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Wordstream research reveals why GM pulled $10m adspend from Facebook

It’s Facebook IPO day tomorrow and the web is awash with reports saying why ads on the social media site don’t work very well.

A new report from internet marketing firm Wordstream adds to the volume, claiming that Facebook’s click-through rate (ad clicks against impressions) is just 0.05 per cent against Google Display’s 0.4 per cent, eight times greater. Display only accounts for 20 per cent of Google’s revenue whereas it’s nearly all of Facebook’s $3.7bn revenue.

Wordstream founder and CTO Larry Kim told The Register about his survey findings:

“Facebook had pretty good marks for huge audiences and growth, where they got really killed was in two areas – ad formats and ad targeting.

“Think about most banner ads: they have rich media and flash or video. These are all the things that would compel someone to want to click on an ad. The Facebook ads are very boring, not very imaginative, they’re not able to deliver a very rich experience because of the limitations of the ad format.

“Say you’ve visited an airline company to book a trip to San Francisco and then you don’t book it because you’re just thinking about it. But then as you go to other websites like the BBC or USA Today the ads for that airline company follow you around from site to site, it’s like a puppy dog following you home.

“It’s incredibly targeted, incredibly powerful advertising because what it’s doing is combining your interest with your intent – it remembers not only that you’re interested in a flight to San Francisco but it also remembers that it was recently, it knows you’re in the market for that flight.

“People tend to click on those ads, they’re more relevant and more engaging and the problem with the Facebook ads that we’re finding is that they’re neither very engaging nor very relevant so that’s why you’re seeing such a low ad conversion rate.”

So is Facebook founder Mark Zuckerberg bovvered?

“It remains an open question whether or not Zuckerberg even wants to be an ad company because they’re talking about other things like trying to connect people. The word advertising shows up once in the 2,000-word letter to shareholders for this big stock offering – it’s not necessarily a main priority.”

And GM?

“Say you’re selling a car, you might sell it to people between the ages of 20 and 30, a particular car might appeal to women or whatever.

“But just because you fall into that demographic doesn’t necessarily mean you want to buy a car right then. People might own a car for ten years so it can be very difficult to know exactly when they’re in the process of trying to buy a car…it’s an incredibly inefficient way of trying to sell cars.”

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