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Facebook share price drop: Finance teams move budgets, but Facebook business may compensate

As marketers move budgets away from Facebook, can Facebook for business make up for losses?

Google, Amazon and Linkedin Marketing Solutions gained ground as marketers dial back on losing revenue with Facebook ads. Since Facebook ads yield some of the lowest conversion rates in the industry, all it’s magic targeting options just are not enough to convince marketers to throw more money down a black hole. This is what the recent drop in the share price reflects. The consensus among ad agencies: LEAVE Facebook, or slash your cost per click by 80% as it simply is not viable at present levels.

Some analysts belief that Facebook can only turn the tide if it is successful in making “Facebook Business” more appealing, taking market share from Linkedin. But does the company have what it takes? If they do, clearly not enough has been done. Statistics currently indicate that Facebook has a mere 2 million paying users for it’s business communication tool. So is this a case of “buying in the dip”? Facebook will need to convince marketers that it has a higher quality of visitor and that clicks are more legitimate, which it simply has not been able to do.

Key challenges with Facebook:

Those who decide what share of the budget needs to be allocated to Facebook, are quite responsible to track results with analytics and deliver a reasonable ROI. It just does not seem to happen these days – and other channels like Google are more reliable. Here are several challenges faced with Facebook:

  1. Marketers feel tricked into paying more: The number of people I spoke to who woke up in the morning and received a bill higher than anticipated, complain that the company does not use above board tactics in the way it changes site UX on a regular basis.
  2. Google analytics does not measure it well: Facebook analytics is used by less than 30% of marketers, as most practitioners prefer GA. The problem? Google analytics does not measure Facebook traffic well. This always makes Facebook bills seem higher and less legitimate.
  3. Accidental clicks are not dealt with effectively: High bounce rates and zero engagement on many visitors, is quite normal when running Facebook ads. Often this makes marketers feel incompetent, especially when facing senior management. It is a platform problem, not a marketer issue – yet the platform does not face any flack from board members.
  4. User intent is missing: Search, which is dominated by Google, Bing – and to some extent, Amazon for shopping, is truely absent in Facebook. If only Facebook continued it’s partnership with Bing and attempted to offer search – there would have been more credibility with advertisers. It is not doing any better than Linkedin when it gets to conversion rates.
  5. Aggressive policies: Facebook would easily knock off fan pages and company pages without giving a sufficient reason – and without being contactable. Companies who invested in building follower levels, feel defrauded when this happens.
  6. Marketers are waking up to better alternatives: Now content marketing is a mature industry on it’s own, where agencies have figured out several alternative channels to be safeguarded against erratic Facebook policies. Integrated with email, many have cut Facebook out the loop.

Facebook could, for example, do well by introducing e-learning that would take market share from inferior services such as Udemy. Facebook for business, could launch freelancing services tied closely to profile data, taking market share from Fiverr and Upwork. Facebook could even have a go at Netflix and Youtube combined with an innovative business model. But will it? Probably not, as it seems that Facebook’s only play book is acquisition, acquisition – and more of the same.

Will the Facebook board surprise analysts – and more important, marketers who make key decisions? Impressing the former but not the latter, will only lead to another bubble.

 

Adriaan Brits

As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment and business. He covers mostly topics related to his qualifications. He is a specialist trainer in Advanced Analytics & Media. He also writes for Jpost.com, BestTechie, CEOWorld Magazine and other media outlets.
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