Why Pay-Per-Click Tool Vendors Are Struggling On Facebook

By Dennis Yu 

Three years ago, you could drastically reduce your cost per click by just running a ton of ads. The mainstream pay-per-click vendors, experienced with Google, applied their same techniques to Facebook — multiplying tons of ad combos by headlines, images, and body copy. While that technique was positioned as smart optimization, it was really spamming the system with thousands and thousands of terrible ads. If a general message against a particular audience wasn’t effective, making 10,000 variants of the same thing wouldn’t matter.

Facebook click-through rate goes from a pathetic 0.020 percent to perhaps 0.025 percent, instead of the 2 percent to 3 percent range it should be.

But the average CPC was lower, since Facebook’s ad optimizer didn’t know how to guess the effectiveness of duplicated ads. Spammers have realized this and, over the past six years, have employed the tactic of exactly duplicating ads over and over to get fresh traffic on what appears to be new ads to Facebook.

Now that right-hand side ads are nearly dead, advertisers are realizing that what works is ads in the News Feed — to amplify organic posts with ad dollars, as opposed to creating content that is solely for advertising.

The new streamlined News Feed puts even more focus in that main middle column, making the seven tiny ads on the right even less relevant. And at the same time, it kills off the technique that has worked so well for the PPC software companies. Last I checked, most were still boasting that they could post 2,000 ads per hour in your account. And then others boast that they can post 5,000 ads per hour. Ridiculous.

Here are a few things that cause traditional PPC vendors to fail, even if they have Facebook ads application-programming interface access, like we do:

Choosing the right interests to multiply ads against. The multiplication game has moved to micro-interest targets, not creative combos. The selection of interests is not simple to automate. You need a strong analytics tool, which is typically lacking in PPC tools. Report-making is not analytics.

Difficulty in creating enough compelling content. You can’t make chicken salad out of chicken sh-t. If the client isn’t producing interesting content — perhaps it is overselling — no amount of ad multiplication will save it.

Measuring the impact of paid on organic. Often a sponsored story will create a ripple effect that spreads into organic traffic. Some call this POEM (Paid, Owned, Earned Media). Because paid media is really just paying to show your messages in the News Feed, it’s better to think of Facebook ads like email, where you’re paying to deliver a particular message to a particular segmented audience. You already pay x cents per thousand messages to your email service provider, so why not Facebook? And you have the exact same metrics with Facebook as email — sent, opened, clicked, shared, converted, etc.

Indirect attribution models. We all know last click isn’t the right answer, but neither is an arithmetic average click or some form of assist. The power of social is not about getting a user down the traditional funnel from awareness to interest to desire to action. It’s about amplifying the fact that Justin likes a particular restaurant, causing all his friends to see this endorsement because we pay for it. Current click attribution models follow a single user’s click stream, as opposed to giving credit to influencers. PPC tool vendors can’t do proper optimization without taking into account the core value of Facebook ads — paid word of mouth at scale.

For the past 10 years, I’ve said that if bid optimization is worth one point of value, then choosing keywords/interests is worth 10 points.

And if choosing interest targets is worth 10 points, then writing a killer post is worth 100 points.

And if a great post is worth 100 points, then the landing page is certainly worth 1,000 points.

But that 1,000-point landing page is nothing compared to a strong multichannel strategy that ties together all points of the customer journey with consistent messaging and nurturing in Facebook, search-engine optimization, TV, print, radio, and so forth. Call that 10,000 points.

The current state of the tool marketplace is only at the beginning of this value scale. They’re applying Google-esque tactics to Facebook, which is like trying to put a saddle on an eagle.

The PPC players will be ineffective unless they tie to content-management systems, lead management, analytics, and the application marketplace, too. Watch for more consolidation over the next few years. That will finally address the value of a Facebook fan, like, share, and install, since we’ll be able to track all the way to a conversion in-store or on the website. Without that visibility, what is your tool optimizing to?

Readers: What is your biggest pain point with Facebook PPC tools?

Dennis Yu has helped brands grow and measure their Facebook presences. He has spoken at Search Marketing Expo, Search Engine Strategies, Web 2.0, The American Marketing Association, PubCon, Conversational Commerce Conference, Pacific Conferences, HostingCon, Affiliate Summit, Affiliate Convention, UltraLight Startups, MIVA Merchant, and other venues. Yu has also counseled the Federal Trade Commission on privacy issues for social networks. Yu has held leadership positions at Yahoo and American Airlines. His educational background is finance and economics from Southern Methodist University and London School of Economics.