Making the rounds is The Facebook Fallacy, a killer essay by Michael Wolff in MIT Technology Review. The gist:
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.
The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency. The nature of people’s behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command real attention, has meant a marked decline in advertising’s impact.
This is the first time I have read anything from a major media writer (and Michael is very much that — in fact I believe he is the best in the biz) that is in full agreement with The Advertising Bubble, my chapter on this very subject in The Intention Economy: When Customers Take Charge. A sample:
One might think all this personalized advertising must be pretty good, or it wouldn’t be such a hot new business category. But that’s only if one ignores the bubbly nature of the craze, or the negative demand on the receiving end for most of advertising’s goods. In fact, the results of personalized advertising, so far, have been lousy for actual persons…
Tracking and “personalizing”—the current frontier of online advertising—probe the limits of tolerance. While harvesting mountains of data about individuals and signaling nothing obvious about their methods, tracking and personalizing together ditch one of the few noble virtues to which advertising at its best aspires: respect for the prospect’s privacy and integrity, which has long included a default assumption of anonymity.
Ask any celebrity about the price of fame and they’ll tell you: it’s anonymity. This wouldn’t be a Faustian bargain (or a bargain at all) if anonymity did not have real worth. Tracking, filtering and personalizing advertising all compromise our anonymity, even if no PII (Personally Identifiable Information) is collected. Even if these systems don’t know us by name, their hands are still in our pants…
The distance between what tracking does and what users want, expect and intend is so extreme that backlash is inevitable. The only question is how much it will damage a business that is vulnerable in the first place.
The first section of the book opens with a retrospective view of the present from a some point in the near future — say, five or ten years out. A relevant sample:
After the social network crash of 2013, when it became clear that neither friendship nor sociability were adequately defined or managed through proprietary and contained systems (no matter how large they might be), individuals began to assert their independence, and to zero-base their social networking using their own tools, and asserting their own policies regarding engagement.
Customers now manage relationships in their own ways, using standardized tools that embrace the complexities of relationship—including needs for privacy (and, in some cases, anonymity). Thus loyalty to vendors now has genuine meaning, and goes as deep as either party cares to go. In some (perhaps most) cases this isn’t very deep, while in others it can get quite involved.
When I first wrote that, I said 2012. But I decided that was too aggressive, and went with the following year. Maybe I was right in the first place. Time will tell.
Meanwhile, here’s what Michael says about the utopian exhaust Facebook and its “ecosystem” are smoking:
Well, it does have all this data. The company knows so much about so many people that its executives are sure that the knowledge must have value (see “You Are the Ad,” by Robert D. Hof, May/June 2011).
If you’re inside the Facebook galaxy (a constellation that includes an ever-expanding cloud of associated ventures) there is endless chatter about a near-utopian (but often quasi-legal or demi-ethical) new medium of marketing. “If we just … if only … when we will …” goes the conversation. If, for instance, frequent-flyer programs and travel destinations actually knew when you were thinking about planning a trip. Really we know what people are thinking about—sometimes before they know! If a marketer could identify the person who has the most influence on you … If a marketer could introduce you to someone who would relay the marketer’s message … get it? No ads, just friends! My God!
But so far, the sweeping, basic, transformative, and simple way to connect buyer to seller and then get out of the way eludes Facebook.
The buyer is a person. That person does not require either a social network or absolutely-informed guesswork to know who she is or what she wants to buy. Obviously advertising can help. It always has. But totally personalized advertising is icky and oxymoronic. And, after half a decade or more at the business of making maximally-personalized ads, the main result is what Michael calls “the desultory ticky-tacky kind that litters the right side of people’s Facebook profiles.”
That’s one of mine on the right. It couldn’t be more wasted and wrong.
Let’s take it from the top.
First, Robert Scoble is an old friend and a good guy. But I couldn’t disagree with him more on the subject of Facebook and the alleged virtues of the fully followed life. (Go to this Gillmor Gang, starting about an hour in, to see Robert and I go at it about this.) Clearly Facebook doesn’t know about that. Nor does any advertiser, I would bet. In any case, Robert likes so many things that his up-thumb has no value to me.
I have no interest in Social Referrals, and if Facebook followed what I’ve written on the subject of “social” (as defined by Facebook and its marketing cohorts), it wouldn’t imagine I would be interested in extole.com.
I’m 64, but married. “Boyfriend wanted” is a low-rent fail as well as an insult.
I get the old yearbook pitch every time I go on Facebook, which is as infrequently as I possibly can. (There are people I can only reach that way, which is why I bother.) I don’t even need to click on the the ad to discover that, as I suspected, 60s.yearbookarchives.com is a front for the scammy Classmates.com.
I’ve never been fly flishing, and haven’t fished since I was a kid, many decades ago.
And I don’t want more credit cards, of any kind, regardless of Scoble’s position on Capital One.
In a subchapter of The Filter Bubble titled “A Bad Theory of You,” Eli Pariser calls both Facebook’s and Google’s data-based assumptions about us “pretty poor representations of who we are, in part because there is no one set of data that describes who we are.” He also says that at best they put us into the uncanny valley — a “place where something is lifelike but not convincingly alive, and it gives people the creeps.” But what you see on the right isn’t the best, and it’s not uncanny. It’s typical, and it sucks, even if it does bring Facebook a few $billion per year in click-through-based revenues.
The amazing thing here is that business keeps trying to improve advertising — and always by making it more personal — as if that’s the only way we can get to Michael’s “sweeping, basic, transformative, and simple way to connect buyer to seller and then get out of the way.” Three problems here:
- By its nature advertising — especially “brand” advertising — is not personal.
- Making advertising personal changes it into something else that is often less welcome.
- There are better ways to get to achieve Michael’s objective — ways that start on the buyer’s side, rather than the seller’s.
Don Marti, former Editor-in-Chief of Linux Journal and a collaborator on the advertising chapters in my book, nails the first two problems in a pair of posts. In the first, Ad targeting – better is worse? he says,
Now, as targeting for online advertising gets more and more accurate, the signal is getting lost. On the web, how do you tell a massive campaign from a well-targeted campaign? And if you can’t spot the “waste,” how do you pick out the signal?
I’m thinking about this problem especially from an IT point of view. Much of the value of an IT product is network value, and economics of scale mean that a product with massive adoption can have much higher ROI than a niche product…. So, better targeting means that online advertising carries less signal. You could be part of the niche on which your vendor is dumping its last batch of a “boat anchor” product. This is kind of a paradox: the better online advertising is, the less valuable it is. Companies that want to send a signal are going to have to find a less fake-out-able medium.
In the second, Perfectly targeted advertising would be perfectly worthless, which he wrote in response to Michael’s essay, he adds this:
The more targeted that advertising is, the less effective that it is. Internet technology can be more efficient at targeting, but the closer it gets to perfectly tracking users, the less profitable it has to become.
The profits are in advertising that informs, entertains, or creates a spectacle—because that’s what sends a signal. Targeting is a dead end. Maybe “Do Not Track” will save online advertising from itself.
John Battelle, who is both a first-rate journalist and a leader in the online advertising industry, says this in Facebook’s real question: What’s the native model?:
Facebook makes 82% of its money by selling targeted display advertising – boxes on the top and right side of the site (it’s recently added ads at logout, and in newsfeeds). Not a particularly unique model on its face, but certainly unique underneath: Because Facebook knows so much about each person on its service, it can target in ways Google and others can only dream about. Over the years, Facebook has added new advertising products based on the unique identity, interest, and relationship data it owns: Advertisers can incorporate the fact that a friend of a friend “likes” a product, for example. Or they can incorporate their own marketing content into their ads, a practice known as “conversational marketing” that I’ve been on about for seven or so years (for more on that, see my post Conversational Marketing Is Hot – Again. Thanks Facebook!).
But as many have pointed out, Facebook’s approach to advertising has a problem: People don’t (yet) come to Facebook with the intention of consuming quality content (as they do with media sites), or finding an answer to a question (as they do at Google search). Yet Facebook’s ad system combines both those models – it employs a display ad unit (the foundation of brand-driven media sites) as well as a sophisticated ad-buying platform that’d be familiar to anyone who’s ever used Google AdWords.
I’m not sure how many advertisers use Facebook, but it’s probably a fair guess to say the number approaches or crosses the hundreds of thousands. That’s about how many used Overture and Google a decade ago. The big question is simply this: Do those Facebook ads work as well or better than other approaches? If the answer is yes, the question of valuation is rather moot. If the answer is no…Facebook’s got some work to do.
But Facebook isn’t the real issue here. Working only the sell side of the marketplace is the issue. It’s now time to work the buy side.
The simple fact is that we need to start equipping buyers with their own tools for connecting with sellers, and for engaging in respectful and productive ways. That is, to improve the ability of demand to drive supply, and not to constantly goose up supply to drive demand, and failing 99.x% of the time.
This is an old imperative.
In The Cluetrain Manifesto, which Chris Locke, David Weinberger, Rick Levine and I wrote in 1999, we laid into business — and marketing in particular — for failing to grok the fact that in networked markets, which the Internet gave us, individuals should lead, rather than just follow. So, since business failed to get Cluetrain’s message, I started ProjectVRM in mid-2006 at Harvard’s Berkman Center. The idea was to foster development of tools that make customers both independent of vendors, and better able to engage with vendors. That is, for demand to drive supply, personally. (VRM stands for Vendor Relationship Management.)
Imagine being able to:
- name your own terms of service
- define for yourself what loyalty is, what stores you are loyal to, and how
- be able to gather and examine your own data
- advertise (or “intentcast”) your own needs in an anonymous and secure way
- manage your own relationships with all the vendors and other organizations you deal with
- … and to do all that either on your own or with the help of fourth parties that work for you rather than for sellers (as most third parties do)
Today there are dozens of VRM developers working at all that stuff and more — to open floodgates of economic possibility when demand drives supply personally, rather than “socially” as part of some ad-funded Web giant’s wet dream. (And socially in the genuine sense, in which each of us knows who our friends, relatives and other associates really are, and in what contexts our actual social connections apply.) I report on those, and the huge implications of their work, in The Intention Economy.
Here’s the thing, and why now is the time to point this out: most of those developers have a hell of a time getting laid by VCs, which on the whole have their heads stuck in a calf-cow model of the Web, and can’t imagine a way to improve the marketplace that does not require breeding yet another cow, or creating yet another ranch for dependent customers. Maybe now that the bloom is off Facebook’s rose, and the Filter Bubble is ready to burst, they can start looking at possibilities over here on the demand side.
So this post is an appeal to investors. Start thinking outside the cow, and outside the ranch. If you truly believe in free markets, then start believing in free customers, and in the development projects that make them not only free, but able to drive sales at a 100% rate, and to form relationships that are worthy of the word.
Bonus links:
- Facebook’s fail? No, Madison Avenues!, by Terry Heaton.
- Facebook IPO Post Mortem – Killer – but not for the reasons you think!, by Mark Cuban
- EXCLUSIVE: Here’s The Inside Story Of What Happened On The Facebook IPO, by Henry Blodgett
- Bit.ly tweet roster.
HT to John Salvador, for pointing to Life in the Vast Lane, where I kinda predicted some of the above in 2008.
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If we let Facebook popularity determine a party’s presidential candidate, then instead of a statesman with known, stable policy positions we might end up with someone “…lifelike but not convincingly alive, someone who gives people the creeps.”
And a big thanks and congratulations to Garry Wills for coining the phrase “comic rictus” in describing Mitt Romney’s laughter.
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Could not possibly agree more strongly. I am certainly not a power user of social, but I can tell you with absolute certainty that the next time I actually pay attention to an ad on the web will be the FIRST time. I suspect I am not the only person who blithely ignores all that “targeted advertising.”
Human beings are much more complex than the simple summation of their online behavior.
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Visionary marketeers would give all the data to the customer and offer content just to look at that data and think of ways to use it without pestering for an autograph all the time. Great post.
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Too long/didn’t read
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Well, if it’s failing – don’t use it 🙂 There are other social networks like Diaspora who aren’t aimed to profit by selling off your privacy. They simply have no ads at all. Such kind of networks are doing what they are supposed to do – helping social interactions. No point to blame the symptoms (broken ads), when the cause is all wrong (the purpose of the network is to sell off your profile to third parties).
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Interesting piece. I am just beginning to be convinced that this is the way to go. I have not read the Cluetrain Manifesto but I did pen a few thoughts on – why search is the only relevant adertising – on my blog: http://www.nileshtrivedi.com/search-results-are-the-only-relevant-advertis
Your analysis obviously seems to be much deeper. Would like to read more.
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Facebook is just a place for all the stalkers to gather.
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The concept of flipping the model of “the person to advertise to” to “the companies a person receives advertising from” is brilliant. A paradigm shift to say the least. The question is, will this be an evolution or a revolution?
Conversely, I find it interesting that people allow so much advertising around them…right down to keeping a license plate frame in place from a car dealership. Makes no sense. I pay $20K+ for a vehicle, then turn around and advertise for free (whether I “endorse” my purchase or not).
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For years, Doc has been one of the clearest voices out there. His wisdom and insight have repeatedly proven themselves to be exceptionally valuable. This post is no exception. Thank you Doc!
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You are right but wrong.
Right that what they are doing now is not the best.
But wrong to assume they will just keep doing more of the same.
They will evolve and like the person on CNBC said yesterday, if you want to short FB and get in front of the speeding train, good luck!Sometimes it’s the simple ideas that work. For example – Yahoo. What should they do going forward? Simple answer – why not just compete directly with Google instead of differentiating into unproven markets?
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Fantastic article- I’m a recent graduate and trying to build a career in the digital world whilst also trying to think of new, innovative web solutions myself. If things were reversed, and customers were proactively enabled to build their own vendor relationships (through some kind of open platform) then not only would customers be happier, feel more in control (etc), but vendors would save time and only have to manage interactions that actually converted to a sell. Thanks Doc- I will be checking out this blog frequently!
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Pingback from Overload « swadishTa on May 24, 2012 at 4:52 am
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I would add that the transition to mobile platforms, with their limited display capability, might only worsen this trend.
Great post! -
I disagree “digital ads” are losing value. The data shows just the opposite–every year ads are worth more. Where before ads cost 5 cents per click, the same ad now costs $50 per click, because the targeting is better, the landing page is better, the payment gateway is better, the buyer more comfortable, etc. More data means better targeting. If you don’t like fly fishing, no big deal. a) Mysticwaters.com wins here because we’re talking about them and b) they *do* know their market–they can afford to plant the “fishing trip” idea in your mind–to be successful they don’t need to convert even half of the people they show the ad. Better to convert 10% of 1000 people than 90% of 10 people who exactly match some too-specific criteria. 1% or 2% of 5000 impressions might be even more affordable, so the 99% need not be offended.
Don’t get me wrong, I hate Facebook. I see Facebook as the training wheels for the bulk of people who still don’t get the Internet. Eventually they’ll break free from Facebook–yeah I really hope it’s 2013. Zuckerberg hoodwinked millions of families and now he’s a billion dollars richer. The users need to realize they did most of the work that made Zukerberg so rich. If families built their own websites, the families would get paid–not Zuckerberg. Registering a dot-com is not the easiest thing in the world but it’s only $10/year, it’s affordable.
As far as “tools” for interaction with businesses, that’s on my to-do list. And I have been engaging “prospects” on Twitter more recently. But with word-of-mouth working well, I’m reaching the point where advertising and prospecting may be unnecessary.
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As a minotaur, all these cow analogies offend my sensibilities. 🙁
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I know you have a relationship with Robert Scoble and thus must refrain from wanton criticism of him.
I, however, have none. Thus I can readily conclude that this man is one of the biggest tools on the Internet. He ‘likes’ Orchard Supply Hardware and Capital One. My, how discriminating of him.
And that’s just what he’s done today.
If I ever used Facebook, I no doubt would see that he also ‘liked’ Sears for their Kenmore refrigerators, John Deere for their riding mowers, McDonald’s for their quarter-pounders with cheese, Ryobi for their cordless drills, Foster Farms for their chicken broilers, Casual Male for their big and tall clothing, Depends for their absorbent underwear, and this inane list goes ever on.
What an unbelievable waste of space and an unparalleled example of pure sycophancy.
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Simpler said: “I am content with my life and never buy anything that is being advertised to me, only that I learn about by other means. So, don’t bother with the ads.”
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Doc,
Good luck changing the Venture investor mind about the free/ad supported business model.
I’ve been in the meetings with VCs, presenting business models with member fees, event tickets, merchandise, and sponsorable apps, with double digit EBITDAS. They asked me where the ad revenues were.
I told them I left the big agency business because advertising-as-we-know-it doesn’t work anymore. The Internet, by being more accountable, has proved it.
None of them have any experience in advertising or marketing. Unfortunately even people with experience starting in the late 1980’s have no idea how it did work when it worked.
You’d think that someone would want to at least hedge their bet with one alternative.
But there is something Psychological going on here that is described in the book “mistakes were made, but not by me”. Their point is that once people make a bad decision they will often continue to make the same bad choice to rationalize the first one. I guess the premise is that admitting your wrong is the most difficult thing a human being can do.
By the way, many Venture Funds were counting on the Facebook shares they bought in the private market to liquidate at IPO and replenish their coffers. So you may be talking to a “big hat with no cattle” (just keeping with the whole cow-calf thing)
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So where’s the MP3 audio download of the Gilmor Gang episode? No audio download == not interested.
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According to the WSJ, in an urgent letter to its suppliers last week Target “suggested that suppliers create special products that would set it apart from competitors and shield it from the price comparisons that have become so easy for shoppers to perform on their computers and smartphones.”
In other words, they are enlisting vendors to help them deceive customers.
Yesterday I saw a pitch to a VC from a social media company that is luring consumers by offering to connect them with other people they trust. But the company is telling VCs they plan to help vendors prevent showrooming by -essentially – also deceiving individuals (or at least distracting them from the fact they are about to make a bad purchase.)
Old business models die hard.
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Pingback from Ugh… More on Facebook | feed on my links on May 24, 2012 at 8:26 am
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Interesting piece – I agree with almost everything you’ve said about Facebook. The one part I disagree with is this simplistic notion that advertising is all about signalling to the potential buyer that the firm is a stand-up company and not a junkie company. While it’s a nice combination of economic theory and advertising it is, in my opinion, a left-over idea from a time where only big firms could afford to advertise.
This model also got blown away during the last dot.com bubble, when we clearly had fly-by-night companies that advertised in big ways on traditional channels – the best example being Pets.com (which ironically would probably be a good business now). They bought up space during the Superbowl – thus, they supposedly signaled to the audience that they were a strong company – when in fact they were not. And for many of us, that ad was a signal of weakness rather than strength – as in “oh my god they’re wasting $XX millions on a Superbowl ad.”
I think the average consumer is completely unaware of this signal that you guys are talking about. The consumer is interested in relevant product information in relationship to their place in the buying cycle. That’s why search advertising is so effective because it signals the consumer’s intent. And it’s the last part about the consideration process that most people miss. Advertising to someone about a TV on a TV website isn’t very useful. Advertising to someone who has shown that they are in the process of buying a TV is.
So this idea that targeting an ad makes it less worth just doesn’t wash imho. And moreover, it isn’t proven out by data as others have mentioned here in the comments. CPMs go up for targeted audiences that are valuable to advertisers – moms as an example. Now, if you want to target moms that have shown intent in buying a new baby stroller, that ad will likely cost you more and it should because you’re getting to the right person at the right point in the consideration process.
Great article though – and like you, I’m not convinced that Facebook can ever really deliver the value that the IPO price delivered.
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Great article. I think it all comes down to trust and I’m not even talking about the company of Facebook but my ‘Friends’ on Facebook. The people I follow on Facebook are not necessarily people I trust or even, in some cases, like. Most are people I haven’t seen in years, decades even, including past co-workers and school mates who I’d be much happier not knowing their political beliefs or opinions. These people don’t know me, I don’t know them and if Facebook gathers information based on how I interact with them, it’ll never know me either. The data they have is flawed so I don’t trust it.
Ads work on me when I’m either shopping (I’ve bought items I wasn’t necessarily searching for while on Amazon) or when I’m in a ‘place’ where I’m relaxed and trust the community. I’ve ran out and bought items based on reviews from my RSS feed via Pulse or while watching, say a TWiT Network show and being introduced to a new app or product. I trust my sub-communities, be they the few relatives and friends that I trust but are drowned out by the mass of others that I follow on Facebook or the specific communities online that I belong to that are not part of Facebook or Google.
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There was a time not too long when I worried about what companies were doing with all the data they collected. I worried less as I saw them apply it, because it didn’t really tell them anything about me.
My continued worry, though, is that law enforcement might start to believe data is all-knowing and use it in place of professional police work. I’m sure Big Data advocates are hard at work trying to sell the virtues of data to governments.
It’s not a problem for someone skilled enough to manipulate the data in their favor, but what about the average person?
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Shared this as a “Must Read”
I adopted Facebook very late in the game and quite reluctantly.
Early on, I could somewhat see the value for small item B2C, and it does have other useful purposes; we’re releasing an updated white-paper tomorrow (“Using Social Media for Disaster Recovery”) from the Joplin Tornado Info folks. They created a tremendous resource for the Joplin community via Facebook during the tornado last year.
That said, aggressive app integrations – SocialCam, Yahoo Reads, etc. – are annoying and dangerously invasive; they have the potential to create mountains of issues for unsophisticated users. Accidentally click in to a “questionable” video via SocialCam and it gets announced on your Facebook page. Read a racy article on Yahoo News and the world knows it. Blech.
That said, a fundamental issue with those annoying Facebook ads is that, to me, they are redundant to the nth degree; If you click a GM ad once, it constantly appears. I don’t even notice them any longer from a consumer perspective.
As we are the product of Facebook, it seems like a risky supply chain plan to me.
The paradox outlined in the article is fascinating to me: “… the better online advertising is, the less valuable it is.”
Start “Thinking outside the cow” indeed.
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When are companies going to get the following REALLY important point about the Internet (and other platforms as well):
The more you try to “personalize” advertising, the more perceived “deception” you’re creating.
I equate “personalized” advertising in any form to a strange man on the street walking up to me and saying…
“Hey, no, really… your Mom said I needed to pick you up. No, really!”
To the investors, and to entrepreneurs… advertising isn’t something people WANT to see, it doesn’t matter how you dress it up, even if you try to “personalize.”
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Damien, I’m not arguing against advertising that works (including search advertising), or against what can be done with “big data” on the sell side, even by Facebook. I am agreeing with Michael Wolff that there is little little evidence from Facebook, so far, that it can evolve past “the desultory ticky-tacky” advertising stage it seems stuck in now. And I am saying that there are limits to personalization — limits that are less worth probing once we see what can be done with fresh and effective new approaches from the demand side.
While the kind of brand signaling Don talks about does not apply in all cases, it was hardly “blown away” by dot-com failures. The Pets.com example might be an affirmative one here, because it was so clearly a bogus outfit. “Nothing will kill a bad product better than good advertising,” an old saying goes.
What’s required, and very hard to do, is to think outside the advertising box. So, while “advertising to someone who has shown that they are in the process of buying a TV” is a good thing to do, maybe a better one is to give the customer their own ways of “intentcast” that fact to the marketplace before “showing” that interest to the behavioral targeting mills — and to do that selectively, in ways that respect existing relationships and that protect their anonymity in other cases.
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“While the kind of brand signaling Don talks about does not apply in all cases, it was hardly “blown away” by dot-com failures. The Pets.com example might be an affirmative one here, because it was so clearly a bogus outfit. “Nothing will kill a bad product better than good advertising,” an old saying goes.”
Agreed my statement was over the top – too much coffee. But I still think the idea that consumer gets that signal no longer true with the fragmentation/long tail media development.
“So, while “advertising to someone who has shown that they are in the process of buying a TV” is a good thing to do, maybe a better one is to give the customer their own ways of “intentcast” that fact to the marketplace before “showing” that interest to the behavioral targeting mills”
I get thinking outside the box, but isn’t that exactly what searching is? (albeit going to the behavioral targeting mills).
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I’d be interested in hearing more about the intentcast ideas in a full blog post (if not in your book).
Getting your book and the other you mentioned on kindle [so some kind of targeted advertising works ;-)].
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Doc,
I have a huge respect for the intellectual and ethical integrity of your VRM concept.
However, I see a problem with the “management” element in it. Management is too much work… too much complexity… with little ROI most of the time – CRM being a classical example.
I have an almost philosophical problem with idea that we can “manage” anything – but that’s a longer conversation.
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I loved reading your article and couldn’t agree more with your position on Facebook but I do have to say that being that you’re 64, Facebook does not consider you part of its target audience. Facebook thrives because of 14-20 year old girls who vomit their entire lives onto the site with complete disregard for privacy and/or how it will affect them in the future.
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David, I get your points, but don’t consider either of those statements true. And, for what it’s worth, my age doesn’t buy anything. I do. Big difference.
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Emil, “management” doesn’t mean the individual does it all. That’s why we have fourth parties. Lawyers and brokers are fourth parties already. As individuals get more control over their lives online, new professional classes will arise to help out.
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Steven, intentcasting has lately emerged as a better name than personal RFP. Look that up and you’ll find more. And I’ll be glad to post more on the subject as well (as will others).
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Joseph, good points. I should add that there are plenty of kinds of advertising people do like to see, and use. I once sat next to a woman on a plane who, from one coast to the other, read an entire fat issue of Lucky Magazine, cover to cover. The magazine even came with a sheet of page flags bound in, and she used some of those to flag the editorial and advertising pages she was interested in.
Trade publications too are places where the ads function as a kind of editorial.
When I lived in Chapel Hill in the ’70s, a weekly paper with nothing but ads, and abundant classifieds, was snatched up the instant it came out, mostly by people like me, looking for an apartment or some used furniture. At its best, the commercial Web satisfies the same needs.
What we don’t want, as customers, is to be stalked.
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Really love this article, thumbs up. On my wavelength, yet clearly extendng and deepening my understandıng, thankyou.
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Doesn’t matter that the ads cost $50/click – that actually shows you how little value the ad really has, because the clicks are so rare they’re worth that to companies desperate to increase some number in a database.
And also, that tells you how much the products you are consuming really cost – that $50 to get you on the hook is $50 you’re expected to pay back for the ‘privilege’ of being their customer. Deals are offered to get the new customers in, but the loyal get it stuck to them (see, for instance, any contract services like cell phones, internet lines, etc.).
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Doc, You are correct that both Facebook & Google have birthed appalling formats for selling advertising based on their data. In some way they both appear to disdain advertising in fact. I don’t think though that personalization is what makes the work appalling.
The idea that Advertising was once a great art that has now been reduced to drivel is absurd. Advertising has always been 99% appalling drivel and always will be. It’s just that no one has made a hit TV drama about how awful it is. Stick around for “The Pitch” after watching MadMen and you can see first hand “how the sausage is made” and why maybe you shouldn’t really eat sausage.
There are incredibly brilliant campaigns still being created that only exist in this socially networked environment “Old Spice Guy” for instance. Unfortunately for Facebook, YouTube & Twitter the majority of engagement in those campaigns takes place on the free properties as opposed to paid. Currently they all seem to charge for the crap, and let advertisers have the prime real estate for free.
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Great post.
I never click an ad offered by Facebook\Google\etc. The last time I did, every site I visited that was part of their respective “galaxies” offered me the same targeted information for weeks. It was a thoroughly humbling experience to see my momentary weakness for swallowing real-time spam paraded in front of me for weeks. When the informational noise of targeted ads finally stopped, I found myself looking for them for another few weeks to verify they were gone.
I’ve been conditioned to avoid clicking any ad – no matter what it is. If I want information about something interesting in an ad, I open a new page and search for it on my own.
A similar phenomenon occurs with online transaction groups like eBay\Amazon. What one buys becomes a template for targeted suggestions that actually limit *what* one might buy by hiding future things of interest behind past things of interest, It’s a form of social engineering by suggestion really. For example, I purchased one pair of shoes on behalf of my daughter on eBay, and now I get constant offers for women’s shoes whenever I enter the eBay “constellation”. I don’t wear women’s shoes. Should I be insulted that the suggestion engine at eBay has decided that I’m a man that likes his lady-girl pumps? If I was a woman, would I find it limiting that I bought my daughter an outrageous pair of boots, and now all the ads are for similar products?
Mr. Searls, you’re spot on: targeted everything makes people feel uncomfortable in their own homes, interacting with their own computers. Not everyone is in tune with the same ideas of privacy, individuality and right to be anonymous; but ultimately this is all less about 30 somethings and above’s ability to adapt\thrive in the Generation next world, and more about the survival of Facebook\Google\eBay. I’m not worried about my kids though, the subtle limiting of choices foisted on Generation next aside, Generation next knows how to deal with informational noise – they turn the volume of their PlayStations higher while simultaneously texting three friends, IMing with class mates, doing their homework, and..
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We’ve been working on this for the past seven months and we have the answer. Ten Quick Questions is a new company that will flip the script and finally help you monetize your personal data. We need consumers to sign up. Just like during the Industrial Revolution, we can only change the system of data exploitation if we band together.
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@Joseph Ratliff — +1 Insightful. (“Your mom said to let this man pick you up” would be a great display ad.)
Closely matching the ad to the _content_ can increase its value. Closely matching it to the _user_ can only reduce its value.
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if there is anything that illustrates Doc’s point perfectly it’s re-targeters.
its borderline offensive to visit a site once and then be followed around by their ad begging you to come back again and again and again… -
Hey Doc. Long time, no comment. I took a long break from this stuff since net/crit was bad for my mojo. I saw this via the Berk’s Facebook so I figured to reply as a brain exercise.
One proposition on the table is:
1. Targeted advertising doesn’t work for most people because they find it too invasive.Maybe it is for a lot of high-IQ net/critters, the ones who never click on any Internet ads. But consider the rest of the population, whose online clicking+conversions — what proof is there to this proposition?
Another proposition on the table is:
2. Facebook is uniquely evil/annoying because (a) they are exclusively wed to that practice, and (b) nobody else is doing that (what about targetted newspaper circulars?)Again, maybe that’s reading too much into it.
Now let’s say I want to get in the business of cleaning out home gutters. If I could target people who live in single-family homes (by zip code, age), really, is that such a bad thing? What if they helped underwrite an online “game” that would encourage to check-off all of the home maintenance stuff that they should be doing… would you suggest that that’s not in Facebook’s realm to provide an audience for?
ultimately:
3. Facebook’s targeted advertising sucks — it is, still, providing, woefully untargeted ads.Indeed it does. Again, is this due to inherent qualities of Facebook, of social graphs, or consumer targeting in general?
What is it that you want of targeted advertising? Do you want the whole enterprise to be abandoned — or do you want it to work better?
Jon
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Jon, Doc and sundry have writing for years about their perspective, which from my view here is basically trying to portray business as personal empowerment for the buyer – i.e. “we need to start equipping buyers with their own tools for connecting with sellers, and for engaging in respectful and productive ways”.
This makes for great conference fodder for businesses, but tends to fail rather badly when one gets out of the talk-bubble. It’s a living, but one of the negatives is constantly having to write that businesses would do so much better if they followed the guru’s theory, and lamenting that they don’t.
If the guru actually believes the theory, that makes it even worse.
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Jon, I’d like targeted advertising to work better, but without the compromises to personal privacy that too much of it tends to involve.
But my appeal here isn’t for better advertising. Mostly I don’t care about that. Billions are being spent on making advertising better. That will do whatever it does.
I think that now, as attention turns to Facebook’s shortcomings, we could use at least some consideration, especially from investors, of what can be done to improve markets by working from the customer’s side.
As for Seth, he and I have gone back and forth on this for years. He calls empty the glass I’m working to see filled. Take away the characterizing and that’s his argument. Hey, maybe he’s right. If the work VRM developers have been doing fails, so be it. If it succeeds, we won’t have to settle just for improving what we’ve already got.
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Couple comments,
I’m not a huge fan of targeted advertising for myself. As others have pointed out, the engines are rather ineffective and we tend to get stuck in strange silos that are hardly appropriate. Often, the idea of basing future purchase possibilities off of our online behavior or past purchases can be ridiculous. If all content delivery mechanisms were based off of this premise, we would all be effectively sucking on our own tailpipes.
However, the very fact that there are billions of dollars being spent on this method of advertising seems to suggest that the ROI isn’t as bad as some comments are making it out to be. Businesses spend a lot of time, effort, and energy into making sure that their ad monies are being spent effectively. While even the best of these measuring tools are somewhat questionable, the fact is that there are a lot of very smart people looking at the return on this and continuing to invest. Maybe because they are just hoping it will pan out, but you can only send those kind of numbers back to your CFO for so long before you lose your job.
Also, I’ll submit that this discussion is rather broad. Interest based advertising might be terrible for one company, but brilliant for another. Broad appeal products might lose their shirts on this sort of advertising, while niche products may really shine here.
Eventually, the market will probably prove this out. If targeted advertising is crap, we’ll soon know it. Like sheep, we’ll abandon in droves and FB will be left to the late adopters and continue to cling to hopes of its former glory. -
Cannon H,
There is plenty of ROI in online advertising.
The investments of smart people have also gassed up every bubble in history.
FWIW, Facebook’s users are not its customers. Advertisers are. They are the ones whose abandonment will make a difference to Facebook’s bottom line. I doubt that will happen soon, though I do think Facebook and “social” everything have both peaked. And, of course, I could be wrong.
Michael Wolff’s argument is that Facebook’s current model is inadequate to satisfy its investors and growth imperatives. I agree. But, as I’ve said above, I also don’t much care about that. I do care about the liberties Facebook takes with users’ data, but others are doing a great job of hammering on that issue.
Instead this post is about what Michael calls “the sweeping, basic, transformative, and simple way to connect buyer to seller and get out of the way that eludes Facebook.” VRM developers have been working on that, in an investment-starved environment, for years. I’d like to see that changed, and that’s why I wrote this post.
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Great article, I have felt that facebook and social media in general is over rated and specifically in the case of Faceblok OVER VALUED!
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