What is new, are the methods for identifying the target audience and then tailoring the ads to each person.  Before the ads were based on a group mentality which meant you might only hit about 70-80% of your target audience. There was a lot of guess work and there still is in TV and Print ads. With the internet and the ability to use content based scripts you can get closer to your penetration target. Google and a few others have done this with great success, but where this type of advertising has always fallen short is when trying to apply this to a pure social network environment like Facebook or even MySpace. Most people are not there to click on ads but are more concerned with self-promotion or looking at the latest funny pictures.  This means that while ads are displayed they are not part of how people interact with the site.

Facebook has tried multiple things to fix this and even went so far as to use their own members’ images with “sponsored stories”. How these worked is like this;
If I like a page and that page pays Facebook for a sponsored post or story then anyone that is a friend of mine might see a post for this story saying that I like the page complete with my image. It was intended to get you to trust the page; after all if I like it you can trust it right? Instead Facebook ended up getting sued over the use of people’s images in these campaigns and lost.

Now it seems that there is another controversy with Facebook. There are two companies that are claiming (in loud voices) that Facebook is misrepresenting the value of their advertising and that the majority of the clicks they are seeing are bots and not real Facebook users.  According to one disgruntled Facebook company Limited Run they found that only 20% of the clicks that Facebook was claiming actually ended up on their site. This was an unusual number and one that prompted them to put their own analytics in place. They are now claiming that the missing 80% was bots and not real users.

Another dissatisfied Facebook user went further and claims that 90% are spambots and they would like their money back that they paid into Facebook. We have maintained that Facebook’s ad services are not what they are cracked up to be and we also know that Facebook makes changes to their services in the back ground without notifying its users (which has led to multiple issues with Multiple sites including complete blocking of links posted). This type of behavior will not fly now that they (Facebook) are a public company. They cannot simply run their tests and trials in a live environment without reporting these things any longer. As many companies have found they must report on intentions in their annual 10-k filings which means that investors, the SEC and the Press will know what Zuckerberg has up his sleeve in the future. He cannot continue to play things so secretive. Even Apple has to divulge some of what they are doing on their 10-k which is where many predictions come from.

We have a feeling that Facebook will be facing some serious legal issues as other companies begin looking into where their advertising dollars are going and what the real traffic conversion rates are. From there Facebook might find that their limited revenue streams from ads will dry up. If that happens we might see that Facebook will try the premium account like Myspace did which would spell the beginning of the end of Facebook.

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