Facebook Advertising is Fool's Gold

My personal anecdote: Facebook ads are the only online Ads I click with any regularity. They are targeted to my interests, such as programming. They also hit me at a time when I am mostly bored and clicking around on anything that interests me.

When I find myself on Google, I am on a mission for very specific information. Even if I am shopping, I do a research phase and a purchasing phase. Ads in the research phase don't woo me. I google straight to trusted sources. Once I'm in the purchase phase (shopping for best price), I am not wooed either because the ads are too broad. E.G, I want the D3100, not just any camera in general.

I completely understand Google's strategy of "intent" based ads. I just think Facebook's user data is even stronger.

A big part of Google's success is that #1 is much easier to prove than #2.

"People bought our product more because they had become familiar with it over the last month via newspaper/radio/Facebook ads" is a hard-to-prove claim.

"We got X clicks from Google ads leading directly to Y purchases" is much easier.

This is why advertising has been such a profitable business. That's because targeting of traditional advertising system is not good. As a result, traditional marketing has to be attention-driven. You have no better choice other than throwing trillions of dollars to attract attentions, and hopefully several percent of the attracted attentions will be finally converted to your new customers so that your business can continuously run. As a matter of fact, a huge amount of your marketing costs are completely wasted, and it is necessary due to low efficiency of the advertising model. This well-known fact is clearly shown that the low efficient classical display advertising model need be disrupted and replaced.

Fortunately, with the help of Internet and advancement of information processing technology, targeting will be significantly improved, and it has to be improved. However, it could not be attention-based, because attention is intrinsically low efficient on targeting. It has to be intention-based, which is intrinsically well targeted and accurate. For instance, with prior knowledge of your intention on buying some orange juice in front of a Trader Joe's, I will recommend you some good juices. It will be interesting information to me instead of advertisements. On the contrary, it will be totally annoying to me if you shout out at me about some high-end computers just because you know I'm a computer science student or a software programmer, but you don't know I just bought a super cool Macbook last week and don't need a new computer in next few months or even years.

To solve the targeting issue, intention-based marketing systems will be an ideal alternative to current dominant attention-driven marketing systems. Attracting attention is surely helpful. But it has to be complementary, not the primary driving force. It will be intention-based and intention-driven systems that can significantly improve targeting accuracy and marketing efficiency. That is the future!

Lincoln and Cadillac maybe not, too -- perhaps Americans who holiday in Europe are much more likely to buy European cars. If I had more data I could draw up some correlations and tell you exactly how much more likely they are to buy European cars and whether it's still worth waving a shiny new MKZ in front of our Volvo fan.

There's always exceptions to any of these correlations between stuff we like and other stuff we might like. In fact we're all exceptions; we all like things which are anticorrelated with other things we like. But that's not a big problem -- your targeting algorithm doesn't have to be perfect, it just has to be significantly better than random scattershot... and ideally, better than Google.

In an ideal world, I'd only serve Acura ads to people who:

a) Are buying a new car soon

b) Are certain to buy an Acura if they see an ad for one, and

c) Are certain to not buy an Acura if they don't see an ad for one.

but failing that I'll settle for targeting people who are in vaguely the right age group and income bracket.

Actually, I think car sales are a bad example; if I wanted to sell cars I'd use google ads, because people buying a new car already know they're buying a new car, and are probably out there doing research on the subject of new cars. Whoever posted the milkshake example had the right idea for facebook ads.

Google ads can sell you stuff that you're looking for, Facebook ads (if implemented properly) can sell you stuff you don't yet know that you want.