Facebook CEO Mark Zuckerberg has a goal for ads on the site: someday a post from Target will be as timely and relevant as your best friend’s vacation photos. While this may seem crazy at first, Facebook’s advertising offerings are getting better, as evidenced by record ad revenue in Q4.
Facebook released its Q4 earnings and usage stats Wednesday, showing an incredible $2.5 billion in revenue — $2.3 billion of which came directly from advertising. In Q3, Facebook pulled in $2 billion total and in Q4 2012, that figure was $1.5 billion.
However, Zuckerberg thinks Facebook ads can be so much more, and he’s not thinking in dollar figures.
He believes that someday, the ads within News Feed can be as timely and relevant as posts from friends and pages the user has liked. Zuckerberg discussed the company’s advertising mission in Wednesday’s earnings call:
Last quarter I talked about our efforts to grow our business through improving the quality of our ads rather than just increasing the quantity. Our goal is to reach a point where the ads are as relevant and timely as the content your friends share with you.
To do this, we’ve put a lot of effort into measuring people’s sentiment around our ads and seeing how people engage with them. We do some of the broadest surveys in the world. We survey more than 35,000 people every day to see how we’re doing, and we use the results to drive our product development.
Our approach is working. In the second half of 2013, we saw an improvement in sentiment about ads on mobile, even as volume grew during that period. We also saw sentiment on desktop remain stable. Interestingly, even as the volume of News Feed ads has grown, clickthrough rates have also remained stable.
Relevant has been one of Zuckerberg’s favorite words, but it’ll be difficult to see a News Feed in which ads are truly relevant. When a user sees a post from a coworker, relative or friend — there’s no selling aspect. It’s just a friend sharing a funny photo or linking to an interesting story. The relevancy is in the real-life connection that may have happened before Facebook was even a thought.
When there’s a Facebook ad in News Feed, even if it’s not commercial in nature, there’s still an aspect of selling that usually turns a user off. While more users are clicking on Facebook ads (and revenue, revenue per click and clickthrough rates show this), it may not be possible for an ad to be nearly as relevant as an authentic post from a real connection. A News Feed ad is still seen by many as an intruder, like someone who butts into a conversation or posts an ad flyer on the community billboard.
That disconnect (and the fact that there are plug-ins such as Social Fixer and Adblock) is why ads will likely never reach the relevance of a post from a real life connection. Many users like brands and even love them, but Starbucks or Walmart doesn’t have the same kind of real-life cache of a friend. While Facebook ads may continue to improve, full relevancy seems to be an impossible goal.
Though full relevancy will be hard to achieve, the ad offerings from Facebook are rapidly improving. Many advertisers, marketers and Facebook Preferred Marketing Developers were excited by Wednesday’s news.
Joe McCormack, CEO of Facebook PMD Adquant, weighed in on Facebook’s Q4 ad performance in an email to Inside Facebook:
Over 2013, our customers averaged triple digit ad-spend growth on Facebook. The growth that we saw on our platform is in line with what Facebook announced today. We think this is attributable to the major improvements Facebook made to their ad platform on a monthly basis over the past year. Additionally, our customers are very excited about Facebook in 2014 and plan increasing their ad investment in this upcoming year. We think this is the clearest sign yet that Facebook has successfully made the transition since IPO, from being in an exploratory phase where they were not yet sure where their revenues would come from, to building a robust business with a quality set of products.
Molly McCarty, Social Account Manager for 3Q Digital, sees a bright future for Facebook ads:
Looking ahead, I think we can expect budgets to be strong across the board. With the recent changes to Facebook’s advertising platform – including a much-needed improvement to the ads interface and the introduction of powerful new ad types late in Q3 – and the continual improvement of the algorithm, I fully expect performance to continue to be strong. I think it is safe to say that 2014 will be a year of positive changes for Facebook that will continue to reinforce Facebook as a leading platform for online advertising.
Readers: What did you think of Zuckerberg’s statement that Facebook ads could be as relevant as a post from a friend?
Photo courtesy of Courtney Rundles.