Facebook Ads a Flop

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According to a recent BBC investigation, advertising on Facebook is not worth it, since companies do not receive the return on investment they expect.

The vast majority of users go on the site to socialize with friends and family; the tiny ads on the right-hand side of the Facebook homepage don’t attract nearly as much attention as advertisers would hope. Worse yet, it has been found that a significant proportion of the user profiles who do ”like” company pages turn out to be fake.

Of the social network’s 901 million users, 54 million, or close to 6 per cent, have been identified as fake by Facebook.  It’s from this ample pool of false personas that we see groups of so-called ”users,” numbering in the thousands, who “like” several thousand pages each with no interest whatsoever in a company’s products or services. In ”liking” large quantities of various Facebook pages, the puppet-masters—malware authors and spammers—responsible for these mass user profiles create communities around themselves, which they can then exploit by sending spam and dangerous links to real users. This means that companies paying for advertising find themselves getting hundreds or thousands of “likes” that are worth nothing, since they don’t come from real people, while real users risk being targeted by spam and malware.

This is a genuine problem, but Facebook, since it derives the greater part of its revenue from advertising, continues to downplay the issue. A spokesman for the company said, “We’ve not seen evidence of a significant problem. Neither has it been raised by the many advertisers who are enjoying positive results from using Facebook… A very small percentage of users do open accounts using pseudonyms but this is against our rules and we use automated systems as well as user reports to help us detect them.”

To test the supposed effectiveness of Facebook advertising, the BBC created a page for a fake company called VirtualBagel and set up an ad campaign costing, in total $50, with the intent of garnering “likes” for the company on the social network. The page had little interesting content, or even any products, but still managed to get 1,600 ”likes” within 24 hours of posting ads.

A closer examination revealed that almost all ”likes” were from the Philippines, Indonesia, Egypt and India, with three-quarters of ”likes” coming from 13- to 17-year-old users in Cairo, Egypt. An even closer look at individual user profiles revealed that these users were obviously phony; one user, going by the name Ahmed Ronaldo, had a photo of football player Cristiano Ronaldo as his profile picture, listed his place of employment as Real Madrid and liked over 3,000 other pages.

This profile and others like it have details that are clearly made up, and create the illusion of a successful advertising campaign—a given company’s page can receive a large number of likes in response to its Facebook ads, but if the majority of them are from fictitious identities, much of the advertising money has been spent for nought. Facebook will release a financial report on July 26, which will give further insight into the situation. But if this trend of futile advertising continues, it could deal a blow to the popular social network.

Word Count: 538; Arbitrage Magazine

July 29, 2012: http://www.arbitragemagazine.com/topics/science-technology/facebook-ads-flop148/

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