The report, authored by Forrester’s vice president and principal analyst Nate Elliott, claims Facebook has “abandoned its promise” to revolutionise marketing with social ads and has instead “become almost entirely reliant on the traditional advertising models it once lampooned”: display ads and simplistic targeting.
Facebook “no longer supports social marketing”, the report claims. Facebook instead “teases marketers” with the promise it will better connect them with their customers, yet on average Facebook only shows a brand’s page posts to 16 per cent of its fans.
On the paid advertising front, Forrester claims fewer than 15 per cent of the billions of daily display Facebook ad impressions leverage social data to reach more relevant audiences and its static image ad units offer marketers less impact per impression than they could achieve with ad units from other sites.
Forrester polled 395 marketing and “e-business executives” from the UK, US and Canada to gauge their satisfaction in various different digital marketing channels. Of the 13 online marketing sites and tactics those marketers were questioned about, Facebook came bottom in terms of satisfaction when it comes to driving business value (see table), below sites such as Twitter, YouTube, Google+ and LinkedIn. Marketers polled were most satisfied with on-site ratings and reviews.
In addition, just 51 per cent of marketers said they were satisfied with Facebook as a marketing partner, behind Google, LinkedIn and Yahoo.
The consequence for Facebook not changing its ways could be dire for the company, the report predicts. A handful of brands – such as General Motors last year – have previously announced they were withdrawing Facebook advertising – although General Motors has since returned to advertising with the site – which Forrester says should leave the social network concerned about “death by a thousand cuts” as more “smart brands” move away from the site.
Forrester goes on to forecast that as big brands walk away, Facebook will begin to feel like “MySpace circa late 2000s: a home for poorly targeted, low CPM direct marketing”. The report says the user experience will become so poor, Facebook will abandon its marketplace ads – which appear on the right-hand side of the page -entirely and focus purely on improving News Feed ads or on building an ad network or exchange.
The report explains: “Yes, Facebook made $4 billion last year running ads on its site — but the real marketing value in social media isn’t in trying to market to people on social sites; it’s in using data from social sites to power better marketing everywhere else. As Facebook slowly learns to leverage its affinity data for ad targeting, and as it partners with media outlets that can offer its marketers branding opportunities, the ads on its own site will be seen less as a revenue stream and more as a nuisance. Facebook will cut its own ads to keep members happy and will use the resulting data to generate more profit from ads on other sites.”
Google, LinkedIn and Twitter should be “revelling” in the opportunity that Facebook is leaving behind, but the report adds they must move quickly to improve the tools that marketers use to manage and measure their interactions with customers that drive business value in order to prosper from Facebook’s apparent mistakes.
In response to the report, a Facebook spokesman said: ”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.”
The Forrester report (”Why Facebook is Failing Marketers”) published today (28 October), is not the first time Facebook has come under criticism from marketers. Last year, ahead of its IPO, marketers demanded more data from Facebook to prove the value of their social campaigns.
Facebook has since embarked on a number of global and local initiatives including a UK marketing roadshow and the formation of a UK marketing advisory board as part of its efforts to improve its relationship with advertisers.