Why are advertisers still flocking to Facebook?

In November of 2007, Facebook launched Social Ads, an ad system designed to connect advertisers with their target audience and to facilitate the spread of brand messages and product promotion between users.  The theory behind this was that brands seemingly recommended by friends would be trusted, thereby increasing sales for those companies.

As part of this ad campaign, Facebook also released an interface that allows advertisers to gather information about user activities, demographics, trends, and ad performance.  The use of this service gives advertisers valuable information about their promotional efforts and presence on the site.

What is wrong with that?

It seems like a beneficial service to marketers that will enable advertisers to better target their ads and assist them in determining the best way to reach their audience.  Facebook has at its disposal a goldmine of information on its users’ preferences and interests, as well as massive amounts of personal information, voluntarily supplied by its members, including marital status, employment history, interest groups, and social networks.

However, due to an outpouring of negative feedback over privacy concerns from members, Facebook changed its new ad system to an opt-in policy only a month after its initial launch.  The previous system signed users up by default, forcing them to manually opt-out if they did not wish to promote a  specific brand or product.  Without any motivation to promote these products, few Facebook members are choosing to opt-in to this service.

The ads only work if users actually care about the products being advertised.   Facebook members, like other consumers, have no interest in recommending a product to their friends or family unless that product is truly phenomenal.  Facebook users do not want to be flooded with advertisements about products they care nothing about, and they have already made it very clear that they do not want to be associated with the ads recommending those products.  Because of this, advertisers on Facebook are not seeing very good results.

According to Facebook, their plan is to change the face of “brand advertising” by turning friends into marketers.  All they have accomplished thus far is irritating their users and wasting the time and money of their advertisers.