The Golden Age of Facebook Advertising

Editor’s Note: The following is a guest post from author and entrepreneur Thomas Meloche.

The Wall Street Journal recently published growing rumors that Facebook may sell stock publicly in 2012. This Initial Public Offering (IPO) may value the Facebook at as much as 100 billion dollars. For Facebook to be this valuable somethings will need to change. Specifically, Facebook will have to make a whole lot more money from advertising.

For those who are already successful Facebook advertisers, the IPO marks the end of the golden age.

For those who have tried Facebook advertising and failed, however, the IPO likely marks the beginning of a new golden age.

Facebook has made it difficult for most advertisers to be successful. How do I know? Because I’ve surveyed over 1200 Facebook advertisers asking them what they did, how much they spent, and how it worked. Most failed miserably. A few have made millions.

It is shameful the number of people who have tried and failed at Facebook advertising. Shameful because a few changes to the Facebook advertising interface, and a few additions to Facebook advertiser training can quickly make Facebook advertising work for many of these businesses. So why hasn’t Facebook done this already? Perhaps they don’t know what to change. Or perhaps their priorities have been elsewhere. And, since nobody was pressuring them to seriously grow revenue, the fact that most of their advertisers try, fail, and bail hasn’t really mattered. An IPO will change that–forever.

If you have figured out how to make Facebook advertising work for you, it is currently an amazing bargain–high traffic, cheap impressions, and affordable clicks. For those who have figured Facebook out, the death of other Facebook advertisers makes “right now” the golden age.

As Facebook is forced to grow revenue, it will fix the glaring holes that cause so many of their advertisers to fail. As more and more businesses begin to succeed, the law of supply and demand will drive up advertising costs and the golden age of cheap clicks will end. However, a new golden age will begin. It is the golden age where most businesses who try to advertise on Facebook will be successful.

It will be an interesting ride.

So what changes will usher in the next golden age?

Better Tracking and True Split Testing

Direct marketers devour real data from ad to sale. Data is how they know a campaign is successful. Facebook does not yet provide the data we need to make a campaign quickly successful. The irony is, once we make a campaign successful, we crank up the ad spend!

Frequency Capping & Scheduling

Advertisers require more control when scheduling ads on Facebook. We need to be able to spend money in a predictable manner, knowing it will achieve a predictable rate of return. We need to cap the frequency at which an ad gets impressions, and we need to schedule that ad to appear at specific times.

More Focused Targeting

Advertisers require more focused targeting. The ideas for new targets are almost limitless. Here is a simple example: targeting the family and friends of a person the week or month before that person’s birthday.

All of these changes, along with improved reporting and user training, will usher in the next golden age for Facebook advertising.  Facebook, to be successful, ultimately has to follow Google’s model. Google makes great money in advertising because the advertisers themselves are clearly making money when they advertise. Once Facebook understands this, really understands it, and they commit to making their advertisers truly successful, the revenue floodgates will open.

Although Facebook has a long way to go, it is clear they have started. New features this year include Sponsored Stories, Broad Category Targeting, and # Interest Targeting. These are just the beginning.

One golden age is ending, the next has already begun.

Thomas Meloche is a serial entrepreneur with more than 25 years of experience in building and selling companies. Thomas is the founder and president of Procuit Inc. He is also the author of the Ultimate Guide to Facebook Advertising with Perry Marshall. 

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• Facebook PPC advertising – What’s it about? (marketing.yell.com)