CEO: Facebook Advertising Hasn't Worked For Us - Business Insider

At our Social Media ROI conference this morning, Facebook has been a big topic of conversation.

And the comments from marketers have not been encouraging for Facebook's bottom (or top) line.

All the brands have tried Facebook, of course. But they've had mixed success.

And, importantly, a lot of the success stories have come through companies using Facebook as a platform to interact directly with customers, rather than as a paid advertising medium.

Gilt Groupe, for example, was one of the first companies to set up a store on Facebook.

It flopped.

Why?

Because people don't go to Facebook to shop, said Gilt Chairman Susan Lyne. They go to hang out and chat with their friends.

Selling things on Facebook, Lyne said, is like selling things in a bar.

Lyne said Gilt has had exceptional success on Pinterest, Instagram, and Twitter, albeit for different brands. Pinterest has been huge for JetSetter, because of all the beautiful travel pictures that JetSetter has pinned and encouraged followers to re-pin. Gilt City, meanwhile, has given Twitter followers freebies for tweeting about the latest deals they've gotten and invited Instagram followers to take and share pictures of their cities.

(Facebook owns Instagram, so the news isn't all bad.)

Gilt does spend some money advertising on Facebook, but most of its social-media budget is devoted to its own promotions and people.

Dave Gilboa, the co-CEO of Warby Parker, a new online eyewear retailer, said "Facebook advertising hasn't worked."

Warby has benefited heavily from Facebook word-of-mouth, but that's because Facebook users have used Facebook to spread the word about Warby. And they've done this in part because of articles that have been written about Warby that have been shared by Facebook users--not because Warby has spent money advertising on Facebook.

Gilboa added that "90%" of the interactions Warby Parker has with people on Facebook are customer-service interactions.

Meanwhile, Adam Kmiec, the Global Director of Digital Marketing and Social Media at the Campbell Soup Company, said Facebook "is the most A.D.D. company I've ever seen."

Kmiec says Facebook has changed its ad products every few months, creating tremendous confusion among its clients. Kmiec suggested, for example, that Facebook may be about to kill "Reach Generator," a huge product it announced a huge launch conference earlier this year in New York. Until recently, Kmiec said, Facebook has also refused to share much data with its clients, making it "really tough for marketers and partners" to judge how their campaigns and content are doing.

Twitter, on the other hand, Kmiec says, has created spectacular tools for marketers. And this has helped Twitter gain strong early traction.

The message we've heard over and over again this morning is that the social platforms are excellent (critical) tools with which advertisers can interact with customers and potential customers, but that this is not the result of the advertisers spending money advertising on the platforms. Pinterest, for example, doesn't even accept advertising yet. And much of the value that advertisers can get out of Facebook comes from the advertisers' own efforts and investments and people, not Facebook advertising.

Kmiec of Campbell Soup put it this way: "The answer isn't Facebook. The answer is your social strategy."

"The mad rush to Facebook [is over]," he said.

Source: http://www.businessinsider.com/facebook-advertising-2012-9

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