ADVERTISING: Facebook 'consistently the worst performing site'
So Facebook, which has been letting people know it's on track for $150m in revenues in 2007, must be an awesome advertising platform. Well, sorry to rain on the parade, but no. Media buyers — the agency people who book campaigns …
Context & Ripple Effects
The disconnect Valleywag flags is between two confirmed data points days apart: a March 2007 Youth Trends survey ranking Facebook the favorite site among 17-to-25-year-olds, extending its lead over rival social networks, and media buyers ranking it consistently the worst-performing site for campaigns. Facebook says it remains on track for $150 million in 2007 revenue despite that verdict from the agencies who actually book the spend.
The company arrives at this moment with momentum built through 2006 — the News Feed redesign, an API opening that won broad blogosphere praise, and the Notes blogging feature — and having reportedly turned away buyout interest in 2006 to stay independent, though those offer rumors were never confirmed. Audience leadership without ad performance is the tension the story exposes.
First-order effects
- Agency media buyers have a documented basis to steer client budgets away from Facebook, putting direct pressure on the $150 million revenue target the company says it is on track for.
- Facebook's sales pitch to advertisers now has to overcome its own worst-in-class reputation among the buyers who control campaign placement.
Second-order effects
- Rival social networks can use the buyer rankings to position themselves as the performance choice for the same youth demographic Facebook dominates in surveys.
- Sustained underperformance forces Facebook to rethink ad formats and targeting rather than rely on raw audience growth to fill inventory.
Third-order effects
- If engagement metrics and ad performance stay decoupled, the industry faces a structural question about whether display-style social ads work at all, or whether platforms must invent new commercial formats to monetize attention.
- Agencies' performance rankings become gatekeeping power over which social platforms capture the shift of brand budgets online.
The trend: Social networks are discovering that youth audience dominance does not automatically convert into advertising effectiveness, setting up a race to build formats that perform.