"Facebook’s closest competitor is Yahoo’s network of sites, which claimed 10.1% of the market. Google, which is still relatively new to the display business, had 2.5%."
Prediction is hard. Especially when talking about the future.
FB might dethrone Google, of course. But the 30% number does not imply that. Ads in google are pretty damn effective for everyone who is using them, whereas (from what I've heard of people in the industry), the only ones who are happy with FB ads are "lifestyle" advertisers who can't actually measure their impact.
If you look at Real Time Bidding, there are ~100Billion impressions per day, of which 80% are worth $0.0000 or less, and then it starts rising with most commanding about 300-400 microdollars per impression, with a few publishers commanding 30000-40000 per impression.
If FB owns all of the 80% and most of the 15% that are 400 microdollars, and google owns the 5% of 40000 microdollars, Google is not in danger (yet; they shouldn't rest on their laurels, of course).
The info I have, skewed a little by the RTB industry (but which is increasingly becoming the online ad industry), is that for now the case is as described in the previous paragraph.
Ads in google are pretty damn effective for everyone who is using them
Possible, but don't forget Google has nearly a decade on Facebook in that arena. With that amount of time, most of those advertisers who found it to be ineffective would have stopped using the service, so it is a selection-bias issue.
In comparison, Facebook's relatively new. With enough time, Facebook ads will become comparatively effective for everyone on them, as people learn how to use them better, as Facebook adds more ads features, and as those with the wrong business or advertising model pull back and try something new.
Edit: What is it with Hacker News being so antagonistic when someone defends Facebook against an unjust assault? If Facebook were Google and Google were Facebook, I would have said the same thing: Time allows advertisers to adjust their advertising strategies and platforms such that, in equilibrium, you wouldn't be using the platform that is ineffective and hence those who still use a platform are probably finding it effective.
This is not a matter of Facebook fanboyism, but one of selection in market equilibria. It's like asking a buyer of some particular brand of tofus whether they like the tofu. Well, they wouldn't buy it from that brand if they didn't, so hearing a majority of "yes" doesn't say so much.
The time frame doesn't matter too much, there is a fundamental difference between intent based advertising and interruption advertising.
CPMs for social networks will always be lower because there are so many more pageviews per user, and the user isn't searching for anything or in a buying mood.
In Google's limited view of the world, life starts when the customer is looking for your product. As an advertiser on Facebook, I can raise awareness for my product first, then convert those people who are interested. So when you look at CPC or CPM on Facebook, keep in mind that you derive two values from your ads: awareness and intent. Google only does intent, so their CPC numbers look "better" but it's a misperception.
FB had already managed to get the people from Google, and that's (so far) hadn't gotten the expected result.
So, as you mention, it is time for the advertisers to adjust. They might, and FB will be happy -- but if we can learn from RTB - the "intent to buy" (or "intent to act" in general) is worth some 80-90% of the impression value. So FB is potentially running in neutral until they can manufacture that.
I imagine at some point FB will launch an ad platform similar to AdSense that lets publishers run FB ads on their sites. Once FB marries the targetting they can get at by owning the social graph and the accompanying information with higher value ads space outside of FB, that's when Google will be in for a fight. I would launch that ad platform right before I IPO'd if I were FB.
I'd be more interested in seeing the breakdown by revenue. In my experience FB ad CPMs are way lower than Google's. Even if they had equal impressions Google would still be profiting something like 10x more probably.
Stupid Question [stupid because I should know this]: If facebook shows 4 advertisements on a page, is that counted as 4 impressions in the "impressions" metric? Has there been any effort to normalize the effect of showing ads [I don't think I've ever seen a google page or search with 3, let alone 4 ads]? Theoretically, a person could load a page with a ton of ads and artificially boost the impression measure ...
Seriously, Facebook users could careless about those ads, with Google your searching for an exact thing and those ads maybe helpful. When on Facebook no one is buying they are about friends.
Its like an Ad in a hotmail email, the user is emailing someone not directly looking for anything, search is key.
Facebook listen! ok? You need a Facebook Search, then you got that advertising game! :)
It highlights a basic difference. Google is trying to provide ads for services that meet your current task. Facebook is trying to provide ads that appeal to you as a person, using all the information you provide in your profile.
Either way, facebook ads aren't useful. If running a startup no one is running after Facebook ads like they ran after Google in the good days. Google made people money, not just ones with huge budgets. Facebook can bring awareness and that social experience, but do I have to have a huge budget for it to work? More than likely. Like I said no one is chasing Facebook ads.
Intent is all important in this stuff. I can justify spending $5 per CLICK on Google, because about 30% of the time that user really is looking for my service and interested in using it.
Facebook lacks that intent, so their CPC is always going to be quite a bit lower. Unless they can monetize intent. Every day there have to be millions of "can someone recommend a <blank>" status updates. That'd be an ad I'd be interested in buying.
I have to say, Facebook ads have been spookily relevant to my interests and I click them almost regularly. When I'm on Facebook, I'm just looking to waste time anyway, so an interesting ad might get a click. Google search ads are usually for sites I already knew about and visited.
The majority of people aren't on Facebook to look or click on any ads. Not only Facebook, but any ad at all online. Facebook may target some of your interests, but advertisers want buyers and they just don't get that with Facebook.
I've had the exact opposite experience. In the past month, I've received Facebook ads for diet pills (I'm skinny), office temp work (I have a job), tequila (I don't drink), DVRs (I don't have cable), and real estate (in a city I don't live in).
Granted, a couple of those may be unfair. Facebook doesn't know my weight (though they do have my photo) and they probably wouldn't be able to data mine out that I don't drink. On the other hand, why are they trying to sell me a temp job when they know that I'm currently employed? Basic data mining should tell them that most of my social group doesn't have cable, so why are they trying to sell me a DVR? Plus, Facebook knows that I'm recently single and they couldn't think of anything to do with that? Or was that the tequila?
This is why I'm always surprised by the hubbub around facebook advertising. I actually get better targeted ads from the local newspaper. I guess Facebook's future just depends on which one of us is the anomaly.
>"Granted, a couple of those may be unfair. Facebook doesn't know my weight (though they do have my photo) and they probably wouldn't be able to data mine out that I don't drink. "
You have just identified the next big thing in marketing: Parsing facebook pictures for ACTIVITY and PHYSICALITY of the people in the photos, then directing ads towards them based on the relevant info garnered from their photos.
If you have a bunch of pics of you RUNNING, SWIMMING, HIKING, SKIING, SNOWBOARDING etc... you can target that user base to sports ad companies.
For all the talk about one beating the other search and display ads are completely different channels and Google has never been particularly strong in display ads.
Google makes so much money by dominating the search advertising market that they pretty much dominated the entire time that they can try and get a foothold in other mediums like display, social, radio, tv, newspaper, and so on.
The problem is that Google isn't nearly as good at those things because they don't have their own product to put it on. Without that they don't intimately understand the needs of buyers and they stop investing in those things before they are fully baked.
Of course facebook is dominating display advertising because they put pictures next to their ads. Google doesn't do this for product quality reasons. That makes sense.
In the end both are going to make gobs of money and dominate their respective markets.
30 comments
[ 3.7 ms ] story [ 74.4 ms ] threadThey're being out played on their primary revenue stream and facebook isn't even breaking a sweat.
"Facebook’s closest competitor is Yahoo’s network of sites, which claimed 10.1% of the market. Google, which is still relatively new to the display business, had 2.5%."
Big companies have a lot of resources available to get back on track -- Apple, Intel, Microsoft and even IBM are still around and kicking.
Even if Facebook wins and Google loses, I'm just curious -- what's in it for you?
FB might dethrone Google, of course. But the 30% number does not imply that. Ads in google are pretty damn effective for everyone who is using them, whereas (from what I've heard of people in the industry), the only ones who are happy with FB ads are "lifestyle" advertisers who can't actually measure their impact.
If you look at Real Time Bidding, there are ~100Billion impressions per day, of which 80% are worth $0.0000 or less, and then it starts rising with most commanding about 300-400 microdollars per impression, with a few publishers commanding 30000-40000 per impression.
If FB owns all of the 80% and most of the 15% that are 400 microdollars, and google owns the 5% of 40000 microdollars, Google is not in danger (yet; they shouldn't rest on their laurels, of course).
The info I have, skewed a little by the RTB industry (but which is increasingly becoming the online ad industry), is that for now the case is as described in the previous paragraph.
Possible, but don't forget Google has nearly a decade on Facebook in that arena. With that amount of time, most of those advertisers who found it to be ineffective would have stopped using the service, so it is a selection-bias issue.
In comparison, Facebook's relatively new. With enough time, Facebook ads will become comparatively effective for everyone on them, as people learn how to use them better, as Facebook adds more ads features, and as those with the wrong business or advertising model pull back and try something new.
Edit: What is it with Hacker News being so antagonistic when someone defends Facebook against an unjust assault? If Facebook were Google and Google were Facebook, I would have said the same thing: Time allows advertisers to adjust their advertising strategies and platforms such that, in equilibrium, you wouldn't be using the platform that is ineffective and hence those who still use a platform are probably finding it effective.
This is not a matter of Facebook fanboyism, but one of selection in market equilibria. It's like asking a buyer of some particular brand of tofus whether they like the tofu. Well, they wouldn't buy it from that brand if they didn't, so hearing a majority of "yes" doesn't say so much.
CPMs for social networks will always be lower because there are so many more pageviews per user, and the user isn't searching for anything or in a buying mood.
If advertisers get 30% less out of Facebook ads but it costs 30% less, then the effectiveness is comparable.
Facebook ads work (http://blog.fairsoftware.net/2011/04/01/sell-your-google-sto...). Yes, intent-based advertising converts better. But that's irrelevent.
In Google's limited view of the world, life starts when the customer is looking for your product. As an advertiser on Facebook, I can raise awareness for my product first, then convert those people who are interested. So when you look at CPC or CPM on Facebook, keep in mind that you derive two values from your ads: awareness and intent. Google only does intent, so their CPC numbers look "better" but it's a misperception.
So, as you mention, it is time for the advertisers to adjust. They might, and FB will be happy -- but if we can learn from RTB - the "intent to buy" (or "intent to act" in general) is worth some 80-90% of the impression value. So FB is potentially running in neutral until they can manufacture that.
Its like an Ad in a hotmail email, the user is emailing someone not directly looking for anything, search is key.
Facebook listen! ok? You need a Facebook Search, then you got that advertising game! :)
Facebook lacks that intent, so their CPC is always going to be quite a bit lower. Unless they can monetize intent. Every day there have to be millions of "can someone recommend a <blank>" status updates. That'd be an ad I'd be interested in buying.
Granted, a couple of those may be unfair. Facebook doesn't know my weight (though they do have my photo) and they probably wouldn't be able to data mine out that I don't drink. On the other hand, why are they trying to sell me a temp job when they know that I'm currently employed? Basic data mining should tell them that most of my social group doesn't have cable, so why are they trying to sell me a DVR? Plus, Facebook knows that I'm recently single and they couldn't think of anything to do with that? Or was that the tequila?
This is why I'm always surprised by the hubbub around facebook advertising. I actually get better targeted ads from the local newspaper. I guess Facebook's future just depends on which one of us is the anomaly.
You have just identified the next big thing in marketing: Parsing facebook pictures for ACTIVITY and PHYSICALITY of the people in the photos, then directing ads towards them based on the relevant info garnered from their photos.
If you have a bunch of pics of you RUNNING, SWIMMING, HIKING, SKIING, SNOWBOARDING etc... you can target that user base to sports ad companies.
Fat people get diet pills and other offers...
Otherwise put: are Facebook taking a larger slice of Google's pie, or have they grown the pie overall?
Google makes so much money by dominating the search advertising market that they pretty much dominated the entire time that they can try and get a foothold in other mediums like display, social, radio, tv, newspaper, and so on.
The problem is that Google isn't nearly as good at those things because they don't have their own product to put it on. Without that they don't intimately understand the needs of buyers and they stop investing in those things before they are fully baked.
Of course facebook is dominating display advertising because they put pictures next to their ads. Google doesn't do this for product quality reasons. That makes sense.
In the end both are going to make gobs of money and dominate their respective markets.