of their new metric has merit in the advertising industry. By simply counting the number of clicks that a company’s website received, they are assuming that those people stayed and looked around, maybe even headed their direction in the first place. Facebook’s system allows companies to judge how well their advertising is working by the level of involvement (engagement) that is taking place in society. A known fact in the business world is that the most successful advertising is done by word of mouth. Happy customers tell as many people as possible about their experience, urging others to use said service as well. Basically Facebook is taking what we’ve always known and given us a platform to analyze it properly. It’s like a version of game theory. Analyzing why the equilibrium path came to be and why other paths weren’t chosen by players. It’s rare that internet users will click on banner ads because they are often told such ads might well contain threats to their network. Therefore, showing how many people “liked’ something, talked or commented about something, posted something about the product or service is a much more useful statistic than the traditional click method.

  7. Matt B

    I believe that Facebook is trying not to use the industries standard metric of “clicks”, because it’s not as accurate as other ways like their new view of engagement. The engagement is tracked by the interest of the person on Facebook. The “People Talking About This” metric is a great way to get a company’s name out there. Ways they are able to be mentioned is through a “like”, comment, mentions of the company on their page, checked into your place. With all of these examples it gives quality marketing opportunity to the companies. Personally I think of it as if one person talks about my company on Facebook, all of their friends see it on their news feed. And out of all of their friends there may be one or more friends that share that information of the company to their friends. It’s sort of like a chain reaction. I think it’s a better way of advertising then the “clicking” of an ad because I know for myself I never click those ads and if I do it’s on accident. I usually have no interest in the ad. I know im not the only one that’s the same way. The clicking doesn’t seem like a very accurate way of knowing who’s actually interested.

  8. Destiny S

    Facebook began as a way for online users to connect electronically via social media to other users, usually those in a distant social network. As time went on, the value of social networking websites such as Facebook increased dramatically and advertising invaded the website. Ultimately, Facebook is attempting to convince advertisers to pay more attention to actual user brands and turn their attention and focus away from simply counting clicks from advertisements and links. Facebook created “likes” and “fan pages” to help aid in this attempt to revert advertising companies drive for revenue. Sites like Facebook suggest that simply counting clicks is not an effective way of determining what users are doing on the site. By doing what Facebook is doing, this article suggests that Google may be threatened as Google simply relies on advertising banners and clicks. Ultimately, Facebook is trying to focus on actual customer responses. Of note is the fact that by adding advertisements to Facebook, the website’s generated revenue doubled.

  9. Breanne Marton

    I think that Facebook does have a good idea in their new tracking metric however I would also wonder how actually effective this marketing is. I think it is good for the advertising industry to be able to see which people “Like” their brands online enabling them to view their target market better and to understand them in a more informative manner, however, most advertising companies already know who their target market is. As such I don’t know that it would be so beneficial to have extra costs in advertising on Facebook. I think that this gets their brand into people’s heads more but as far as trusting the sources that “Like” them and seeing this lead to increased sales, I don’t think this is accurate. Most people on Facebook will “Like” something simply because it’s there to “Like” or because their friends have “Liked” it. I think that this makes this technique highly ineffective as Facebook is for social media. It’s for people to connect with other people, not for individuals looking to shop or be influenced by a specific brand. If anything extra marketing on a website like Facebook in my opinion is slightly wasted as most people aren’t even paying attention to the ads going along the side of the website.

  10. Erin

    I am surprised that Facebook has not tried this sooner. The ‘pages’ of different businesses or brands are liked and followed by so many people, that it woul be a shame not to. I rarely, if ever, click on the advertising that is on the side, but I like many pages, and get updates on countless businesses, such as Starbucks and non-profits and many more. Showing this information to advertisers could seriously help them to streamline their marketing. I am not sure if Facebook can get a lot more out of advertisers though than the click-per-ad, because companies can start up their own Facebook page and have people either like them or become friends with them, and this is free for everyone. Facebook will have to really market to their advertisers in order to get them to choose this different form of advertising, though if they are able to sign customers up, the advertising will have a far greater impact on their audience, because they will be getting all the instant feedback of their potential consumers.

  11. Hassan Al Sarrar

    Interesting factors I would like to mention in the beginning how this social networking sites is impacting every single aspect of life in modern world. I have never heard of Facebook or similar social networking site until 3 years ago, and the next thing I realized, is that it became a way for people to even interact socially more than face to face and also business start marketing their products over those site or employers make a back checks on their employee throughout their profiles on these website. Unbelievable. Anyways, the shift to the engagement type of advertisement that Facebook is undertaking instead of click ads is better and make all the sense. I don’t even find it would be a problem to get this idea across the advertising companies. It is very obvious that if you approach people directly and getting them to involve in a certain manner, you would get a better response and better communication rather than wasting time and resources while not making sure you got the people attention. For myself, I have always been discomforted by these pop up ads which doesn’t have anything to do with me or even interest me, however, inconveniently it kept popping up with me having no power to control it. I would rather at least have the chance to be involved where I could at least pick ads that might interests me.

  12. Bubba_34

    Why does Facebook not want to use the industry standard metric of “clicks”? This could be because of the cost per clicks. So what is cost per click? Cost per click is an Internet advertising model to direct traffic to websites, where advertisers pay owner of the site when their advertisement is clicked. So why would Facebook not was to use this kind of model. It could be perhaps because; Facebook doesn’t want to collect revenue from advertiser if someone had mistakenly clicked on their ad. How do I feel about how Facebook’s claim of their new metric has merit in the advertising industry? I think it is worth a try. Doesn’t hurt to experiment and see what kind of reaction you get. I think also that this could work too because, this could give more of an actual representation of the data to the companies who advertise. What I mean by this would be it wouldn’t count the people who accidently click on the ads. I think what would be a good think too would be that it would charge for how long a person views the ad too. The good thing about this to would be that only the creator of the page could view this information. I think in a business perspective not everything needs to be shared.

  13. Brad

    A major reason that Facebook does not want to use the industry standard is because Facebook has always gone by their own means, and in turn they have really created something special with their site. No social media site has been able to draw and attract the amount of users that facebook has in such a short period of time, and doing this they want to show their potential investors that they are able to gain the revenue’s that is needed for such a high initial public offering on their shares.

    The issue at hand with facebook’s new metric is that Google has such a stranglehold on the online advertising community, that it will be hard for Facebook to come in and take away the share percentage that Google has already established, and the one that they continue to grow with. One great thing that facebook has for them is that they are able to personalize this advertising, as they have all of the individuals personal information and can create personalized databases based on each individuals preferences.

  14. Pulkit Arora

    Facebook doesn’t want to use metrics of clicks for advertising because it’s not as successful as having a “people talk about this” app. I think that this app would be more helpful for both facebook and the advertising industry. Instead of just seeing how many people have clicked your advertisement, it can be more analyzed to help the advertising company produce reports that could help them boost sales. With this in depth analysis, they can target markets that are best suited for them instead of wasting time and money on consumers that have no interest at all. For example, many people click on advertisements by accident so this app could tell them how many people that might be and not to focus on them but rather people that have shown interest in their advertisement. I think that facebook is doing a great thing for both parties here because it does not only benefit facebook, but the advertising industry as well. The focus is turned away from just simple clicks, but more so on the engagement of each consumer, which is more helpful for the advertising industry. Also this app lets only the creator of the advertisement view the information that is produced rather than being open to the general public. Therefore security issues are at a minimal.

  15. Rick Sharma

    A simple click counter is not as helpful as what facebook has innovated to do. Facebook’s claim of their new metric does definitely have merit in the advertising industry. Granted, a click counter generates revenue, and actually probably a lot of revenue because of widespread use of the website, however the clicks only show well ‘clicks’ the advertisers or even facebook doesn’t know if the user actually meant to click on the ad or was it clicked accidentally. Facebook’s new metric makes sure to take into consideration the interaction between advertising customers and their users. The engagement of a customer is what delivers the message of how interested the user is in the product or service advertised.

  16. B Schnell3

    It is not difficult to understand the motivation for Facebook to get more recognition (money) for its advertising capabilities, but can can we blame them? are they justified? The shift in the focus from ‘clicks’ to “people talking about this” and ‘earned media’ makes sense to me. The exposer that is created by the facebook site works in a variety of ways, and users are certainly exposed to, and in many cases interact with, far more ads than would be represented in a “click-factor’ alone. No doubt we will continue to see online or web-based advertising grow rapidly so perhaps a new standardization for the value of these types of services is on the horizon.

  17. Wale Obateru

    Facebook is a social networking site that has an enomous number of users and the number keeps growing on a daily basis. This is the reason why this site is a highly potent platform for advertizing, and advertizers are actually making use of this medium to tell a wide range of people about their product offering and services. But the issue here is that not many facebook users pay attention to these advertisements. I personally hardly click on advertisements I see on my facebook page, talk more of going through it. This has become a big concern for advertizers because the anticipated success that advervising on facebook is supposed to bring to them in terms of larger market share and profit has not being realized. This is why facebook is attempting to change the industry standard of clicks to a more interactive method such as the “liking” and other features they are trying to incorporate. Facebook feels that this way, the revenue they generate from advertizing will be earned which would help give them a good reputation and increase their customer base. But facebook still has a lot of work to do regarding their users because it is going to take a lot of efforts to convince users to actually become interested in the adverts and eventually get them to take out time to take a look at them.

  18. Andi Watts

    Facebook wants to stress the importance of engaging potential consumers as opposed to simply registering the amount of clicks on a link. By tracking the amount of ‘likes’, ‘shares’, or ‘comments’, a company can better understand their users, their demographic, and the potential areas a company should adapt to; this data and insight can’t be derived simply by observing the click through rate. I would assume that Facebook’s predictions could hold strong against the current marketing and advertising techniques being used online today, however, using Facebook’s methods could render more costs and aren’t as straight forward as reading a basic click through report on an ad or on a web page. I can appreciate where Facebook is coming from because they’ve been about user-friendliness since the beginning of their endeavour and for that reason they want to see advertising really revolve around the consumer and what they want from advertisements. Facebook is truly trying to personalize ads and ad feeds on their site and is encouraging companies to do the same in order for companies to mirror Facebook’s ideologies. This process that Facebook is proposing could come at a cost and more thorough reporting methods, which could sway advertisers from signing on.

  19. Alejandro Valderrabano

    Facebook does not want to use the metric standard of “clicks” because their amount of clicks on ads is extremely low, being lower than 1%.
    I do not think that facebook’s claim of their new metric has much effect, since you can only see as much as your friends on facebook do, it is not as open as say twitter where one person tags a company and can give them a compliment that vast amounts of people can see. Yes there are events on facebook and fan pages, but their market penetration is rather low, because of privacy concerns regarding the nature of the use of facebook there is a limit on how much advertisers can interact with users and vice versa.

  20. brett pudwell

    It is not hard to see at all why facebook is pushing this path. They way they are already able to advertise to such a specific demographic is amazing and the potential for advertising with facebook is nearly limitless. If facebooks click rate for advertising is as low as the article sais it is, then this is another great reason for facebook to look down this path. As a 23 year old college student, most of the advertising that I see comes from social media sites and I see the huge potential in this new marketing theory. If all of my friends are interested enough in a certain product to let people know about it I am going to check it out. If a company cannot recognize that marketing trends are changing and becoming ever more geared towards social media, then those companies are going to get left behind. This is just the next step in internet advertising and I believe there will be many many more to come.

  21. Brett z

    Facebook does not want to pursue this path since their target is much more random. Facebook tailors to a young market, who typically does not click on advertisements, and therefore Facebook does not follow the traditional format of advertising like Google such as pay-per-click, as they advertise based on impressions. Therefore, Facebook’s use of tailoring to recently visited websites, users interestes, and likes Facebook is more effective with its advertising campaigne. With the young market Facebook targets, whos advertising preferences are significantly different than say a 45 year old man, Facebook has effectively begun a revolution in advertising.

  22. Yanmei Sun

    The reason that Facebook does not want to use the industry standard metric of “clicks”is the rate at which users of the social network click on ads is extremely low, and tend to be below 1% . So in order to prove that advertising on Facebook makes sense for brands, the company has to show there’s something else to be gained than just prompting users to click on a banner ad.
    I DO feel that Facebook’s claim of their new metric has merit in the advertising industry because the “story about your page” will tell a business more than just clicking rate,it can help business to improve their products. However, facebook has a lot of work to do to attract users and to convince users to look at the advertisment.

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