[Ankesh]

Most people don't advertise on Facebook correctly.

Facebook is good for 2 types of advertising.

1. To build a stronger bond with people who already know of you. If you are well known, you can run a campaign to get people to like / join your FB page. However, when you are unknown and you try to do this - you'll make losses. (Unless you turn scammy and trick people. Eg: Someone selling tennis shoes running an ad that says: Like if you like Roger Federer.)

2. To find people who like your competition. And let them know about you. Eg: if someone has liked Pizza Hut - and you show them your local pizza parlor ad - would you see a good conversion rate? Most likely - yes.

So Facebook works only if you are already popular. Or have competitors who are popular.

The second issue with Facebook is - people don't have a purchasing intent while they are on Facebook. On Google, people search for what they are looking for. On Facebook - people come across your ad before they want your product. Sometimes - this may be weeks before they need you - sometimes it could be months before they need you. Depending on your product life cycle.

Eg: If you sell beds on Facebook - and on average, people buy a new bed only once in 10 years - a 3 month campaign on Facebook is not going to increase your sales dramatically.

So you have to realize that while Google is like Yellow pages, Facebook is like radio advertising. People won't have buying intent. But it still works if you take a long term view and are smart with it.

I'm surprised to know that a wine seller and a game developer's ads on facebook bombed. Did they run an ad to get people to like their facebook pages? Or did they run the 2nd type of ads - showing your ad to people who like your competition - and get them to come visit your website?

My educated guess is that they may have run the first kind of an ad campaign - getting others to like their facebook pages - when they themselves weren't popular...