Facebook will go bust and take the rest of the ad-supported Web with it

- - Blog News

At the heart of the Internet business is one of the great business fallacies of our time: that the Web, with all its targeting abilities, can be a more efficient, and hence more profitable, advertising medium than traditional media. Facebook, with its 900 million users, valuation of around $100 billion, and the bulk of its business in traditional display advertising, is now at the heart of the heart of the fallacy.

via The Facebook Fallacy – Technology Review.

There Are 10 Comments On This Article.

  1. Agree in many ways. Although, I did have an interesting conversation with a lead digital coder and designer that works on multi-platform (FB, mobile, web) marketing campaigns for companies such as coca-coca about just this. His opinion is that although many of us, including myself, purposely don’t click on targeted ads in direct opposition to its invasion of privacy (and other reasons,) many people do.. especially with larger companies offering incentives etc. There is money to be made here, but it is completely over valued and should not replace or diminish the effectiveness of well executed, superbly produced traditional advertising.. such as PRINT!! okay okay I am bias to photography :)

  2. “There is money to be made here, but it is completely over valued and should not replace or diminish the effectiveness of well executed, superbly produced traditional advertising.” The Key word here is Over Valued. Heck – I believe MOST IPOs are Over Rated and therefore Over Valued. ALL it takes is one idiot on the internet to say – “it worked for me.” MY research has PROVEN – 1 out of 20 people “might” click on an ad – 1 out of 50 – will actually buy something; these Statistics are not good enough for my return on investment. Direct Marketing is still King.

  3. The day before the IPO, General Motors removed their ads from facebook because
    no one was clicking on them . Don’t you guys read the Journal?
    Thanks,
    Tim

  4. Whenever a new medium appears, it will be used with habits of older mediums until it gets clear that this won’t work. Online advertising now discovers that it doesn’t work like print advertising – putting an ad area next to the content area.

    More sophisticated ways to advertise online have been around for years. Companies offer content with their brand weaved into it decently instead of blunt in-your-face advertising that turns higher end customers away.

    Indirect advertising has been around as long as humanity, and the online industry will increasingly work that way. A good example from history is the catholic church, propagating the faith by wonderful pictures painted by the best artists of their times. Or take a look at fashion stories in fashion magazines – they are creating an aura for fashion lines.

    If current social media platforms can adapt to this the future will show.

    • Mike Moss

      I agree Robert

      This is a good time to revisit Marshal McLuhan’s books on media. The switch from print to the internet was a shift from a left-brain to a right-brain dominated media.

      Traditional advertising for print media is an isolated and detached process in a sequence containing multiple parts (producer, consumer, distributor, printer, photographer etc)

      Unfortunately, advertising can’t exist as an isolated element in simultaneous electronic mediums like the internet. There is no dividing line between producer and consumer or advertiser and audience. Any attempt to recreate the print media advertising model on the web is destined for failure.

  5. Once in my internet life did I click on an add. It was the last. I seems that we are led as quickly as possible to closing the deal without the opportunity to digest and make the informed decision to buy on not to buy. Clicking an ad leads one through a slippery funnel to imminent purchase commitment, The escape is not easy either with someone almost literally chasing you out the virtual store doorway. It is that typical experience by potential clients that render click here adds useless. JMHO

    When I see a more traditional add the provides me with concise information and it gently leads me through the decision funnel, I am okay with it,

  6. Peter Haggart

    The other factor is that no one – that’s right – no one has ever undertaken a scientific study of Facebook advertising – that is – no one has tested the system and discovered if anyone ever clicks on all those ads that pop up – even if they are aimed at your supposed likes. Plus the audience for any ad is broken down into such a small fragmented group – it is hard to target your ad for all those sub-groups. It will take a next generation guru to figure out how to change the advertising industry to meet these new goals – that is if they really want to…………….. Hope you didn’t buy any Facebook stock……….

  7. Stuart Hooper

    I disagree. I’ve gone from nothing to a career in photography, living comfortably and growing quickly over a period of two and a half years, and I can atttribute essentially all of my business a combination of Facebook use and advertising. Of course, many clients have come through word of mouth from other clients, but the root has always been a connection made through social media. Of course, I live in an extremely small market, so I can literally target people that I’m going to run into in professional and social situations. Even people that have never clicked on an ad or seen one of my photos will say when introduced, ‘ah, *you’re* Stuart Hooper’.

    I’m not 100% positive how it will work in larger markets, but I’m being flown to New York next month for a couple of gigs, so something is working.

    I encourage my clients to try advertising instead of just some half-assed social media intern, and I think it makes a difference for their brand, as long as it is kept after in a thoughtful manner.

    I guess time will tell.

  8. Long read on Internet Trends just released today points towards greatly declining revenues from advertising as mobile devices become more common.

    http://allthingsd.com/20120530/mary-meekers-internet-trends-live-at-d10-slides/

    I don’t particularly agree with the ideas presented here, especially that she does not qualify the effectiveness of ads on various media types. Being forced to watch an ad on YouTube prior to watching a video might be good for the quantifiable number of ad views, but I don’t think force feeding ads to viewers actually increases sales. That’s nearly as bad as ads playing at the gas pump. If the ad giants really try to grab onto of this trend, or some of the crowd sourced ideas put forward by Mary Meeker, then I think the public will simply tune out even more.