We recently had a chat with a top executive at a company that helps brands market on Facebook to get a sense of what brands like–and don’t like–about Facebook. This is important because, as you can see in the chart below, Facebook generates the vast majority of its revenues from advertising. Not only that, but in order to justify its IPO valuation, Facebook will need big brands to start spending a LOT more money on Facebook in the future than they do now.
Photo: Facebook S-1
The executive agreed with the consensus we’ve heard from almost everyone we spoke to: brands are planning on spending more on Facebook.
That being said, the executive said, before Facebook can become a juggernaut, it needs to address three problems that brands have and that are limiting their eagerness to spend:
- Reliable APIs. Big brands don’t update brand pages and buy ads through Facebook’s website like regular people and small businesses. They use specialised tools to manage ad buys, run multiple country-specific brand pages from the same console, and so forth. These tools plug into APIs which Facebook provides. The problem, the executive said, is that these APIs change all the time, which makes it hard to use these features. It’s not just about convenience, it’s about “trust” and “reliability”, the executive said. “Why is it that Google has dominated ad serving for the past 15 years, at least when it comes to CPC ads? Because their technology has been reliable for the past 15 years. With Facebook, you feel like you’re dealing with three developers in their garage changing their mind every week. If they want to lock in revenue increases, they should show to agencies and brands that their solutions are reliable: that advertisers know what they’re buying, that they’re able to compare campaigns historically, that they know how to compute ROI. It’s a matter of trust. They can’t build a strong business ecosystem around their solutions the way Google has if there’s not enough trust that things will be reliable.”
- Ownership of data and content. According to Facebook’s terms of service, when a brand posts something on Facebook, Facebook owns it, not the brand. This is a big sticking point. It’s a sticking point from a copyright perspective: if you post elaborate creative and so on, you want to make sure you have ownership, this executive said. “If brands were rigorous, from a legal perspective, they wouldn’t post anything.” It’s also about ownership of customer data. When users subscribe to a brand page on Facebook, the brand feels that they’re “their” customers and that they should have their data to be able to market to them. Facebook says that the user is “theirs”, not the brand’s. Brands, naturally, hate this. Note: this point is unlikely to be resolved to brands’ satisfaction. If only for user experience reasons, Facebook is never going to give up on this last point. But it’s still something brands don’t like about Facebook.
- Analytics. This is another thing we’ve heard from many people dealing with Facebook, including an ad agency executive we spoke to recently: their analytics, well, suck. It’s important, because when you ask people to devote a big part of their budgets to a property, they want to be able to measure their spend precisely. It’s not just that the functionality is lacking, the executive said, it’s that the stats are virtually unusable: “It’s a black box. It mixes engagement numbers with audience data. Big brands are telling me they simply don’t trust Facebook analytics anymore.” Facebook basically twists the numbers to make it look like brands are reaching huge masses of people thanks to its virality, but in doing so makes the numbers meaningless. The executive told us of a big brand that had a Facebook page for a small-town subsidiary, and their Facebook analytics proclaimed that the page “reached” 1.3 million people, which in that context is just ridiculous.
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