Advertising to the Robots: Marketing Dollars Well Spent?

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Something strange is going on with social advertising. Two interesting stories in the past few weeks offer contrasting views: Google is buying social ad startup Wildfire, while in a different corner of the Internet, one company is pulling its social ads from Facebook after alleging that only 20% of clicks on its ads were from humans.

The optimistic view first. Google’s acquisition of software developer Wildfire will allow the company to deliver software and services to brands for running social marketing and ad campaigns on Facebook, Google+, LinkedIn, Pinterest, Twitter, and YouTube. Wildfire was Google’s second choice; the company bid on Buddy Media earlier this year but lost out to Salesforce. Interestingly, Wildfire only offers ads through its partner Adaptly, somewhat limiting the utility of the company’s offerings, although that is subject to change after the acquisition.

Google will enter the social ad space through the acquisition, and will be soon positioned to not only sell services on its own Google+ platform, but also to provide its customers with marketing tools that can be used on other companies’ platforms, which of course would include Facebook.

But back to the pessimistic view of social ads. Facebook has stumbled as of late, with its share price nearly 45% below its initial $38 per share IPO price on May 18. Concerns about slowing user growth and the lack of an effective mobile strategy are spooking investors. Just days before the IPO, General Motors pulled the $10 million it was spending on Facebook ads, citing a failure of the ads to impact consumer purchases.

Now, Limited Run, a music industry-focused e-commerce startup, is pulling its ads from Facebook as well. The company claims that, through running analytics of who is clicking on their Facebook ads, they have determined that nearly 80% of clicks are from automated bots, not real human potential customers. To experiment, Limited Run tried ad campaigns on various other social platforms and came up with the same results, only 15%-20% of clicks could be verified as coming from flesh and blood humans.

In July, the BBC conducted an experiment by setting up a fake company on Facebook, VirtualBagel. The BBC team set up some ads and then left it alone to see what would develop. Within 24 hours, the fake company had over 1,600 likes, and within a week, the company had 3,000. After analyzing the data, it was observed that the majority of the likes came from profiles of 13-17 year old Egyptians with suspiciously similar and sometimes outright contradictory profile information, indicating the presence of nonhuman profiles. For its part, Facebook admits that 9%, or ca. 54 million, of its profiles are fake, and that number is nothing to sneeze at in a market where every advertising dollar counts.

For Google, now entering directly into the social ad space, it is critical to not only solve the automated bot problem, but demonstrate the clear value of social ads. Social everything has been hyped beyond belief, and as we are seeing with the ill-fortunes of Facebook’s falling stock value, there may be some value in being anti-social, at least for advertising.

Cody Burke is a senior analyst at Basex. He can be reached at cburke@basex.com

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