If you’ve missed out on all the hoopla surrounding the recent Facebook IPO, then allow me to offer a brief and extremely general one-sentence overview (and I hope your under-rock vacation spot was lovely!): Can Facebook leverage their massive database of user information in order to improve the site’s currently dismal advertising ROI and more effectively monetize their platform? In other words, can Facebook get people to buy what their advertisers are selling?
Allow me to demonstrate the problem. Facebook is currently showing me four ads when I’m logged in to the site: one for Applebee’s new Sizzling Chicken Fundido, one for Verragio engagement rings, one exhorting me to “Grow Roses Like the Pros” with Drift roses, and one for the Nordstrom’s Half-Yearly Sale for Women & Kids. Unfortunately for those advertisers, I’m a married vegetarian who doesn’t garden and has never once bought from a Nordstrom’s.
That’s 0 for 4 on ad relevancy and usefulness. I’m a heavy Facebook user with lots of info on the site, so basically one of two things is happening: they haven’t yet figured out how to use the data they’ve gathered about me effectively, or they’re not using it at all and are just showing ads at random. Either one of these options turns their ad sidebar into essentially wasted space.
Facebook is, of course, a huge and powerful company, and despite some concerns about over-valuation, there are clearly a lot of people who are betting that they’ll figure out how to advertise more effectively. There are a lot of challenges to work out, but they’ve certainly got enough money to throw at the problem.
The real question is, do you? When Facebook shows random, untargeted ads to their users, they know that they’ll get terrible response rates. But with 150 million users in the US alone, even a response rate of half a percent could net the advertiser 750,000 clicks. But if your small business makes 1000 cold calls this year – five calls a day, every working day of the year – that same half a percent response rate will net you only 5 interested prospects. That kind of return on investment can kill your motivation – or your business – before you can even get it off the ground.
Before you begin any kind of advertising project or campaign – and that includes everything from setting up a website to attending a networking event – you absolutely have to understand your target market. Who are your ideal clients? What are their characteristics: age, gender, location, occupation, income, marital status, etc.? What keeps them up at night? How can you help them?
The better you understand the people you’re marketing to, the more effective your advertising will be. You’ll know where to go to be able to speak to your ideal clients. You’ll understand their fears and desires, and can show them how your company helps avoid the one and achieve the other.
The first thing I do with every new client – and do again every time we begin a new project – is sit down and walk through a target marketing questionnaire to make sure that the copy I create will deliver the right message to the right customer at the right time. If you’re handling all your own marketing, make sure that you’re not wasting time and money. Figure out who you’re trying to sell to before you start worrying about what and how you’re going to sell to them.