Forrester Gloomy On Facebook's Shift From Social To 'Traditional' Ads

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forrester-nate-elliottMost Facebook observers would be hard-pressed to find "negatives" in the evolution of the company's ad products over the past year.

Performance continues to improve, as detailed in a new report from Adobe. Mobile monetization is proceeding apace. And it has executed on programmatic selling, through its Facebook Exchange, Custom Audiences database match program and Partner Categories third-party data targeting.

But all is not well with the world's largest social platform, according to a new report from Forrester Research analyst Nate Elliott. Facebook, Elliott concludes, has largely turned its back on the social and affinity data it once heralded -- and it has done so to the detriment of large marketers.

Forrester surveyed 395 executives in the US, UK and Canada in August for the report, called "Why Facebook Is Failing Marketers." It asked them, among other things, how satisfied they are with the business value generated by a lineup of 13 different "online marketing sites and tactics." Stunner: Facebook ranked dead last on that list. When placed next to five other "large online and social properties," it also ranked poorly – ahead of MSN and Twitter but behind Yahoo, LinkedIn and Google.

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According to Elliott, Facebook no longer prioritizes affinity and social connections in its ad products, and is now so enthralled to revenue growth sourced to lower-funnel advertiser demand that it can't see how much it has alienated many advertisers. Facebook's failings, as detailed by Forrester, also touch on its neglect of non-paid tools products such as Brand Pages and a poor overall quality of service -- even for some Fortune 500 companies. (Facebook offers special tools and opportunities to members of its Client Council. As a result, Council members are generally satisfied, while "hundreds of billion-dollar companies are not getting that special attention and are overwhelmingly dissatisfied," said Elliott.)

The affinity data to which marketers have access is very thin, according to the report. "Facebook needs to do more and do better ," Elliott said. "When Facebook says, 'We think someone's purchase history in Epsilon's database is more effective than affinity data,' that just means the purchase data is better leveraged."

In a phone interview, he was careful not to imply negative intent on Facebook's part. "The conversations I have with Facebook indicate they honestly believe they are serving customers well. I think the massive revenues have blinded Facebook executives to the growing dissatisfaction of marketers who pay their bills," he said.

One interpretation of the data is that Facebook has optimized its ad algorithms for its own yield rather than for advertiser objectives. As Forrester notes, fewer than 15% of Facebook paid media impressions use social data to target audiences. That ratio might be higher if ads with social data weren't squeezed out by higher bids from advertisers targeting users lower in the purchase funnel.

Elliott is urging clients to put pressure on Facebook, by eliminating dedicated budgets and forcing it to compete with other websites for spend. But he's not optimistic.

"We don’t believe that Facebook will make the changes needed to win back marketers’ hearts," he writes in the report. "In fact, we don’t believe the company even sees the need to change."

From Facebook's perspective, marketers may no longer need or want affinity-based targeting solutions. Rather, they're looking for performance and engagement, which the company increasingly aims to fulfill through advanced targeting capabilities combined with enormous reach. The revolutionary idea of "word of mouth at scale," while not forgotten, is no longer on the front burner.

The company issued the following statement in response to the report:

"While we agree that the promise of social media is still in process, the conclusions in this report are at times illogical and at others irresponsible. The reality is that Facebook advertising works.  That's why we have more than a million active advertisers including all of the Ad Age 100.  And, countless studies have demonstrated the significant return on investment marketers see from Facebook.  Our promise is to continue to deliver positive results for marketers.”

Facebook acknowledges that its biggest complaint from advertisers and agencies is around the quality of service, an area it says it has taken steps to improve.

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One Response to “Forrester Gloomy On Facebook's Shift From Social To 'Traditional' Ads”


  1. Scott Krauss says:

    Affinity data has for a long time, been very unreliable within Facebook. As everyone under the sun tried to increase their "Likes", they ended up diluting the value of all Likes and therefore basically rendered Facebook affinity data useless....All in the name of an extra sweepstakes entry or a $5 off coupon. Everyone likes everything...which of course is not so useful.

    But Facebook is still really critical for any marketer for two main reasons -

    Mobile - Facebook provides marketers with something most display networks etc...simply cannot. Addressability. With so many campaigns still focused on targeting demographic attributes, Facebook with a high degree of certainty tell you who someone actually is...and for most that is more than enough.

    Custom Audience - A funny thing happened when they launched Custom Audience. Marketers realized they really want to speak more to people they already know...because not surprisingly, those people are more willing to buy and when they do, spend more. With avg. email open rates hovering around 15% or so, the likelihood that you a have ton of emails on file that you're not talking to is very high. Custom Audience solves for this and has been an absolute home run for Facebook. Marketers also tend to know a lot more about their customers and how they purchase their goods than Facebook, which again makes Facebook's data far less important and with 1B Log In's they've got unparalleled scale to make this product work.

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