Why Facebook Advertising Doesn't Work (Well)

The Dope on Why Google Ads Work and Facebook Ads Don't

Facebook's stock tanked after the IPO for one singular reason. Their advertising model does not work well. Most people who've advertised on Facebook, including myself, have been disappointed. That's not the case with Google. I still advertise on Google and am happy with the results.

At first glance Facebook is an advertiser's dream come true. After all, Americans spend over 53 billion minutes per day on Facebook. That's a lot of time. And that's a lot of users. Yet most advertisers are disappointed. Why?

It comes down to dopamine.

Facebook users are on dope. And Google users (with YouTube users as an exception) are not.

When people are getting high from dopamine it's hard to distract them. You have to interrupt them, like they do with TV advertising, or catch them when they're looking for another hit (or a better hit).

Facebook's advertising model fails for the same reason Sudoku magazine advertising fails.

With the billions of hours a year people spend with their noses buried in a Sudoku magazine you'd think advertisers would be clamouring to advertise. But they don't. Advertising in Sudoku magazines doesn't work. Why? Sudoku users are getting hits of dopamine as they're doing their puzzles - they are cognitively engaged. That's the same challenge faced by Facebook.

Facebook users are so engaged (and pleasured) by the updates from their friends and family that they aren't attracted to advertisements.

So why is Google different? With Google, users are searching for dopamine - but they haven't found it yet. That's an important distinction. Let's say I'm looking for a large print of Steve Jobs (being the Apple fan that I am). So I type in "steve jobs print" into Google. And there's a Google advertisement for "Steve Jobs Prints" from fineartamerica.com. So I click on it. Ka-Ching. Google just got paid. And so now I'm on the fineamerica.com site and I see an awesome picture - a blueprint for the iPhone patent. I buy it. I just got my hit of dopamine. And I'll get another hit when I get the print delivered.

When I'm on Facebook I'm not really hunting. I'm in receive-only mode. I'm engaged in the updates from friends and family. And to tell you the truth, I'm not a big user of Facebook. I'm mostly there to keep an eye on the platform so I can exploit it as a marketer in the future.

One Solution to the Facebook Advertising Problem

I may become a Facebook investor when they figure out local advertising. I believe that Facebook users can be attracted to advertising if it is hyper-local. Why? Because it's better dope. That's right. If I see an advertisement for 33% off organically farmed salmon from Joe's Fish Shop, which is five minutes away from my house, that'll be a chance to get multiple hits of dopamine. I get my first hit from buying the fish at a discount. And I get my second, better hit when I taste that fish. Then I get a third hit when my brothers and their spouses say how great it was. I win. Joe's Fish Shop wins. And that's how I believe Facebook can win. Hyper-local dopaine peddling.

My own bad experiences advertising on Facebook, a few years ago, had everything to do with not being able to target my ads at users in small towns like Stouffville, ON and Uxbridge, ON, for a career fair. But I'm happy to report that this may have changed. I'm running some test advertisements right now that may prove that I can hyper-target my advertisement to small geographic locations. That is fantastic news. So I may, indeed, become a Facebook investor sooner than I thought.

Please don't invest in Facebook on account of my analysis or advice. Do your own analysis. Come up with your own thesis as to why advertisers have not found it to be a successful advertising platform. I believe that the answer lies largely in focusing on local advertising. But I may be wrong.