A short while back, outgoing Google CEO Eric Schmidt dismissed the idea of Facebook as Google’s main competitor, claiming that Facebook ads don’t really displace search ads.
A Webtrends study of Facebook advertising explains at least one reason why Schmidt may be right: users burn out much faster on Facebook ads than they do on search ads.
The study looked at about 1,500 Facebook ad campaigns consisting of more than 11,000 ads, and found that average click-through rates decline by half in about two days. In other words, once a user has seen an ad a couple of times, they’re very unlikely to click on it. The pattern of decay continues until the click-through rate gets so low that Facebook removes it, and the advertiser is forced to start over again.
Advertisers can reduce the problem by using “friend of fan” targeting — the feature that shows the names of friends who have also clicked on an ad. This helps advertisements last three times as long before users get sick of them and stop clicking. But the effective duration is still only a week or two.
In contrast, a search ad can run for weeks or months with no changes. That’s because the ad shows up only when users search on the associated keywords, so each ad continues to rotate through people who have never seen it before. The trick with search advertising isn’t figuring out how to attract users with new ad copy. It’s more about buying the right keywords at the right times.
So Schmidt is right in one sense: Facebook ads are more like very well-targeted display ads.
But Google has a growing display advertising business as well. Plus, there’s only so much online advertising budget to go around, and advertisers will go wherever they get the best results.