Facebook’s Advertising Conundrum
Sorting through the news pile of the last month, two big stories seem to put Facebook in a tough spot.
On one hand, Facebook wowed businesses and investors with its quarterly revenue report. They posted a 61% increase in year-over-year revenue, with advertising representing 88% of this total haul. What’s more, is that they are positioned well for the future with their successful adoption of mobile; mobile usage is surging and their advertising on mobile accounted for 41% of their advertising revenue.
On the other hand, Facebook must pay attention to the quality and relevance of its advertising so that it doesn’t diminish the user experience. According to the most recent ForeSee Results/ASCI (American Customer Satisfaction Index), search engines and social media channels are slowly losing favor in the eyes of customers.
A possible culprit is the sudden increase of advertising across these channels, many of which are still trying to figure out how these ads can better enhance any particular user’s experience on the site. At this point, it’s still not uncommon to see ads that are sloppy at best and spammy at worst. And according to the report, 27% of Facebook users reported that ads “interfere with my user experience of the site” — the highest rate among all channels included in the study. If bad ads continue to diminish the user experience and customer satisfaction, then the integrity of Facebook’s product will be in jeopardy.
So what does this all mean? Can Facebook have its cake and eat it too? Will they live and die by the sword? Can they mix metaphors and still stand upright?
As marketers, we’re inherently interested in creating ads that appeal to the user for our own ends. But we have the added incentive of creating quality, relevant ads and promoted content for the long-term health of the media channels we utilize, in this case Facebook. As the lines blur more and more between publishers, advertisers, and content creators, everyone has a stake in each other’s viability.
This isn’t lost on Mark Zuckerberg. In response to their quarterly revenue news, he said that “in recent studies, people have told us that they noticed the ads more, so we’re going to invest more in improving the quality. Our top priority is to expand the number of marketers and overall demand in our system rather than just increasing the number of ads that we show.” In this way, he hopes that by increasing the competition for ad space, the quality of ads will improve along with subsequent user experience.
How exactly he aims to go about this quality-control initiative and expand the number of marketers is yet to be seen. But as marketers and content providers, we have an interest in improving the consumer’s perception of ads on the network overall, beyond the limited perception of our individual offerings, so we can bolster the efficacy of Facebook as an e-commerce channel for the foreseeable future.