Facebook IPO: Not Focusing on Advertiser’s Needs

It’s definitely no secret that Facebook is launching it’s IPO this coming Friday, as it’s been all over the news in the digital marketing industry.  However, there has also been a great deal of backlash from their current advertisers, including GM who actually stopped all of their Facebook advertising.  Facebook recently announced that they were going to increase the number of shares to it’s public offering, which has so many analysts around the world wondering if they are going to be able to uphold their worth.

Facebook has used many different types of advertising models, some of which have been successful, others, not so much.  Although Facebook has been a huge hit amongst it’s users by catering to their demands, they haven’t been so catering to their customers – advertisers.  Facebook is a great marketing tool as companies can choose their exact target audience, however, Facebook has not yet executed a strong advertising system for businesses.

Currently, Facebook has ads on the side of the web page so when users are logged into their accounts, they see ads targeted to them along the right side of the page.  This is great for businesses to get right in the face of their target audience who may be pulled in by the ad, but what if their target audience isn’t actually looking or interested in the product or service?  That is where the advertising system being used by Facebook is flawed.  For example, with Google, users are actively searching for particular products and services and advertisers appear in those searches.  So here you have the consumer searching for a particular product, and the advertiser appearing right in front of the user.

Facebook’s average click-through rate (CTR) for a Facebook ad is under 0.05% which is approximately half the average CTR for banner ads across the Internet, whereas the average CTR on the Google Display Network is a bit under 0.50% – almost 10 times the CTR for Facebook ads.

What are your thoughts on the Facebook IPO launch?

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