Facebook has approximately 2 billion monthly active users.
In 2016, the social network’s annual revenue amounted to close to $27.64 billion, the majority of which was generated via advertising.
Facebook delivered 2017 Q3 profits of $1.59 per share on revenue of $10.3 billion and it now has 1.37 billion daily users, up from 1.18 billion a year ago.
So, as Jerry Seinfeld so famously queried- who are these people? And how is it that people are still only first signing-up to the most most famous company on earth? Are new users 5 years old? 95 years old? Unemployed? Partially employed? In high school? Have debt up to their eyeballs?
And how likely is it that if such people are real, and have disposable incomes, and are inclined to buy products found online through a social media site, they are, only now, first joining Facebook?! If user-growth of a medium is too fast, how can an advertiser be sure of who the users really are and if they are really being reached?
Facebook’s ad rates are based, among other things, on number of users and on user growth. To some degree, to what degree it’s not totally known, ads are targeted to relevant demographics- to the extent that Facebook has accurate data.
There are software companies who measure conversions of ads to clicks- and, then, how many click-thrus actually result in purchases. This information is vital to advertisers.
So what are the results of such data? Are advertisers satisfied- or are they still experimenting? Are ads turning into purchases? Let’s see the data. Let’s hear from advertisers if their Facebook ads are working.
Have you ever seen a press release or quarterly report by a retailer that says, “Our return on advertising on Facebook has been phenomenal. We are seeing sales increase directly resulting from our Facebook and Instagram ads”?
Is advertising on Facebook and social media just one big experiment for companies at this stage? If conversion rates and purchases rates of clicks from Facebook are lame, will advertisers continue to deploy ad dollars with Facebook rather than re-deploy those dollars in more tried and true, and less expensive mediums?
Are people on social media not prone to actually buying products and just prefer to peruse and play? Facebook is selling its broad reach to people around the world- but people’s attentions come and go; they log on and off and they are communicating with others. They are often either at work, at a party, in a car, or tired and bored- not situations offering great likelihoods of reading ads and buying products. Perhaps a television show is a better way to reach people. Perhaps an interactive sign on a Manhattan street is more attention-grabbing than a social media ad. Perhaps a radio ad while people are trapped in their cars during rush hours is more effective. We know Facebook reaches billions of people- but so does the Internet in general- isn’t that kind of a broad and generic way to sell advertising space?
How can anyone invest money in a company without any data that shows its product is effective- that it works. Sure, Facebook has mind-boggling revenues, and even earnings- But this deflects the real question: whether its product works- whether its ads lead to product sales.
Many businesses have launched and grown through Facebook (until Facebook changed the rules on them, in some case), but how many companies have advertised on Facebook with limited or no success, and with poor conversions or unimpressive sales rates following click-thru? How can it be known?
Are user numbers and user-growth numbers causing a hype to advertisers, and, thus, a bubble in Facebook ad rates, and, thus, a bubble in Facebook’s earnings, and, thus, a bubble in Facebook’s stock? After all, what has user-growth got to do with advertising? Companies that advertise on television select their spots based on number of viewers that can be reached, and then pay ad rates accordingly. They are not concerned with viewer-growth. They are only concerned with viewers reached.
If Facebook can’t prove that its ads equal clicks- and that clicks equal purchases- then how is social media any better a way to advertise than any other medium? Let’s see the data- then let’s judge if Facebook, as an advertising medium, has legs- and if Facebook can, well … save face.
Neil S. Siskind, Esq., President
The Siskind Law Firm
Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Learn more at: http://www.neil-siskind-the-fatherhood-assignment.org/
Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.
Neil Siskind, Founder, “National Fatherhood Day” – March 29th
Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®
You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.
Neil Siskind’s Volunteer Work:
– Memorial Sloan Kettering Cancer Center, Volunteer
– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskind help children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal
– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm
– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving
– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/
Neil Siskind’s Pro Bono Work:
– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com
– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/
– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/
– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.
Neil Siskind’s Government Work:
– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern
Neil Siskind’s Community Assistance:
Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.
Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/
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