[kposehn]

I'm kind of smelling some negative press push here about the IPO. A lot of the stuff doesn't seem to add up - despite supposedly solid leaks about documents, etc.

What this might be an indicator of is a dedicated effort to push the stock price post-IPO lower so that various traders/funds can make a nice chunk of change off a rebound post-earnings.

I'm fairly skeptical of this sort of conclusion - especially about supposed ad revenue or other issues - due to my personal experience using the platform. I have spent a small fortune (of my own money) on online advertising as an affiliate for several years. Out of all the various ad networks and venues, the most consistently profitable has been Facebook, bar none.

On a typical campaign, I'll net a 200-300% profit on my ad spend. Compare this with 60-100% on Google AdWords and 50-65% on Bing. Don't even get me started on buying display ads. I'll spend any free ad budget on FB before any other network, simply because I _know_ I'll profit from it - the risk is far lower and the margin far higher.

I guess my point is, like when Google started, people just don't get the power that FB holds when it comes to advertising. Storefronts in FB were never the point - what is far more important is engagement and interest.

Facebook is king when it comes to that.

[tokenadult]

I'll spend any free ad budget on FB before any other network, simply because I _know_ I'll profit from it - the risk is far lower and the margin far higher.

After reading that, I went to your HN profile, where you write, "Entrepreneur and rabble-rouser with an eye for monetization and innovative business concepts. Tempered by the reality of being an affiliate marketer for 3+ years. Forged in the fire of having to compete tooth and nail to succeed in that industry. Prone to writing silly and/or odd descriptions of himself. Named his company after his cat."

I still don't know what industry you are in, but I suppose different businesses in different industries get different results from Facebook ads. I don't know either how Facebook compares to the great majority of places to sell advertisements online, but isn't it possible that your experience is exceptional, and that there aren't enough businesses like yours to sustain a business with the expenses Facebook has?

[kposehn]

Good point. I have given a lot of thought to sustainability with Facebook Ads, and my optimism follows the basic data of my experience ever since it opened up.

Originally, low CPC's were quite commonplace. I could advertise something and get a pretty good rate - $0.10 or so - and make some really good money. Over time, the base CPC has risen across the world. Right now, you're looking at $1.20 or so just to hit the US untargeted (this isn't the suggested bid, this is actually running all-US ads).

What is really telling however is CPC's on very tight interest groups. Let's say I target a set of interests in a city that gets me about ~2k people in the profile. It used to be, even a year ago, that I'd pay about $0.80 per click. Today, you'll be lucky to find $1.30 on the low end. As niches get narrower and people get better at mining interest, the CPC climbs. Long term, sustained CPC trends are clear indicators of increasing demand and the ROI to sustain them.

Why this isn't talked about so much has to do with barriers to entry. I'm telling everyone here a lot about what I do without revealing the finer details. Also, I would say that as with any venue, some products do better than others. You can sell big-ticket stuff on FB, you just have to go about it much differently. You can lose a lot of money on Facebook quite easily, so how you approach the market is a big factor.

That said, the secrecy surrounding the success FB advertisers like myself are having is a much stronger indicator than anything that is said publicly. Will it keep FB from missing earnings targets? Probably not, but I remain very bullish on where they are going and what they have to offer.

[ary]

Since your evidence is anecdotal I'll point out that there have been a number of "unhappy ending" stories regarding Facebook advertising on the front page of HN over the last year and a half. Perhaps your niche works well with their offerings, but it seems like you're the exception and not the rule.

[kposehn]

Well, most of the unhappy endings have suffered from one or more of these problems:

1. The advertiser does not put enough money in to fully test the product/niche/demographic

2. The product targeting mix is not well thought through, targets too many people or doesn't take in to account other factors.

3. The advertiser is not testing enough ads to find what gets people to respond.

There are many more reasons as well, and I won't try and cover them all here. Suffice to say, most of the time people don't really put enough on the line to find where they can succeed with FB ads. This has kept the market fairly clear for people like me - I'll happily drop $1k to test something, because if even 1-2 ad/target combos is reliably profitable, I know I've hit something.

A very broad range of products work quite easily, you just have to break out of the old mold of thinking in terms of direct interest -> product correlation. For example, you aren't really going to sell jeans to people that like "clothes".

Think broader - target people that like home improvement and give them ads that say "Toughest Jeans Ever / (pic of dirty as hell jeans) / Work in the garden or change a sink, it doesn't matter. Save $20 with coupon FB20OFF today only!"

These are the ways to succeed on FB, but you really have to be willing to put it on the line.

[perlgeek]

Without wanting to support one side or the other, I'd like to point out that the "unhappy ending" stories are likewise anecdotal.

[kposehn]

Another key point is that you have to be willing to dump what isn't working - or a targeting group that doesn't work.

You may find a group that likes the product a whole bunch, but they can't or won't spare the cash to buy it. You may also be reaching them at the wrong time and they aren't close enough to the buy cycle.